By on May 18, 2010

Speaking at a Brookings Institution summit on cities affected by the auto downturn, National Economic Council director Larry Summers said that taxpayers will likely see “most, if not all” of its $42b outstanding “investment” in GM returned when the automaker goes public. According to the Detroit Free Press:

Summers’ comments were backed up by an analyst estimate today that suggested the new GM’s equity could be worth between $75 billion and $78.5 billion – giving the government more than $42 billion for its 60.6% stake.

Obama Administration officials had previously said that taxpayers stand to lose as much as $34b on its bailout of the auto sector, including GM, Chrysler and their finance unit formerly known as GMAC (now called Ally Financial).

With all three firms seeing improvements in their first-quarter financial performances, Summers is certainly correct in saying that

The prospects of repayment are brighter than they were a year ago

However, the three firms do appear to be on a collision course over the issue of captive and subprime financing. This emerging conflict has all the looks of a zero-sum game in the making, meaning it’s unlikely that all three will be able to reach their optimal performance level without harming one another. Moreover, Treasury has already written off $1.6b in loans to Chrysler. Still, if the line can be drawn there, and taxpayers can be protected from further losses, we should all be grateful. Reasonable minds can agree or disagree with Summers’ optimism, but every US taxpayer should hope he’s right.

Seperately, the Freep reports that the cast-off remnants of GM known as Motor Liquidation will set up an $800m trust fund to clean up polluted former GM sites. No new government money was allocated to the fund, which will be created from $1.2b given to Motors Liquidation by the US Treasury to wind down GM’s old business. Concerns have been voiced recently that Motors Liquidation might not have enough money to clean up all these sites, but according to Rep John Dingell (D-MI) those fears are unwarranted.

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43 Comments on “Obama Advisor: Taxpayers Can Expect “Most, If Not All” Of GM’s Bailout Back...”


  • avatar

    and we were told Napolean lost the battle…oops!

    http://www.youtube.com/watch?v=dJ6yzIUfhBQ&feature=related

    how many trillion do we owe?

  • avatar
    segfault

    “This emerging conflict has all the looks of a zero-sum game in the making…”

    They’ll lose a little on each one, but they’ll make it up with the increased volume.

  • avatar
    Tommy Boy

    To repeat what I posted on a different thread earlier today (for my comment is even more relevant re: this thread):

    Given how the Obama administration stuck it to the bondholders, what professional investor with a fiduciary responsibility to its clients is going to invest in the “new” GM while the UAW is still on the premises, and particularly while Comrade Obama is still in the White House?

    http://www.investors.com/NewsAndAnalysis/Article.aspx?id=534273

    http://www.washingtonexaminer.com/politics/White-House-puts-UAW-ahead-of-property-rights-44415057.html

  • avatar
    mythicalprogrammer

    “This emerging conflict has all the looks of a zero-sum game in the making, meaning it’s unlikely that all three will be able to reach their optimal performance level without harming one another.”

    Whoa.. game theory. Heh, zero-sum game means that everything will equal out to zero. If all three aren’t going to hit this mythical unachievable in real life optimal performance level then it’s not really a zero sum game. I really doubt if you add all their performance level together it’ll come out to zero.

    While the news is good, I’m still caution because they can still F it up. They should go back into lending auto loans and ONLY auto loans. Greedy bastards tried sub-prime markets -_-.

  • avatar
    bwell

    The investment will be worth $75 billion. But this will occur 20 years from now, and said $75 billion will be about enough to pay for dinner and a movie.

  • avatar
    tparkit

    Be warned – if the IPO is successful (meaning, it brings in +- $75 billion) it will be as fake as GM’s recent “repayment” of its loan.

    • 0 avatar
      KixStart

      Why would it be “fake?” If the IPO raises $75B, what’s “fake” about that?

