May 22, 200917 yr I just read in the Washington Post that, under the proposed GM Chapter 11 Plan that the UAW will receive a 39% ownership share of GM in return for the $10B owed it. On the other hand, bondholders, who are owed $29B, will receive a 10% ownership share. This is similar to the deal forced on Chrysler bondholders. Does anyone besides me see something shocking, dangerous, and unfair about all this?
May 22, 200917 yr I just read in the Washington Post that, under the proposed GM Chapter 11 Plan that the UAW will receive a 39% ownership share of GM in return for the $10B owed it. On the other hand, bondholders, who are owed $29B, will receive a 10% ownership share. This is similar to the deal forced on Chrysler bondholders. Does anyone besides me see something shocking, dangerous, and unfair about all this? Yes in short, but the reasons are too numerous to list. Under the "proposed plan", The government will own 50%, bondholders 10%, shareholders 1%, and the vile UAW will own 39%. So, the moral of the story is: Cripple a company with ridiculous demands of inflated wages, benefits, and retirement pay, line the Dems pockets with $, and you, yes you can be a 39% owner of a large auto manufacturer. This is the new America.
May 22, 200917 yr Cripple a company with ridiculous demands of inflated wages, benefits, and retirement pay ...Didn't the company agree to those "ridiculous" demands?
May 22, 200917 yr Yes in short, but the reasons are too numerous to list. Under the "proposed plan", The government will own 50%, bondholders 10%, shareholders 1%, and the vile UAW will own 39%. So, the moral of the story is: Cripple a company with ridiculous demands of inflated wages, benefits, and retirement pay, line the Dems pockets with $, and you, yes you can be a 39% owner of a large auto manufacturer. This is the new America. A typical corporation: Owned by stockholders, labor supplied by workers (union/non-union), operating capital borrowed from bondholders, pay taxes to the government. The new Obama corporation: Owned by the government and the union, erase the debt owed the bondholders and the shareholders get little to nothing Makes perfect sense to me. Those who the company paid the most too, the unions and the government, now own the company, while those who had a financially stake in the company get little to nothing. :idunno:
May 22, 200917 yr A typical corporation: Owned by stockholders, labor supplied by workers (union/non-union), operating capital borrowed from bondholders, pay taxes to the government. The new Obama corporation: Owned by the government and the union, erase the debt owed the bondholders and the shareholders get little to nothing Makes perfect sense to me. Those who the company paid the most too, the unions and the government, now own the company, while those who had a financially stake in the company get little to nothing. :idunno: Summarized perfectly my man!:thumb:
May 22, 200917 yr Author Didn't the company agree to those "ridiculous" demands? Of course. Just like a child kidnapped by a child molester agrees to be tortured to death. Surely, you realize that there is a bit of governmental duress involved here. Also, the company does not speak for its legitimate creditors- the screwed bondholders- who loaned money to the company and purchased those corporate bonds. Any you find no problem here? George Orwell may well have been a prophet who merely used the wrong year for the title of his book. Edited May 22, 200917 yr by Wyrostek
May 22, 200917 yr The UAW is just as much at fault as GM for the situation they are in yet the UAW gets rewarded. If I were Ford I would do everything I could to remove the union from my factories. If that meant moving every single one of them to Mexico so be it.
May 22, 200917 yr Wouldn't the bondholders have a case here? They did with Chysler as well but Obama waved his sceptre and gave the company to the Union.
May 22, 200917 yr Author Wouldn't the bondholders have a case here? Good question. Do they sue GM or the government? It would be an impossibility to hold the government liable. If they win a judgment against GM, is it worthless since GM would be in bankruptcy and the claim is probably unsecured (which in bankruptcy nearly always means "worthless")?
May 22, 200917 yr Good question. Do they sue GM or the government? It would be an impossibility to hold the government liable. If they win a judgment against GM, is it worthless since GM would be in bankruptcy and the claim is probably unsecured (which in bankruptcy nearly always means "worthless")? It is secured as far as I know. I found this in regard to secured debt: When a company goes under and seeks to reorganize or liquidate under our bankruptcy laws, secured creditors may lose some or even most of their money, but they have an expectation that their secured debt will be paid before funds go to others.
May 22, 200917 yr Author It is secured as far as I know. I found this in regard to secured debt: When a company goes under and seeks to reorganize or liquidate under our bankruptcy laws, secured creditors may lose some or even most of their money, but they have an expectation that their secured debt will be paid before funds go to others. Depending on the terms of the issue, the bonds could be secured or unsecured. However, reality would probably result in, even if they are technically secured, no actual collateral being available to pay anything. So, in the end, the claims will be worthless. Secured creditors do not have a superior claim over unsecured creditors in regard to general assets of the debtor. Secured creditors depend on the collateral securing their claim for payment (ie: properly perfected mortgages and liens). In this case, most likely nothing of material value will be available for this group of "secured" creditors.
May 22, 200917 yr Thug politicians and thug unions have run and ruled Chicago with an iron fist for entire 20th century up till now. They are now in the White House. If you want to see what is happening looking into the history of Chicago politics. http://blogs.telegraph.co.uk/stephanie_gutmann/blog/2009/05/07/obamas_bailouts_are_rewards_for_his_trade_union_allies Obama is in hock to the huge trade unions because they sent their armies of ant-like workers into the streets to get out the vote for him. The paybacks have just begun... ...it's "just economics by mob rule. The side that can assemble the most votes and the most muscle wins. The unions provide the votes, the government provides the muscle. It works in the short run but now of course nobody will lend to other unionized companies that are in trouble. It's really the Marxist ideal of the working class overrunning businesses by sheer numbers. http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051303014.html The administration proposes that Chrysler's secured creditors get 28 cents per dollar on the $7 billion owed to them but that the United Auto Workers union get 43 cents per dollar on its $11 billion in claims -- and 55 percent of the company. This, even though the secured creditors' contracts supposedly guaranteed them better standing than the union. Legal contracts....so what......we are the government.... the administration has "ridden roughshod over [creditors'] legitimate claims over the [automobile companies'] assets. . . . Bankruptcies involve dividing a shrunken pie. But not all claims are equal: some lenders provide cheaper funds to firms in return for a more secure claim over the assets should things go wrong. They rank above other stakeholders, including shareholders and employees. This principle is now being trashed." Tom Lauria, a lawyer representing hedge fund people trashed by the president as the cause of Chrysler's bankruptcy, asked that his clients' names not be published for fear of violence threatened in e-mails to them. Thug politics and union leverage...common in Chicago...becoming common in the rest of the US...quickly... Disclaimer - this is not impune ALL unions. But the intertwined relationship between unions and politicians in Chicago is undeniable.
May 22, 200917 yr Of course. Just like a child kidnapped by a child molester agrees to be tortured to death. Surely, you realize that there is a bit of governmental duress involved here. Also, the company does not speak for its legitimate creditors- the screwed bondholders- who loaned money to the company and purchased those corporate bonds. Any you find no problem here? George Orwell may well have been a prophet who merely used the wrong year for the title of his book. Read a little closer ... I wasn't referring to this situation. I was referring to the labor agreement referred to by titletownclown.
May 22, 200917 yr Author Excellent post by Bluegrasscard. Regardless of the apparent popular belief, we aren't moving in a good positive direction.
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