Posted on 04/23/2009 12:48:06 PM PDT by MaestroLC
DETROIT — The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.
The Treasury has an agreement in principle with the United Automobile Workers union, whose members’ pensions and retiree health care benefits would be protected as a condition of the bankruptcy filing, said these people, who asked for anonymity because they were not authorized to discuss the case.
Moreover, Fiat of Italy would complete its alliance with Chrysler while the company is under bankruptcy protection.
The only major question that remains unresolved is what happens to Chrysler’s lenders, who hold $6.9 billion in company debt. The government’s most recent offer, presented Wednesday, would give the company’s lenders about 22 cents on the dollar, or $1.5 billion, and a 5 percent equity stake in a reorganized Chrysler. Earlier this week, a steering committee of the lenders proposed that they receive 65 cents on the dollar, or $4.5 billion, and a 40 percent equity stake.
Officials at Chrysler and the Treasury were not immediately available for comment.
A bankruptcy filing by Chrysler would be the first among Detroit’s troubled automakers, who have been mired in a devastating sales slump since last fall. Treasury is also working with General Motors to prepare a possible bankruptcy case, and the terms of a Chrysler filing might offer a glimpse into the shape of G.M.’s own filing.
Some analysts questioned whether the Treasury’s steps to prepare a bankruptcy case were an effort to put more pressure on lenders, with which it has exchanged proposals meant to reduce Chrysler’s debt. Chrysler faces an April 30 deadline from the Treasury, while G.M. faces a June 1 deadline in its own efforts to draft a new restructuring plan.
(Excerpt) Read more at nytimes.com ...
Check this out, this is a good article This article is quite thorough considering it’s the Times.
http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=1&hp\
No-in December when the Senate was addressing this issue, many on this forum opined that the contracts needed to thrown out.
I don’t know they gave AIG their bonuses with some squawk, but they still got them.
YES ... we're going to be on the hook to pay for the frakking UAW pensions and pay ... this is BULLSHIT.
There are laws regrading pensions, I don’t think bondholder come first...but if this were to happen...we taxpayers are on the hook for the pensions. I would rather see the UAW take them over...it would cost less. Keep in mind the UAW will be part owners of Fiat-Chrysler.
Did you revolt when you assumed the Airline union pensions?...because you did. Every time a company sheds it’s pensions, we pay and that’s the truth.
Get the government out of business, and, even with vastly different pay scales between the USA and the third world, business will return. Let the states compete with each other. Why else is the South growing while the “rest belt” is on life support???
Thanks for the heads up.
I finally posted it to the website. I had a tough time figuring out what to describe it as since it based on the reporters’ unnamed sources. Eventually I qualified it as being from the NYT’s.
fyi, fannie and freddie are housing default central and will probably cost us about 5-10 times what aig will cost.
No way...AIG is already costing over 200 billion with more to come...sad we are arguing over which dead beat company will cost us more. I really don’t have any idea...if I’m right honestly.
This is why I didn’t post it...I was worried I would break the rules...I’m scared of the mods...I know they all look like my Mom when she was really pissed. LOL
Why would you think that vastly different pay scales won’t matter in manufacturing?...Cheap is king right now.
Nope, and when did that happen?
http://www.tribalwar.com/forums/archive/t-577539.html
Are you scared yet?
Old article, but I think it is worth reading as the numbers are enlightening.
Tower of Babel Economy | Economy | theTrumpet.com
(http://www.thetrumpet.com/index.php?q=5290.3582.0.0)
So it is alarming that the latest report from the Bank of International Settlements (bis) went largely unnoticed.
According to the bis, the number of outstanding derivative contracts in the global marketplace soared by double-digit percentages last year. Anything going up by double digits should elicit interest in and of itself, but in this case it is the sheer magnitude of the numbers involved that raises red flags.
The bis reported the total amount of outstanding derivatives has reached a practically incomprehensible $1.28 quadrillion. Yes, you read that correctly—quadrillion! And as astounding as this astronomically huge number is, the actual totals are even bigger because this number does not include derivatives related to the commodity markets (which the bis says it can’t track because values aren’t available).
A quadrillion dollars is hard to wrap your mind around. It takes a thousand trillion to make a quadrillion. Start with 1 million and multiply by 1,000, then multiply by 1,000 again, then multiple by 1,000 yet a gain—and then finally you get to 1 quadrillion. You can think of it as more than 92 times the value of all goods and services produced in America during 2007, or almost 20 times global gross domestic product.
(Snippet)
According to DeMeritt, the majority of the $1.28 quadrillion in derivatives is “owned” on somewhere near 95 percent margin!
That has got to be “one of the scariest phenomena in economic history,” he says.
In case you are wondering, 95 percent margin means that for every dollar speculators have spent betting on derivatives, approximately 95 cents of that money was borrowed. For $5,000, a hedge fund speculator can control $100,000 worth of credit derivatives.
according to the U.S. Department of the Treasury, JP Morgan Chase bank has $1.244 trillion in assets. Yet, it has a mind-boggling $91.73 trillion in derivatives contracts on its books. A person could buy the whole bank for a comparatively paltry $129 billion.
That means that if JP Morgan was exposed to just 1.3 percent of its outstanding derivative contracts, and things went wrong, it would be completely insolvent. That doesn’t take into account any other liabilities JP Morgan already has on its books.
“It’s going to get far worse than anyone wants to admit. Even respected newsletter writers hesitate to suggest the truth,” says economic analyst Bob Moriarty. “It’s the end of the financial system, as we know it. Central banks might be able to paper over a few trillion dollars but the fraud is 10 times what they can paper over.”
As Moriarty indicates, U.S. financial markets are nothing more than a huge Long-Term Capital. All it will take is a shock to the stock or bond markets, or maybe sharply rising interest rates due to a run on the dollar, and the major counter parties to the derivatives contracts will fail. And when that happens, living in America all of a sudden won’t be so easy after all.
See below: May 11th 2005
TOM BEARDEN: Since a federal bankruptcy judge approved United’s plans to terminate its four employee pension programs, the airline can shift responsibility for them to the federal government and the Pension Benefit Guaranty Corporation, or PBGC, which Congress created in 1974.
The PBGC protects nearly 35 million workers and retirees in more than 29,000 pension funds. United’s employee pensions are under funded by an estimated $9.8 billion. The PBGC would only guarantee some $6 billion of that total. That means some of the airlines’ workers could have their pensions cut. And for some of the highest-paid pilots, the cuts could be even steeper.
The airline’s parent company, UAL Corporation, has been in bankruptcy protection since December 2002, and has been pushing to end its pensions since it lost a bid for a federal loan package last year. Company officials said yesterday’s ruling means it can save jobs and $645 million a year, a matter of survival for the airline.
OMG...OK, I was depressed-very depressed...now I’m thinking suicide...scary beyond belief. How could this have happened? I had never read this article thanks for posting it...I saved it for a night when there are no good horror stories on TV-unbelievable.
So, let me see if I get this...for every dollar spent on these derivatives 95 cents was borrowed? Damn-just damn.
Many pension funds hold auto stocks, twenty two cents on the dollar with cripple them.
It looks like it. It’s as if someone took the entire assets of the banks and went gambling and lost everything, and wants us to make his loans whole again.
I don’t understand why the stock market is still running. Unless it’s just a party going on until the music stops.
Take a look at our survival thread:
Is Recession Preparing a New Breed of Survivalist? [Survival Today - an On going Thread #2]
http://www.freerepublic.com/focus/chat/2181392/posts
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