    • 0 avatar
      tparkit

      To KixStart:

      It will be fake, because the money will be coming from (a) sources that are guaranteed by the federal government, or (b) sources that will receive a return guaranteed by the federal government, so that their “investment” is riskless. The sources will advance any sum because the taxpayers are taking all the risk. In return, they will reap the rewards that flow to those who enable Washington. Just ask the UAW.

      This will substitute one wad of taxpayer cash with another. That makes it exactly like GM’s loan “repayment”.

      Be aware that not all aspects of the transaction will be visible, any more than using AIG as a conduit to give your money to Wall Street was. For instance, GM might be the beneficiary of a bevy of “loans” that need never in practice be paid back. The IPO buyers reap the benefits, and they’ll pay extra for that.

      Here’s a close parallel: Before the Canadian federal government privatized the state-owned Canadian National Railway (CN), it plowed a huge sum of taxpayer cash into renovating the locomotive stock and into other parts of the company. Then the Liberal Party, which was in power at the time, sold the IPO shares to its friends at favorable prices. In effect, it was a huge transfer of public wealth into private hands, with the Liberals reaping the political benefits of appearing to have acted conservatively and responsibly by disposing of a crown corporation by means of what appeared to be an open-market transaction.

    • 0 avatar
      Phil Ressler

      IPOs always benefit friendlies, insiders and others close to bankers’ hearts. But after the IPO, the broader market drives trading and share value. The government isn’t guaranteeing anything with respect to GM’s post-IPO operating performance, notwithstanding everything it (we) did to help it get to the public offering. If the IPO raises $75B, it will be as fair and square as any other IPO, and thereafter we’ll have a market-based measure of company’s worth, or more accurately a market view of the perceived future value of its business.

      Phil

    • 0 avatar
      tparkit

      Phil, the game is being played by Team Inside, and the taxpayers will continue to pick up the tab — before, during, and after the IPO. The fact that GM’s shares will sink to market value after the IPO means nothing. First, it puts no money back in the citizen’s pocket. Second, this market value will not be a true value, because – like Fannie and Freddie instruments – the value has always been predicated on the certainty of federal support and intervention through a variety of vehicles.

      Said another way, the IPO will be political theatre. Pure boob bait for bubba. Besides the Fed/Treasury’s captive banks, I expect GE to show up as a buyer, as they just did for Obama’s pet piggybank.

      http://www.foxbusiness.com/story/markets/industries/finance/lenders-agree-prop-ailing-shorebank/

      For adding credibility, and for helping out the team, GE will be rewarded nicely, via contracts funded by the taxpayer. As we have seen, there are lots and lots of ways for the feds to steer money to GM and its supporters.

      https://www.thetruthaboutcars.com/doe-loans-in-the-works-for-gm-chrysler/

    • 0 avatar
      Phil Ressler

      >>Phil, the game is being played by Team Inside< >and the taxpayers will continue to pick up the tab — before, during, and after the IPO. The fact that GM’s shares will sink to market value after the IPO means nothing.< >First, it puts no money back in the citizen’s pocket.< >Second, this market value will not be a true value, because – like Fannie and Freddie instruments – the value has always been predicated on the certainty of federal support and intervention through a variety of vehicles< >Said another way, the IPO will be political theatre.< >Pure boob bait for bubba. Besides the Fed/Treasury’s captive banks, I expect GE to show up as a buyer, as they just did for Obama’s pet piggybank.< >For adding credibility, and for helping out the team, GE will be rewarded nicely, via contracts funded by the taxpayer. As we have seen, there are lots and lots of ways for the feds to steer money to GM and its supporters.<<

      Sure. What's new about this? It's not like the Feds don't have plenty of things for which GE is the qualified supplier. There's a difference between steering money to GE that's going to be spent anyway, and creating spending for GE phantom undertakings not previously in the cards. Are you really going to let a little Manhattan-Beltway collusion make you cynical?

      Phil

    • 0 avatar
      tparkit

      Phil, your defense of this sham is getting thin.

