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Whoops!
If you believed all the talk from Chrysler about how our tax dollars would help finance its fast-track electric-vehicle future, you're in for a big disappointment.
Chrysler has disbanded the engineering team that was trying to bring three electric models to market as a rush job, Automotive News reports today. Chrysler cited its devotion to electric vehicles as one of the key reasons why the Obama administration and Congress needed to give it $12.5 billion in bailout money, the News points out.
The link is here and I thank John Nye for the pointer.
Posted by Tyler Cowen on November 11, 2009 at 07:38 AM in Political Science | Permalink
Comments
So can we get our money back?
Posted by: Mike Giberson at Nov 11, 2009 8:40:15 AM
I guess this is evidence that the right move was a radical change in who takes decisions at Chrysler. Fiat have their failings, but they have realised that hurrying to be an early follower in a new market is rarely profitable.
Posted by: David Heigham at Nov 11, 2009 9:30:45 AM
The head of the task force making the recommendations on GM and Chrysler indicated some weeks ago the decision on Chrysler was a close one and hinged completely on the Fiat deal, and the prospects of saving tens of thousands of jobs if Fiat could keep some of the Chrysler factories and dealers open.
Think of it this way. Someone on unemployment (now for 99 weeks, or two years if you add in vacation/holiday time) will get I'm guessing more than $20,000 in benefits. That's directly $20M per thousand. 100,000 jobs "saved" is at least $2B in benefits. Add even a small share of homes saved from foreclosure or forced sales. Add in the number of people who are able to delay retirement and drawing Social Security. Add in the number of people able to delay liquidating their 401K or drawing pension which forces sales of stock and bonds, driving down equity prices. Add in the stores closed and jobs lost, and those unemployment benefits.
The hedge fund that owned Chrysler, its bond holders, and others took big hair cuts for their investments in Chrysler, so I'm curious who will walk away from the deal smiling and saying, "now what high risk deal can I make which Obama will bail me out of now?"
Without Fiat closing on the deal, Chrysler would have been cut lose and would have certainly been liquidated in bankruptcy, with the only bailout it got coming from Bush.
Posted by: mulp at Nov 11, 2009 12:50:43 PM
So mulp,
Bailing out car companies (labor unions) so they can keep on keep'n on is better than bailing out individuals so they can retool?
Yeah, the auto bondholders got a haircut. That's fantastic. I'm sure they are thinking "what's the next labor-intensive, capital-intensive, troubled American businesses I can invest in?"
Posted by: Andrew at Nov 11, 2009 1:27:59 PM
Didn't Chrysler make the same promise to the Bush administration in order to get the loan last August?
Posted by: Bill at Nov 11, 2009 2:31:57 PM
If so, so what?
Is there a law that says you can only scam Democrats?
You know what you are doing in effect, right? You implying that if Bush is equally as bad as Obama, then there is no alternative. Well, there are countless alternatives. There are third parties. Or, both Bush and Obama could choose not to be panzies.
Posted by: Andrew at Nov 12, 2009 4:15:32 AM
good bifocals on line
a pair of glasses every year
Posted by: glasses at Nov 12, 2009 10:36:13 PM
