General Motors filed for bankruptcy protection this morning and President Obama plans to give the bankrupt car maker another $30 billion bailout during and after the bankruptcy process. That will bring the bailout of General Motors to $50 billion.
The $50 billion bailout of General Motors is second only to the $150 billion AIG bailout.
According to the Washington Post, under the proposed restructuring of General Motors, about 60 percent will be owned by the United States, about 12 percent by the governments of Canada and Ontario, a union health trust would own 17.5 percent, and the company’s current bondholders would get 10 percent.
The General Motors bankruptcy filing is long over due and should have occurred long ago and without the $50 billion bailout. The bankruptcy should also have happened without Obama’s interference in the process that favors the United Auto Workers, a political ally of President Obama, at the expense of General Motors investors:
The proposal seems to favor the rights and claims of the UAW, a political ally of the current administration and a powerful lobbying force in Washington, over the rights and claims of the company’s diverse group of bondholders, who collectively hold $7 billion more in General Motors debt than the UAW’s health trust and are equal members of the creditor class.
[. . .]
Choosing sides between equal classes of creditors sets a terrible precedent – one that could cause serious long term challenges to the financing marketplace by eroding investor confidence at the worst time in our recessionary period. General Motor’s restructuring, in essence, has become an exercise in favoring one group of retirees over another. Simply put, the administration has overstepped its bounds and by doing so will chase jobs and capital overseas.
We shouldn’t expect any better when the guy Obama has in charge of remaking the American Auto industry in the image of Fiat is a law school drop out “who is neither a formally trained economist nor a business school graduate, and who never spent much time flipping through the endless studies about the future of the American and Japanese auto industries.”
Moe Lane
Steve Maley
KnightsofMalta
Dan Spencer
Dan McLaughlin
Operating GM - Major Changes
mas1916 Monday, June 1st at 10:41AM EST (link)The same folks that will be running GM are the same ones that brought us the idea to close Guantanamo prison without a practical plan. There is no apparent practical plan for actually operating GM. Other than demanding fuel efficiency standards, the administration has no clue how to operate an enterprise with (OMG) a profit.
Team Obama does have some major changes planned, though. ( for a top ten list of the major ones, you can visit:
http://firstconservative.com/blog/political-humor/political-humor-running-general-motors )
Favoring the UAW in future operations will ensure that additional billions of taxpayer dollars will be required to sustain the enterprise.
Throwing more money at the problem
izoneguy (Diary) Monday, June 1st at 10:46AM EST (link)seems to be the governments way of doing everything these days. Giving the UAW a lifeline will just prolong the agony. Obama and the dems are going to use those UAW contributions as a huge club in 2010 & 2012. If American industry in laying off 500,000 to 600,000 employees per month then the taxpayer funding of the UAW is an obscene and gross misuse of said taxpayers funds. Who in the US Congress will introduce a bill banning UAW contributions to all political parties??? Even if a law like that passed I am sure the UAW will funnel funds to Obama anyway. At least the MSM will report this, right?????
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
Political contributions by unions ARE illegal,
Achance (Diary) Monday, June 1st at 11:26AM EST (link)have been since 1948. Contributions to their PACs ARE “voluntary” as a matter of law. They just play all sorts of games with front groups and with “member education” activities and there is NO enforcement at the state or federal level, even in Repubican administrations. Go figure.
In Vino Veritas
Last time I had a working computer, Achance, it was only
janis (Diary) Monday, June 1st at 11:31AM EST (link)to find that you were going dark for job-related reasons. (Is that a racist thing to say these days?) Either that was the shortest mayoral term in history or I was computer-free for a lot longer than I realized.
(Just picking at you. Glad to see you still post here. Hope it continues for as long as possible.)
Not totally dark,
Achance (Diary) Monday, June 1st at 11:34AM EST (link)just no diaries and staying away (mostly) from controversial subjects.
