I read that to help facilitate a merger between Chrysler and GM the US Govt is considering a loan of $10 Billion Dollars.
I fully support the Govt helping businesses when it makes sense.
BUT this situation bears some scrutiny.
http://www.reuters.com/...
The devil is in the details.
$3billion of this money would be used as an equity investment in the combined company.
Sounds good.
However the TOTAL Market cap of GM today is about $3billion. So what stake is the US taking? If we can buy 100% of GM off the street for $3billion why would taking say a %20 stake make sense??? For $3billion we can buy the whole company. That's all its worth.
I'd include Chryslers numbers here BUT WE DONT KNOW THEM, they are owned partly be a GERMAN COMPANY (Daimler) and mostly by a private equity firm with ties to Dan Quayle - Cerebrus. A private equity firm that has over $100 billion in assets I might add..... a firm that is not required to disclose its finances, doesnt have an SEC reporting requirement, and doesn't even have to follow Sarbanes Oxley.
So we're going to give GM and Cereberus $10 billion, take a small equity position, and what about Daimler? Daimler owns %20 of Chrysler
And Cerebrus wants to buy that too? If they need bailing out, why would they want to buy the other 20%?
http://www.freep.com/...
I smell a rat. This is a continuation of the fleecing of America.