      (1) Washington has pissed away tens of billions of our money to protect its friends in the UAW, and we’ll never get it back.

      (2) The IPO is a political exit strategy aimed at covering up this crime.

      (3) I expect the IPO to be a “success” — in the same sense that the AIG bailout was successful in giving Goldman Sachs 100 cents on the dollar. The IPO initial buyers will over-pay (hence the appearance that GM is worth a lot, and the goverenment won its bet), but these buyers will be made whole through the back door.

      (4) There are many, many back doors, and part of the game is keeping the payoff out of public view.

      Consider an example that clarifies Washington’s aims in this shell game of faking financial recovery of the outlays to GM. Remember when Obamacare was going to be paid for by taxing gold-plated health care plans? When the Administration discovered this would include the UAW’s plans, it decided to exempt organized labor from the tax. The rest of us, though, would have to pay.

      http://www.nationaljournal.com/congressdaily/hca_20100113_9874.php

      That’s essentially what will happen with the IPO – and for the same reasons. The same motives are still at work. The proceeds that goes into one federal pocket from the IPO will, overtly and covertly, over a period of years, be taken out of another federal pocket. Just like when GM “paid back” its loan.

      When it happens, Washington will be declaring that there’s nothing to see here, folks. Which seems close to what you’re declaring now.

    • 0 avatar
      Phil Ressler

      >>(1) Washington has pissed away tens of billions of our money to protect its friends in the UAW, and we’ll never get it back.< >(2) The IPO is a political exit strategy aimed at covering up this crime.< >(3) I expect the IPO to be a “success” — in the same sense that the AIG bailout was successful in giving Goldman Sachs 100 cents on the dollar. The IPO initial buyers will over-pay (hence the appearance that GM is worth a lot, and the goverenment won its bet), but these buyers will be made whole through the back door.< >(4) There are many, many back doors, and part of the game is keeping the payoff out of public view.< >Consider an example that clarifies Washington’s aims in this shell game of faking financial recovery of the outlays to GM. Remember when Obamacare was going to be paid for by taxing gold-plated health care plans? When the Administration discovered this would include the UAW’s plans, it decided to exempt organized labor from the tax. The rest of us, though, would have to pay.< >That’s essentially what will happen with the IPO – and for the same reasons. The same motives are still at work. The proceeds that goes into one federal pocket from the IPO will, overtly and covertly, over a period of years, be taken out of another federal pocket.< >Just like when GM “paid back” its loan.< >When it happens, Washington will be declaring that there’s nothing to see here, folks. Which seems close to what you’re declaring now.<<

      It's just a little disorienting to some folks to see public sector behavior emulating private sector shenanigans that are nevertheless within the law. This is what happens when Uncle Sam has to sleep with businesspeople for awhile. Not that politics are clean or anything, but the sordid behaviors are just somewhat different.

      Comparatively, American transparency is extreme.

      Phil

  • avatar
    Robert Schwartz

    I do believe in faeries, I do, I do I do ..

  • avatar
    Robert.Walter

    Maybe Fannie/Freddie, or one of the remaining TARP banks (or they force CreditSuisse, or UBS), will buy the stock…

  • avatar
    jacksonbart

    The model just gets worse,look at UK’s auto industry, it wont be the last loan and replayment. It will end with a larger loan and no repayment in the near (less than 10 years)future.

  • avatar
    mdwheary

    I wonder what Summers was smoking when he made this remark. Send it out to the rest of us taxpayers so we can indulge in your fantasy, too.

  • avatar
    gslippy

    The IPO will be timed with respect to the Volt’s release, depending on how well GM thinks the Volt will be received by critics and the public.

    After all, we’re told it is the car “Americans want to buy”, and it has been referred to as the future of the company’s designs. Since the Cadillac Converj/Cimarron has already been cancelled, maybe they’re losing confidence already.

