Posted on 04/30/2009 8:47:17 PM PDT by Eric Blair 2084
President Obama insisted at his press conference last night that he doesn't want to nationalize the auto industry (or the banks, or the mortgage market, or . . .). But if that's true, why has he proposed a restructuring plan for General Motors that leaves the government with a majority stake in the car maker?
The feds have decided they should own a neat 50% of GM, yet that is not the natural outcome of the $16.2 billion that the Treasury has so far lent to the company. Nor is the 40% ownership of GM that the plan awards to the United Auto Workers a natural result of the company's obligations to the union.
Yet Secretary Timothy Geithner and his auto task force, led by Steven Rattner, have somehow decided that Treasury and UAW chief Ron Gettelfinger will get to own a combined 90% of GM. If there's a reason other than the political symbiosis among the Obama Administration, Michigan Democrats and the auto union, it's hard to discern. From now on let's call it Gettelfinger Motors, or perhaps simply the Obama Motor Company, though in the latter they'd have to change the nameplates.
The biggest losers here are GM's bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. These are owned by mutual funds, pension funds, hedge funds and retail investors who bought them directly through their brokers. Under Monday's offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.
(Excerpt) Read more at online.wsj.com ...
Gettelfinger Motors (the union disaster in Detroit)
The Wall Street Journal | April 30, 2009 | Editorial
Posted on 04/29/2009 9:06:28 PM PDT by St. Louis Conservative
http://www.freerepublic.com/focus/f-news/2241012/posts
Wait til the UAW starts selling their shares willy nilly as they need cash...I wouldn’t own the new stock if it were given to me.
... The mauling of GM creditors tells investors not to invest in TARP banks because everything this Treasury touches turns to politics.
This is a really good article. It should be read by all.
Unfortunately, it will be read by relatively few, and most of them will not be Obamorons - not that such dead-on logic would change their shallow hero worhip a whit!
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