Oh look, we lost money on Chrysler

When you or I make an investment, we try to make at least a little bit more than we put in.  We don’t always do that – that’s the nature of investing after all – but we try.  When we fail, we tend to take our lumps as they are, but we acknowledge that we lost out.  Of course, if you’re the United States government, all bets are off.

Allegedly, it was an “investment” to bail out Chrysler.  Now, they have supposedly paid back all their loans.  The United States government is out.  Fiat is the major stockholder with over 53% of the stock.  The US government lost a significant sum of money in the process too, but they’re not sweating it:

Overall, $1.3 billion will not be recovered from the bankrupt Old Chrysler, but [ Treasury assistant secretary for financial stability Tim] Massad still called it a “major accomplishment.”

Losing $1.3 billion is a major accomplishment?  No wonder their answer to the national debt is more debt.

In all fairness, it’s possible Massad is saying that it’s a major accomplishment that Chrysler repaid anything on the loan.  That’s not really clear.  Of course, the United States of America apparently doesn’t really understand how loans work.  From the same CNN piece:

As part of the loan agreement, Chrysler was given until 2017 to return the bailout funds. If it had taken the full term, the interest accrued on the loans could have significantly reduced the government’s losses.

Just a tip for the next time the government tries to bail out a private enterprise.  When you make a loan?  It’s not paid off until the amount you loaned (also called the principle) is paid back as well as any interest.  Interest is there to make a bit of profit, not to offset losses.  Or, here’s a really radical thought, but maybe you should leave the business of making loans to bankers who actually have a clue how they work.

At least with the government out of Chrysler, I can at least toy with the idea of getting a new Jeep.  Now, if only they would get out of GM so I can contemplate myself behind the wheel of a new Camaro.  I just can’t buy from a company the US government owns if at all possible after all.


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