Posted on 04/27/2009 2:37:46 PM PDT by Michael Eden
Game, set, and match to the Statists and the big labor agenda. From this point forward, the government will be deciding what cars are made, and the unions will literally be negotiating with themselves to determine how much theyll earn making them.
The government was able to buy it's way into total control of the auto industry for only a few billion dollars. A tremendous day for Statism, a dark day indeed for the free market and for individual liberty.
From the Associated Press:
DETROIT General Motors Corp. could be majority owned by the federal government under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.This is about as blatant of a case of simultaneously talking out of both sides of one's mouth as there is. The government has no interest in running GM; they just want to be able to fire the company's GM and have the power to decide who is on the board of directors. You've got to give the Obama administration points for sheer chutzpah. And millions of political cuckolds are literally choosing to believe him rather than trusting their own lying eyes.The plan, which includes an offer to swap roughly $27 billion in bond debt for GM stock, would leave current shareholders holding just 1 percent of the century-old company, which is fighting for its life in the worst auto sales climate in 27 years.
GM is living on $15.4 billion in government loans and said Monday in a filing with the U.S. Securities and Exchange Commission that it envisions receiving an additional $11.6 billion....
GM said that it will ask the government to take more than 50 percent of its common stock in exchange for canceling half the government loans to the company as of June 1. The swap would cancel about $10 billion in government debt.
In addition, GM is offering stock to the United Auto Workers for at least 50 percent of the $20 billion the company must pay into a union run trust that will take over retiree health care expenses starting next year.
If both are successful, the government and UAW health care trust would own 89 percent of GM stock, with the government holding more than a 50 percent stake, CEO Fritz Henderson said in a news conference at GMs Detroit headquarters.
Henderson said that although the government would own a majority of GMs outstanding common shares, the Treasury hasnt demonstrated interest in running the company, but would have someone on the board looking out for the taxpayers interest. The task force has directed current board chairman Kent Kresa to replace several board members.
There's a story entitled, "The Devil and Daniel Webster" that describes what can happen when one foolishly makes a deal with the devil. Unfortunately, the Jabez Stone stand-in (GM) won't have any Daniel Websters to confound Mr Scratch (brilliantly depicted by Barrack Hussein). The lesson of this story is that it's bad enough to do a deal with the devil; but never, NEVER, NEVER do a deal with the government. You can't win, and you won't even be able to lose with dignity.
The shareholders, the VEBA (health care trust) and the government would want to have a someone on the board of directors, he said.The dealer closings are not included in the job loss numbers sited at the beginning of this article, which will easily add well over one hundred thousand more jobs to the low-ball total cited at the beginning of the article.Deals with the UAW and the Treasury have yet to be finalized, he said.
The struggling automaker said it will offer 225 shares of common stock for every $1,000 in notes held by bondholders as part of a debt-for-equity swap. Henderson said the objective is to reduce GMs $27 billion of outstanding public debt by about $24 billion. The company estimates that after the exchange, bondholders would own 10 percent of the company.
That would leave current common stockholders with only 1 percent, GM said. Still, GM shares rose 34 cents, or 21 percent, to $2.03 in midday trading.
The plans, if successful, would reduce GMs debt by $44 billion from the present figure of about $62.4 billion.
We would be substantially less-leveraged as a company, Henderson said.
Kip Penniman Jr., an analyst with KDP Investment Advisors Inc., predicted the exchange offer would fail and GM will file for bankruptcy....
The company also said it plans to reduce its dealership ranks by 42 percent from 2008 to 2010, cutting them from 6,246 to 3,605. When asked how GM would accomplish that, Henderson would say only that the company would be making offers to the dealers in the coming weeks.
Mark LaNeve, vice president of North American sales and marketing, said a big chunk of the dealership reduction about 450 would come with the elimination or sale of Saturn, Hummer and Saab. GM would then look to end relationships with dealers that do only a small volume of business with GM, and then move on to other dealers, he said....
The same government that couldn't run a cafeteria without going millions of dollars into the red; the same government that still can't run a successful post office in spite of the numerous successful businesses that have sprung up all around it; the same government whose model for successful customer service is the Department of Motor Vehicles, is going to be teaming up with the very unions who ran the auto manufacturing industry out of business in the first place to build cars.
The auto industry today; the oil industry tomorrow. We don't need oil anyway. Just ask Senate Majority Leader Harry Reid: It's devil-juice, for sure.
I wrote an article around a youtube video entitled, "The Car That Will Save The Auto Industry (And The Planet!)." It's not a joke any more, given that we elected a bunch of totalitarian Statists to run our country.
Ever heard of the Soviet government-produced Lada? You haven't? Don't worry; you'll be getting a chance to own its American equivalent in just a few years.
Nobody but government will be buying.
.
How can Ford deal with the UAW now? Historically the UAW rotates which car company gets threatened with a strike to negotiate a new contract. Since it won’t be GM and probably won’t be Chrysler (depending on the choice of bankruptcy or Fiat takeover), Ford will be the one punked by the UAW every time.
The UAW and Obama get 89% of GM? Making cars will be secondary to fleecing the taxpayer.
The Soviets had their little car company, too.
It’s time for a new non-union automaker to compete with Government Motors.
Oh yeah, this will end well...
I own 3 GM cars and they will be the last GM cars I ever buy.
They won’t be selling one to me.
The people that currently own 100%, the current stock-holders,
will now get 11 cents on the dollar?
Sounds like a great deal to me. /s
That’s the deal. This is the union’s wet dream (at least until the whole thing implodes).
I think their view is that the government will keep pumping money in to pay for their baby’s incessant needs.
We can go back to the fascists of Germany. As corporations faced increasingly difficult times, many of them traded their freedom for security. And they never got their freedom back.
Why won’t Obama let the banks repay loans? CONTROL.
I bought about $400 in stock when it was trading low. But as I saw what Obama was doing, I sold it (made about a quarter per share for about a $30 total profit).
No way I’d buy stock in Obama Motors.
Btw, do you notice that saying, “OM” is a form of worshipping our messiah?
http://hinduism.about.com/od/omaum/a/meaningofom.htm
“The people that currently own 100%, the current stock-holders, will now get 11 cents on the dollar?”
No they are slated to get 1%, and the bondholders 10%.
In bankruptcy court the common stock holders rate to get 0%, and the bondholders almost everything.
Why should the bondholders agree to take less? Are they going to be sent to GITMO if they say no?
Only two things left to do:
1. Build a wall to keep taxpayers from fleeing the country
2. Invade France.
- - - - - - -
Obama doesn’t want to INVADE France; he wants to BECOME France.
Obama is like a Fuhrer who wholeheartedly believes in the circular firing squad.
BOYCOTT!
Im sorry - what did you say? Ive been too busy worrying about the Swine Flu and that Air Force One flyover in NYC.....
- - - - - - -
No apology necessary. Given who is aboard Air Force One, I’d be worried of it being used for terrorism too.
I will not buy another GM product again if this is the case
Now the other automakers are faced with having to pay taxes to fund their competition.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.