Dartblog

The following message was just beamed to my BlackBerry:

Chrysler has found an international partner in Fiat but the auto maker isn’t out of the woods, mainly because the deal is contingent on Chrysler getting $3 billion in additional government loans.

Chrysler and Italy’s Fiat confirmed they had reached an agreement on an alliance that would give Fiat a 35% stake in the American company. Fiat would not put any cash into Chrysler but would provide technology and vehicles that Chrysler could build and sell in the U.S.

Like the hazy-eyed violets of the corporate world, the huddled faithful who believe that federal diktats—match that contribution! insure that family! withhold those taxes!—that force employers to leech upon their paychecks actually materially alter overall compensation…like those believing souls are Cerberus and Fiat. Fiat will rescue Chrysler—but it’ll only work if U.S. taxpayers kick in about thee bil’? Why, they must take Nancy Pelosi for a fool.

Larry Kudlow’s brilliant little locution for this—bailout nation, he calls it—is right on. The calculus of some MBA with Stata shows that $3B is what this duo can wrench from the people without too many questions being asked; entirely unnecessary, it is free candy, and why shouldn’t Fiat make its deal a little more comfortable? Now these fresh Democrat politicians, who get evaluated in just two years, can either be responsible for letting Chrysler tumble, or they can allocate a paltry sum to lock the deal up. The money isn’t needed in the first place, but the new bailout nation rules have constructed a bargaining game in which one party has no sway at all.

Here’s my prediction: it’s going to turn out that private parties can very ably come to the rescue of almost every deserving distressed private party. And every rescuer is going to want a hit of the TARP. It’ll net out to the same result as if no one had had a hit of the TARP.