In Vino Veritas
That must be a strain for you given the constant
janis (Diary) Monday, June 1st at 11:40AM EST (link)flow of controversy that this administration generates daily. I admire your restraint!
Joy
smitty Monday, June 1st at 10:50AM EST (link)I have loved cars all my life, but never dreamed I would own TWO crappy car companies in my lifetime. All without even wanting to buy them.
Say no to GoMo and UAW
Darin_H (Diary) Monday, June 1st at 11:06AM EST (link)I had to trade in my truck recently (car seat was a no go in the back seat, and even though I could turn off the airbag, I still didn’t want to put my son in the front seat). We went with a Honda Pilot. I don’t think I’ll ever buy another car made with UAW workers. Instead of looking at the Expedition or Suburban for our next vehicle (because we’ll probably need something bigger) I’ll be shopping for a Land Cruiser or equivalent.
A visionary coward says that anger can be power, as long as there’s a victim on TV – Flat Top, Goo Goo Dolls
Exactly
smitty Monday, June 1st at 11:24AM EST (link)I am a proud owner of 2 toyotas (the sequoia is a great size for 2 kids an 2 big dogs Darin). I am done with GM and Chrysler.
Ford is still, maybe just barely, in the clear...
furious (Diary) Monday, June 1st at 11:47AM EST (link)…and in the hands of its shareholders. Would be a shame if Ford were dragged down (please don’t, I own a Volvo) by gov’t mismanagement of the new Dept of Transportation clients.
Too bad for GM, though. My wife drove a Chevy Malibu as a company car for the better part of a year and LOVED it. And she’s a Honda bigot.
–furious
“I find your lack of faith disturbing.” — Darth Vader
Ford too, smitty
Darin_H (Diary) Monday, June 1st at 11:50AM EST (link)Unfortunately. My truck was an F-150, loved it. But I can’t justify buying another Ford either as long as the money is going to the UAW even if they aren’t involved in this bailout, yet.
The Sequoia is nice (my parents owned one for a while), Land Cruiser, Nissan Armada, the new Pilots (mine’s 2006) etc, there are plenty of options for a larger SUV that I need without buying from the Big 2.5.
A visionary coward says that anger can be power, as long as there’s a victim on TV – Flat Top, Goo Goo Dolls
Any chance the UAW can declare victory and not kill the last remaining big three?
General_Confusion (Diary) Monday, June 1st at 11:15AM EST (link)Probably not, as we have seen it is VERY profitable to drive a car company into the ground for the Union.
Anywho, congratulations to the UAW for killing the host(s) [mustn’t forget Chrysler] with their parasitical ways. My condolences to the taxpayer who will be keeping the Union well funded into the foreseeable future.
Go figure
Raven (Diary) Monday, June 1st at 11:24AM EST (link)Just wait, in 6 months or so, they’ll be saying they need MORE money to avoid liquidating the company.
It’s the same course Chrysler has taken thus far.
“If you do not have a sword, sell your cloak and buy one.”
Luke 22:36
If Ford (or the Japanese or Koreans) take...
furious (Diary) Monday, June 1st at 12:44PM EST (link)…or continue taking market share from American Leyland, what’s to stop the Car Czar and his Boy Wonder from rigging the game against the UAW’s competitors?
Is the Dept of Justice going to pursue a consent decree against its own boss?
And, well, yes, an earlier bankruptcy filing would have prevented throwing $50B in taxpayer money down a black hole, but then UAW wouldn’t have received favorable treatment over senior creditors, would they?
–furious
“I find your lack of faith disturbing.” — Darth Vader
The ONLY way that Ford or others can
Achance (Diary) Monday, June 1st at 12:58PM EST (link)get concessions out of UAW is by giving up part of their company; the only question is whether they do it voluntarily or by government action/structured bankruptcy, etc.
If they try to do it on their own, the entire might of the federal government will be turned on them.
In Vino Veritas
Ford should file for bankruptcy now
izoneguy (Diary) Monday, June 1st at 1:02PM EST (link)and get rid of the UAW
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
No way.
