Tuesday, May 5, 2009

From bailout to handout. From sublime to ridiculous.



Chrysler may not repay government loans: Flaherty

KEVIN CARMICHAEL
Globe and Mail Update

May 5, 2009 a

OTTAWA — Finance Minister Jim Flaherty conceded Tuesday that there's a chance the government's loans to Chrysler LLC will never be repaid, although he stressed that the company's planned merger with Italy's Fiat SpA stands a “reasonable” chance of success.

Mr. Flaherty, attending a news conference arranged to promote the government's tax-free savings accounts, was forced to respond to comments made by an adviser to Chrysler in a New York bankruptcy court Monday.

Robert Manzo, an executive director at Capstone Advisory Group, told the Manhattan courtroom that there is a “low likelihood” that Chrysler will repay the “debtor-in-possession” financing put up by governments in the United States and Canada because it is subordinate to almost $7-billion (U.S.) in Chrysler debt held by banks, hedge funds and other creditors.

The Canadian and Ontario governments combined for $1.45-billion in emergency loans for Chrysler.

Mr. Flaherty was asked at the news conference whether he had “every confidence” that the money would be repaid.

“Do I have every confidence? No,” Mr. Flaherty said, noting that Fiat's chief executive officer Sergio Marchionne's plan to return Chrysler to profitability has to be successful.

Still, Mr. Flaherty endorsed Mr. Marchionne's vision, saying Fiat's stable of smaller cars will make Chrysler competitive in markets where it currently has little or no presence.

“This augurs well for success in the longer term,” Mr. Flaherty said.

3 comments:

Anonymous said...

Where are Flaherty’s / Mintz’s / Layton’s complaints about tax leakage?

Hard-earned and precious Canadian tax dollars will disappear into the maw of auto bailouts in order to subsidize the interests of hedge funds and private equity firms.

Will Canadian taxpayers now see their social programs cut due to this latest source of tax leakage?

Gord

CAITI said...

Gord:

If you bail out ABCP, then you must bailout Asset Backed Chrysler Paper.....and on and on


Brent Fullard

Dr Mike said...

I am getting the same feeling I get just after the Doc snaps on his favorite rubber gloves & says bend over & cough.

Dr Mike