    I doubt they’d risk an IPO after a poor reception of the Volt, so an IPO just prior makes more sense.

    Get ready for the hype machine to hit overdrive this fall. 230 MPG = “we paid our loan back in full”.

  • avatar
    Phil Ressler

    Understand as context that the Federal help floated to GM in 2008/9 would feel worthwhile to me for what it averted even if $42B invested had no forseeable return. As bailouts go in this century, this was but a trifle, and for a good cause. But GM has a business and will have a business and there will be an IPO. No 60% stakeholder will try to dump all of their stock at once, so the Treasury will be sensible about the pace of their sell-off. Patience on the part of taxpayers will see it work out fine. That’s the macro view. On a personal level, the returns have been excellent.

    The 2010 CTS-V made it to market, and now that magnificent car is in my garage alongside my XLR-V. A superb and nicely-sorted 2010 SRX AWD Turbo rolled onto my driveway over the weekend and the finance rate was so low it was better not to write the check I had brought along.

    We got a deal. Certainly it feels that way to me as a (heavy) taxpayer. For a tiny-in-the-2000s $42B, we got a controlled contraction of a once-fatally-wounded company, stabilization and relaunch of said company, and new product flow clearly making a better impression that what came before. It’s hard to see the downside here. We still have the lingering question of whether the UAW can learn to be a good steward of a business it has a significant stake in, but we have time to sort that out. Meanwhile, $42B turned out to be a cheap way of limiting the number of emergencies we had to manage simultaneously roughly 18 months ago. The US will prove once again to be the resilient economy growing its way out of its problems.

    Phil

    • 0 avatar
      MikeAR

      Dudw, the first lesson of trolldom is to not lay it on so thick. Although at least you didn’t use the old supermodel girlfriend line. In other words, the GM booster stuff works better when your story has a little hint of truth, you went too far. If you were telling the truth, my apologies in advance but i really don’t think so.

    • 0 avatar
      KixStart

      MikeAR,

      Before you call someone a “troll,” it would behoove you to check his history. Ressler’s been around TTAC for a long time and he’s anything but a troll.

    • 0 avatar
      shiney2

      Phil has it right.

  • avatar
    bnolt

    So the ‘taxpayers’ can expect their money back, huh? As an actual ‘taxpayer’, should I expect a check for two grand to land in my mailbox 60 days after the IPO? I guess I’m just not patient enough. The macro view is we’re broke, but captive financing for people that should be shopping for $2000 used instead of shopping at the GM ‘Excellence for Everyone’ new car emporium will make everything allright. Will the defaults come out of those foolish enough to hold on to the IPOs, or my wallet?

  • avatar
    Dick

    Obama Advisor: “Taxpayers Can Expect “Most, If Not All” Of GM’s Bailout Back”

    Yeah… And we’ll also be able to keep our health insurance plans and doctors.
    This administration is nothing but a pack of lies, on top of more lies.

    http://hotair.com/archives/2010/05/18/forget-keeping-your-doctor-and-your-plan-under-obamacare/

  • avatar
    Phil Ressler

    Yes, MikeAR, I wrote the truth. Do you need photographs? Do a search here on me and you’ll get the bigger picture.

    >> As an actual ‘taxpayer’, should I expect a check for two grand to land in my mailbox 60 days after the IPO? I guess I’m just not patient enough.< > The macro view is we’re broke, but captive financing for people that should be shopping for $2000 used instead of shopping at the GM ‘Excellence for Everyone’ new car emporium will make everything allright.< >the first lesson of trolldom is to not lay it on so thick<<

    This is a twist. Perhaps only on TTAC can an optimistic comment be suspected as trolling.

    Phil

    • 0 avatar
      mikey

      Ah! Mr Ressler, what a breath of fresh air you are. I can’t wait for one of the TTAC newbies to get into a debate with you.

      Does anyone remember “Phil Ressler” vs “pych 101” a TTAC classic showdown?

