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k, so the title probably got your attention. It is tax day 2009, April 15th, and I am writing my dear ol’ uncle in DC another check from what had been a pretty fruitful 2008. The old saying about nothing being certain except death and taxes seems to always be more relevant on this day. Some people have decided to organize ‘tea parties’ today to protest tax issues, though I fear most do not have the backbone to fight a political ground war.
But what does all of that have to do with Mopars? In reality, more than we might like to admit. The political takeover from the 2008 election has been dramatic. With the wind at their back, and not letting a crisis go to waste, the result was a legislative blitzkrieg that even the participants had no inkling of what they were doing. Nobody knows just where all the stimulus money, trillions of dollars, will actually end up. What is known is that it is a borrowing spree of unheard amounts that will have a very, very hefty bill attached to it. A bill that we will all end up getting a share of.
One of the primary issues was to try and assist the nation’s automakers, who got caught with their proverbial pants down when the economy belched. Between the faltering mortgage business, increased fuel prices, and a recession, the Big Three were in big trouble as credit dried up.
Ford apparently had enough resources to not to go hat in hand to the feds. The colossal GM (with a hat under its minority-share mortgage arm) and Chrysler (whose fortunes are actually in the hands of private-capital hedge funds via Cerberus as opposed to accountability-focused shareholders, and who ironically also owns the substantial stakes in GMAC and Dietech) needed cash flow fast. Under pressure, the outgoing President Bush presented them with a promise for just under $20 billion in emergency loans at the end of 2008; the new Obama administration cancelled part of that (they later paid it) and required the two companies to publicly prove viability for more.
Right now, we still do not really understand how it all worked – GMs boss Rick Waggoner said goodbye and GM was told to prepare for Chapter 11, and the administration stated Chrysler could NOT survive as a stand-alone regardless and was mysteriously required to combine with Italian manufacturer Fiat by the end of April (this according to a March 30th New York Times story, and something Fiat had not agree to yet). The carrot – another $6,000,000,000 (billion) in loans, but Chrysler as a brand is likely finished if this indeed is the case.