Chrysler

About a year ago it was announced that General Motors had repaid their government loan but after further investigation it was determined that they used another government loan for the payoff. The CEO of GM was on TV bragging about this loan payoff but when the truth came out he had to run for cover as they stopped the commercial.
Yesterday Vice President Biden announced that Chrysler had repaid its government loan so I was somewhat suspicious. Here is a recent news item.
No one was really surprised that Chrysler posted a quarterly profit — a modest $116 million — this year, technically its first since exiting bankruptcy in 2009, but really the first time it’s been in the black since the mid-2000s.
Now I wondered how they could pay off a 7 billion dollar loan so I looked further into the matter and discovered that Fiat had increased its ownership from 20% to 46% so I figured that Chrysler got the money from Fiat. Now there are 650 million shares of outstanding Chrysler stock and it is values at $8 per share so the book price of the entire company is about 5 billion. If Fiat bought 26% of that it would only inject about 1.2 billion so how could they pay off 7 billion.
Here is another quote:
The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.
But wait there is more:
So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.
Oh, and Obama plans to make this “success” a centerpiece of his 2012 campaign.

More smoke and mirrors. Will the American people ever catch on?