U.S Treasury to Nationalize GM: American Leyland Is Born!
The New York Times reports (and GM CEO Fritz Henderson’s comments at this morning’s press conference confirm) that the US treasury has plans to “own” GM. If the current bondholder offer goes through, “the Treasury and the UAW would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent. The Treasury would hold more than half of G.M. on its own and therefore have control over the election of its board of directors and other matters requiring the approval of shareholders.” A reporter brought up the fact that bondholders’ $10 billion debt swap would buy them 10 percent of the new GM, while the unions would get 39 percent for their $10 billion haircut. Fritz declined to address this issue—probably because there’s not a damn thing he can do about it. Of course, the offer won’t go through. But the principle will be established. And then, according to The Wall Street Journal, consummated in federal bankruptcy court.
That’s when some $21 billion worth of unpaid US loans to the old, broken ass GM for a majority stake in the new, clean and tidy post-bankruptcy GM. The plan would also translate a large chunk of the automaker’s health care obligations to the United Auto Workers (UAW) into a UAW share in the new “good” GM. When asked by the FInancial Times (shame on the US press contingent) how he feels about a nationalized GM, Henderson deployed the distinction without a difference defense. “The US Treasury doesn’t want to run the company,” Fritz soothed, “they just want to make sure it’s well run.” And girls just wanna have fun. No babies, no lifetime dependents, right?
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As I read through these posts the majority seem to think the end of GM is a good thing? Wow! It is true that the UAW stretched the benefits and salaries up but they also did what unions do. protect the little guy. There is definitely wrong done but there are multiple reasons and most of it has little to do with the blue collar workers. Our government is irresponsible with money. Stories of that have been shared for years. Just recently Air Force One flew into New York city in a 3.5 hour or so trip that cost us about $200,000 or so just for a photo shoot all while scaring people to death. No one knew anything about it including the mayor. Why? How can they manage GM better? What happened to GM, the strongest one will probably happen to all US car companies. What is so interesting is that Japan announced today that they are moving in the opposite direction of our country by cutting taxes in corporations, etc. Sounds VERY U.S. Republican in strategy. We will see.
@ PeteMoran: Although the press likes to hammer on, well, $500 hammers [and although military procurement has definitely performed a lot worse in the past decade] it is hardly true that *every* military project has been over-budget. The classic example of this is the "Polaris" missile and its associated submarine, which worked extremely well, and was on time and within budget. This is not the only example -- though again, over-runs [not necessarily poorly performing products, but that too, sometimes] have become a lot more prominent in the last decade or so. This is a result of deep structural problems in the Pentagon which probably cannot be cured.