Nice that the government spent $4 Billion dollars to bail out Chrysler.
What did it buy us? Nothing, now that Chryler is bankrupt.
Well, actually it did. Apparently, what it bought was the company for the United Auto Workers.
For those that don’t understand basic finance.
Many thousand of individuals, hedge funds, mutual funds, and even state and local pension plans bought Chrysler debt,i.e. bonds.
Why? Because by buying bonds, they have lent the company the money that allows it to keep operating.
In a normal situation these folks are known as “senior debt holders”.
If a company goes bankrupt, they get paid FIRST. Before companies work with the bankrupt one, and certainly before stockholders, who are out of luck.
But not here. King Obama has handed Chrysler to the unions.