UAW Health Care Fund Would Fund UAW Health Care Fund
Unlike enlightened TTAC readers, your average Wall Street type believes that The Big 2.8's
survival recovery hinges on transferring their health care liabilities to a union-administered health care superfund (a.k.a. VEBA)– PROVIDED they pay somewhere around 60 to 70 cents per dollar of health care liability. BUT to do the deal, GM would have to find some $30b, Ford would need some $15b,and Chrysler around $7b. Guess what? They don't have that kind of money hanging around, and their current "distress" makes the cost of borrowing somewhere between "onerous" and "usurious." SO the automakers are looking at paying for the VEBA with a large percentage of their own stock– except for Chrysler who might want to pay cash on the installment plan instead. BUT the union doesn't like the idea of a health care fund paid for by stock or deferred payments all that much, because, well, what if the automaker goes belly-up? Only, again, Wall Street thinks they won't go bankrupt IF the carmakers create a health care VEBA. And THAT means if they do the deal the cost of borrowing to fund the deal would go down AND their stock would go up. And IF the union had agreed to take stock in lieu of cash money AND the stock goes up, the rise would cover the aforementioned discount on the full health care liability. That's IF the union cashes out at the top of the market and invests in something less volatile than their employers' stock. Like, I dunno, Toyota stock. Don't laugh. It could happen. Anyway, if you want to try that again, we recommend Kaisernetwork.org's summation.
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