    • 0 avatar
      bunkie

      Phil,

      It’s tough being a dissenting voice here. I got lambasted for suggesting that it was in our collective best interest for wanting GM to succeed something that, to me, seems to be common sense.

      BTW, I envy you for the contents of your garage. As a fellow Cadillac owner (V8 STS, a seriously underappreciated car), I aspire to a CTS-V as it is an expression of everything that’s right about American cars.

      It’s hard arguing with people who seem to have swallowed Atlas Shrugged whole and who dismiss the contribution of collective action through the Government (as representative of the people). The irony is that I could see John Galt driving a CTS-V.

    • 0 avatar
      Monty

      It seems to me that some of the GM haters are as delusional as some of the GM fanbois were during the “death watch”.

      The TTAC meme of Ed Whitacre as the devil incarnate, and blah, blah, blah GM sucks and nothing will ever change is getting tiresome. I subscribed to that meme myself in the past, but evidence is mounting (including posts here on TTAC in the past two weeks) that there have been visible changes at GM. A quarterly profit, incentives down by nearly half, some of the new vehicles recognized as very class competitive, and far fewer sub-prime loans than a lot of competitors. It sounds like GM is making the neccessary incremental changes that their balance sheet can support.

      I’m not a fanboi, and I’m still pissed at GM (the former BoD and executive levels, that is), but is it possible that real change has occured? Maybe it’s time to admit that a culture shift may have occured at GM, and the engineers and assembly guys are back in charge.

    • 0 avatar
      Phil Ressler

      Mikey- Happy to see you’re still here. Working with start-ups to navigate the economic emergency, I’ve been scarce here for about 20 months. That I’m here a little more often lately is a sign of continuing progress by the economy.

      Bunkie- >>It’s tough being a dissenting voice here.< >I aspire to a CTS-V<<

      Everything I've seen written about this car understates how good it is. We had a 2006, which was both excellent in terms of trouble-free service and performance, but also hugely entertaining to drive. It didn't have to have all the polish of an M5. Some of its unbuffed burrs gave it a ton of personality. But when it came time to either write a check for the buyout or turn it back in at lease-end, driving the 2010 CTS-V made change-out an imperative. The generational upgrade is huge, and it permeates every single aspect of the car. Having driven all of its competition available in the US, there's nothing near it in price and size I'd rather drive and own. GM's total systems engineering and technology integration in this car are class-leading, and that comes with no apologies needed for dynamic behavior and power delivery. The CTS-V is the single most distinctive and satisfying sedan available in the US under $100,000 right now. After the Fisker arrives, perhaps it will be the second most distinctive. They sure are scarce. Sitting in a CTS-V in 2006, one could imagine the many ways the next version would be improved but could not have anticipated this big a leap in one iteration.

      Phil

    • 0 avatar

      who is John Galt?

  • avatar
    Telegraph Road

    Presidents Bush and Obama both deserve credit for the political courage and historical insight in rescuing GM and Chrysler, regardless of whether the investments are fully recouped. The economic consequences of the alternatives would have been devastating not only to those here in Detroit, but also throughout the Great Lakes region.

    These view are my own and not those of my Dearborn OEM employer.

  • avatar
    bnolt

    Tax funded ‘investments’. Political speak for wasting the taxpayers money. I’m surprised you didn’t mention ‘the children’. I am glad the taxpayers could subsidize your quality of life with the purchase of your new toys though. No wonder you’re optimistic. I’m sure our debt will be managed ever downward, once again out of (some of) our collective paychecks. Let’s all get behind that productivity surge, no doubt fueled by Cap & Tax, not to mention an efficiently managed, government run healthcare system. All the small businesses I know can’t wait. I too long for a time when we can transform America with a more forward thinking, progressive elite, a time when we can collectively ‘invest’ more money with reckless abandon. If not for that pesky political climate, who could doubt we’d all be swimming in prosperity? Then again, TNSTAAFL; it’s more about who gets to pick up the tab.