Josh Painter (Diary) Monday, June 1st at 3:21PM EST (link)Ford is turning itself around.
As far as the unions go, there’s a better way. Simply move the company to a right-to-work state in the South or Southwest.
Then Ford would be on a level playing field with its competition.
- JP
“An armed society is a polite society” – Robert A. Heinlein, “Beyond This Horizon” (1942)
obama got Unions paid off now GM files bankruptkcy
bobojake (Diary) Monday, June 1st at 1:31PM EST (link)obama we ain’t no dummys GM should of filed bankruptkcy 90 days ago. obama isn’t their a taking issue obama you are violating in our CONSTITUTION???????????
obama you, reid, peloski and the democrats energy bill 3 years ago and the Unions throat hold on the Auto Industry broke the auto industry.
obama no more lies take responsibility for what you, obama and the democrats mismanagement by the Senators and Congressman have done in destroying the United States of America.
Any Senator or Congressman who has been in office 20 years or more should resign in SHAME along with obama and all his thugs.
God Bless America not the one obama is trying to create.
To see the future, look at the past...
ether1 Tuesday, June 2nd at 4:28AM EST (link)To know where the auto companies are headed, look at what happened to all of the private fixed-route bus companies that formerly existed.
Back in the early 1970′s the government effectively nationalized local privately owned bus companies when they created regional transit authorities (rta) to take them over. It was done in a way to make it appear that local government had local control, but that was and is a facade.
Truth is, the union was given control under a provision referred to as 13-C which gave the unions tacit veto power over federal funds.
Further, labor contracts were written so that any attempt at layoff or reduction in force of union members required that they continued to be paid by the rta whether they worked or not. (think auto company Job Bank?)
This gave the unions control over whether or not work could be subcontracted out to private companies. In other words, once hired, never fired.
Ronald Reagan attempted to work around this with an executive order requiring that rta’s contract with private operaters on all new expanded business.
In the 1980′s this caused many rta’s to contract with private taxicab companies when ADA requirements began to cause the creation of comparable service (door to door) for the disabled who might otherwise have rode the aforementioned government run fixed route bus service.
Bill Clinton rescinded Ronald Reagan’s executive order when he first took office as President, giving full control back to the unions.
While the government “purchased” failing private bus companies who could not offer subsidized fares to their riders, they have lured riders away from privately owned taxicab companies without paying them a cent.
If you want to know what the future has in store for the auto companies, look no further than what happened to passenger transportation over the last 38 years.
Fact of the matter is that if the bus or subway fares were not subsizided by taxpayers who did not ride the service, fares would be much, much higher as they should be in a free market economy.
I feel sorry for Ford as they try to remain independent. However, Henry survived interference from the government before and we hope current management can remain just as tough as him.
somehow brings the chaos of the movie: Gung Ho to mind
JLenardDetroit (Diary) Monday, June 1st at 4:59PM EST (link)Remember that one: Gung Ho (1986) Michael Keaton….
From IMDB: (with a few changes by me)
Regards from NoMoTown (the MOTORlessCITY)
“Liberals, looking to do for? America what they’ve done for? Detroit! which is DESTROY IT!”
“I think, therefore I am Conservative”
“Conservative by choice, Republican by necessity”
“You can lead a Liberal to the Truth/Facts, but you cannot make them THINK!”
“Romney [No, not my first choice] does NOT have a MORMON problem. He has a, far too many Americans; these days; are MORONS problem!”
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I want “O” to FAIL (here, here, & whole Diary (Ofail) here, is why)
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2010 Chevy Acorn
Republicanuck (Diary) Monday, June 1st at 8:16PM EST (link)Coming Soon to a showroom that may or may not be near you – the all-new 2010 Chevy Acorn. The first new offering from the new GM – looks like a Lada, can only turn left, and only comes in two colours – Red or Pink.