Thoughts on Chrysler

Congratulations to Cerberus, in buying Chrysler for such a good price. I fully agree with this statement.

• Cerberus Chairman John Snow said Chrysler's management -- which will be headed by current CEO Tom LaSorda -- will be relieved from the pressure of impatient shareholders and quarterly results under private ownership.

I wonder how much of current regulations (SOX and others) led to this thought and how many more are we going to see. Here is another fascinating quote, something I have said for a long time:

• Asked why he thought the merger hadn't worked out, Zetsche said it was clear, in hindsight, that the potential synergies between Chrysler and Mercedes-Benz, the German luxury carmaker, had been overestimated.
  "There is potential, but given the very different nature of the segments we operate in, those synergies are limited," he said.
  In addition, DaimlerChrysler miscalculated the impact that the transfer of Mercedes technology would have on Chrysler's brands and the strength of its pricing.
  "The American volume customer is probably not willing and able to pay premium prices for technology offered in those cars," he said.

How many mergers have been created in the past 10 to 15 years that the primary benefit is synergy, at least the benefit they tell us about. Usually the greatest benefit are to the top executives, very few stockholders and Investment banks. They make the greatest money. Usually 15-25% of the workers get fired, companies that served one of the companies (such as accounting firms) or both lose business, customers get screwed since monopoly power takes over (see banks, airlines, casinos), and prices go up and service goes down. And then, in the end, how much benefit is there really to these mergers? I am sure there have been studies by much smarter people than me, but whenever I hear synergy, I cringe, it is a buzzword for laying off people and getting executive board members richer.

I have complained about unions before, but this is where they could make the biggest impacts, making sure their members don't get screwed in the deal. However, the head of the CAW wants written guarantees their won't be any more layoffs. There has to be a better negoiating ploys than that.

I supposed this isn't a surprise either:

• Its [DaimlerChrysler's] shares surged nearly 8 percent in early trading in Frankfurt on relief that DaimlerChrysler was not paying out more to dispose of Chrysler and that it had shed the pension and healthcare liabilities. The pension liabilities are substantially over-funded, DaimlerChrysler said, but the healthcare liabilities amount to $18 billion.

Further evidence that the current healthcare and pension system in this country is destroying competitiveness. The shares of a German company (where workers are a whole lot stronger, have much better benefits and will be taken care in their retirement) went up 8 percent after taking a massive loss (they paid 37 billion and got 7.7, but will actually receive 1.3 bln), absorbing liabilites and shedding operations because they don't have to deal with massive future liabilities in the healthcare arena.

It is so time for a real healthcare system in this country, one because it is the right thing to do (46 million uninsured makes me sick) and because it will help American business more than any other act of the government could ever do.

All quotes above from detnews.com. Thanks yall