March 3, 2008 (LPAC)--The old joke about the best way to make a million dollars in the stock market is to start with $5 million, comes to mind when looking at what is happening to Chrysler under the management of the big hedge fund Cerberus. "We don't have to chase to be a $10 billion or $12 billion company," Chrysler Vice Chairman Jim Press said February 29. "What we can do is be the best little car company in America." Being the "best" has thus far eluded Chrysler under Cerberus, but they're clearly making progress on the "little" part.

The problems at Chrysler echo the problems at Sears, the retailing giant now owned by ESL, the hedge fund of former Goldman Sachs hotshot Eddie Lampert. Profits at Sears, which also owns Kmart, have plunged and the deal once heralded as a savvy move is looking increasingly like a turkey.

Did anyone ever seriously believe that hedge funds could successfully run large industrial and retail operations, especially ones which were already in trouble? Hedge funds get rich by extracting wealth from companies--by looting--rather than by building. Hedge fund operators might be clever speculators, but industrialists they're not.