  • avatar
    Tommy Boy

    >>Presidents Bush and Obama both deserve credit for the political courage and historical insight in rescuing GM and Chrysler, regardless of whether the investments are fully recouped. The economic consequences of the alternatives would have been devastating not only to those here in Detroit, but also throughout the Great Lakes region.

    I respectfully, yet vehemently, disagree. There’s been a lot of b.s. asserting that it was an all or nothing situation — taxpayer bailout or liquidation.

    The optimal solution, which was available, was a genuine Chapter 11 restructuring in which liabilities would have been truly reduced so that both companies would come out potentially viable.

    At most the government should have guaranteed debtor in possession financing, which would have made plenty of capital available from the private markets.

    Instead what we got was extra-legal strong-arming of the bondholders and a political restructuring (under the guise of a pre-packaged Ch. 11) in order to serve and protect the UAW (from the far more severe cuts that would have been forced upon it by a non-political restructuring).

    Which means that the UAW will be emboldened to engage in “same old, same old” with GM, Ford and Chrysler and again drive them into uncompetitiveness, for the UAW will bank on (figuratively and literally) another taxpayer bailout (or subsidies along the way) when and where needed.

    So for us taxpayers, we are now facing decades of the UAW leeches sucking our blood.

    • 0 avatar
      mikey

      I disagree Tommy Boy.. Big three management,by caving to union demands,were every bit as guilty,as the union bosses were, for asking.

      At anytime during the last 30 years management,could of drawn a line in the sand. To put it into blue collar terms,they didn’t have the balls. They were too worried about market share and how would impact thier bonuses.

      Flint 1998…GM executive Don Hackworth drew such a line. Told the UAW “go on strike,stay on strke,we don’t give a f–k” With Flint operations so crucial to GM production,the entire corporation was down within a week.

      They literally moved the bargaining tables to the plant floor. Temperature in the plant was hovering around 95 degrees. Ties were off and tempers were getting short.

      GM stood firm, and union solidarity,was starting to crack. By week 5 the cracks were growing. The mighty UAW was going to blink. Ford and Chrysler were watching intently. GM dealers were running out of stock. Hackworth would not budge.

      But Mr Hackworth was not in charge of GM,he was just an employee, like I was. I think it was Rick W,but I’m not positive,saw market share drop a couple of points.

      The GM president and CEO had left his balls on the golf course that day. He called Don Hackworth, “pull the plug Don” he did.

      The union was ecstatic,they won! Lots of political hay was made. Mr Hackworth left GM shortly after. A lesson that was not lost on any other up and coming executives.

      For the next 10 years the CAW/UAW were like spoiled children. Whatever they asked for they got.

      In simple terms,the unions mandate IS to ask for more and more. Managements job,like parents is to say NO!

      If Ed Whitacre and his management team get GM to stand on thier feet,and I believe they will. They will not repeat past mistakes. Just look at what he has done to the top management at GM. Produce,and produce now,or your history.

      With GM standing on wobbly legs,does anybody believe that Mr Whitacre is going to stand still,while the CAW/UAW knocks them down to where they were?

      I spent 36 plus years on the plant floor with both the UAW and the CAW and proud of it.

      I understand union culture,and I know what sort of stuff union leaders are made of. The union might make a whole lot of noise,and yell and scream and cuss. They will exploit any weakness they find in any management,at any level. Cause that IS THIER GIG!

      But you show me a manager that got some balls,and the union boys will run back to the hall,and lick thier wounds.

      From what I’ve seen so far I believe that Mr Whitacre has brass ones.

    • 0 avatar
      jkross22

      mikey,

      One of your best posts in a long time. Thanks for sharing your insights and experiences with the union. Very interesting story.

      As for Whitacre, my main beef is that he’s simply not cutting fast enough the empty suits at RenCen. Other than a handful of high profile exits and shifts, who’s been shown the door? Seriously, I haven’t heard of any bigger numbers of corporate folks being let go.

