The market likes the news, sort of. Equity markets are marginally higher, indicating that the market was expecting the news. Wake me up when something exciting happens.
Friday, December 19, 2008
GM and Chrysler Get Government Loans
GM and Chrysler will get $13.4 billion in initial loans from the government in exchange for a restructuring. The automakers will receive an initial $4 billion in February. The government loans will have priority over other debts and will come due by March 31st if the companies can't demonstrate financial viability by that time. As is customary with the government bailouts, the deal is vague as "financial viability" is a somewhat nebulous condition during these highly unpredictable economic times. Fortunately the loans come with some conditions: The automakers must provide warrants, accept limits in executive pay, give the government access to financial records and not issue dividends. The automakers must cut their debt by two thirds in an equity exchange, make half of the payments to a union retirement fund in equity, eliminate a program that pays union workers when they don't have work and have union costs and rules competitive with foreign automakers by December 31, 2009.
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3 comments:
calm before the storm. lots of triple and quadruple tops forming in many positions. quarterly reports are still reporting losses, I am still seeing local job loss reports (in the recession-proof bay area) is this going to lead us to something bigger? or is this market going to trade sideways for long haul?
I wonder why all those clauses weren't included in the $700 billion bailout.
God only knows Hank is a thief...
I loved Credit Suisse's program of paying bonuses with mortgage assets. It made me wonder if that type of thing shouldn't be extended. Any financial institution that needed US Government love to stay alive should pay bonuses that include a GM car or something like that. Heck, it's like one big recycling auction of government property.
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