Riddle me this Batman. If this financial crisis caused the demise of the once great GM, then how do you explain that they have not been profitable since 2004. That’s a great question Mr. Riddler. And such a simple one at that, but no one is really asking that one.
Obama’s government motors is by far the worst invasion of private industry in our country’s history and it is costing the American taxpayer a fortune. In two previous bailouts of GM, the taxpayer has given GM $20 Billion and an additional $12.5 Billion for GMAC. This bankruptcy deal will cost us another $30 Billion minimum, but more than likely upwards of $60 Billion. The Obama deal breaks up the company as follows: Government gets 60%, UAW gets about 18%, Canada gets 12%, and just like Chrysler, the bondholders get the short end of the stick with their 10%. You can forget that pesky little detail that technically the bondholders should get all of their money before anyone else gets a dime. That is in the private world, this is in the realm of government.
The real scary part of this deal is not the money itself, companies have been bailed out before. It is the amount of government involvement with decision making for GM. Obama’s administration first fired the CEO, then they hand selected someone to take his place. Then there is the UAW. Not only did Obama give the UAW 18% company ownership, he also gave them a seat on the GM board of directors. Keep in mind that the UAW is a major contributor to the carmakers demise. Obama’s administration will also select half of GM’s new board of directors and will re-negotiate the UAWs contract in 2 years. Gee, I wonder who is going to make out in that deal. Other provisions do not allow GM to import fuel efficient cars that they make in China. This means they will have to retrofit their factories in the US now, which is why I think the total bill will be much higher than estimated. They do not have the money to run the company. Where do they think they are going to get the money to retrofit? Since no prudent investor will touch them with a ten foot pole (note what happened to the current bondholders), it will be more taxpayer money. The Washington Post has also reported that the White House has violated antitrust laws by selling off part of GM to a European company under the condition that they do not do business in the US.
It is obvious that the Obama administration has a bias in this deal because of the union involvement. It can say it is saving jobs, but jobs are still going to be lost. The UAWs concessions were minimal for what they received in return. Obama did not have this kind of involvement when Circuit City went bankrupt this past year. Were they not big enough or was it something else? It is also evident by their micromanagement of the banking industry with the TARP funds that they will not simply be an onlooker in this GM saga. Every time a decision has to be made, you can bet that this administration will have a hand in it. Either directly, or by those they put on the board of directors. This decision is probably the worst Obama has made thus far and could have grave consequences for the future of our country.
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