  • avatar
    Phil Ressler

    >>Tax funded ‘investments’. Political speak for wasting the taxpayers money.< >… it’s more about who gets to pick up the tab.<<

    Or who gets to pick up the yields, the rewards, the civil/social and opportunity paybacks. Both right-leaning and left-leaning adminstrations came to the same conclusion about pulling GM and Chrysler back from the brink. As a taxpayer I was glad for it and yes, I'll pay disproportionately. But there was a massive tax investment in the country that educated me and fostered a climate of opportunity, and most tax rates are lower now than was true for for my parents' generation when they were paying for me. The bailouts were an imperfect instrument, but swift and better than the alternatives at the time.

    Phil

    • 0 avatar
      geeber

      Phil Ressler: Oh, I see. You think the private sector would have built our roads; that the railroads would have been built without land grants; that rural electrification would have suddenly been undertaken by guilt-ridden private utilities; that Blackwater should be our military and…uh…private industry would have put us in space sooner?

      Those examples are not relevant to the discussion at hand. In each case, the government stepped in to provide a necessary service that was not profitable for private industry, or helped private industry overcome road blocks. (It would have been virtually impossible for a private company to get rights-of-way from a multitude of private land owners to build a transcontinental railroad, for example.)

      If the government doesn’t build a road, it more than likely won’t get built. If GM and Chrysler go under, you can still buy a car – just not from GM or Chrysler. You can buy a Toyota, Honda, Nissan, Hyundai, Ford, BMW, etc.

  • avatar
    Tommy Boy

    >>I disagree Tommy Boy.. Big three management,by caving to union demands,were every bit as guilty,as the union bosses were, for asking. At anytime during the last 30 years management,could of drawn a line in the sand. To put it into blue collar terms,they didn’t have the balls. They were too worried about market share and how would impact thier bonuses

    Mikey,

    Legitimate points, but …

    Federal law forces that management to deal with the UAW, they can’t just tell them to go pound sand, and even if they’d stood firm they’d still be saddled with the “legacy costs” of union sabotage of vehicles and equipment as “payback,” a union determined to “get back” the “concessions.”

    The problem with the UAW (and other unions, nature of the beast) is that they never know when to stop. Partially because the union bosses are like politicians, and like the perks of their offices, so feel compelled to bring home the bacon.

    In the long run, unions kill the goose that lays the golden eggs (or force it into a Chapter 11 reorganization, so that the union bosses can blame the bankruptcy judge for the “concessions” as they live off the rank and file’s dues and restart the compensation binge-purge cycle of excessive union compensation (binge) followed by the next bankruptcy (purge).

    We’ve seen this dynamic with airlines, steel and automakers.

    And to think that Obama using our money to bailout the UAW won’t make it even more emboldened to demand more is fantasy, for it can be confident that they are now “too big to fail.”

    The patriotic (and financially responsible) course for taxpayers is to boycott any product made with UAW labor, and to drive it into extinction, for as long as it continues to exist it will continue to feed off of us taxpayers — a welfare queen masquerading as a labor organization.

    • 0 avatar
      shiney2

      When it comes to the downfall of the big 3, the UAW was entirely secondary to incredibly incompetent management practices. The union did not decide to squander valuable brand names on worthless clone products, did not demand that the big three waste their massive mid 90s profits by going on an overseas buying spree, did not decide to launch whole new brand names when they already had more dealers and brands than they could manage, did not decide financing not car manufacturing was their real core competency… etc.

      How long did it take to get rid of the boardroom blowing failure that was Rick Wagoner? What was his severance package?

  • avatar

    :: Obama Advisor: Taxpayers Can Expect “Most, If Not All” Of GM’s Bailout Back ::

    Um, how is this great news? Didn’t they promise from the beginning to pay it all back?

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