Shock and Awe. NYT: Chrysler’s Fall May Help Administration Reshape GM: “Fresh from pushing Chrysler into bankruptcy, President Obama and his economic team are hoping that the hard line they took last week gives them leverage to force huge changes in General Motors, a far larger and more complex company.”
So now the administration pushed Chrysler into bankruptcy? I thought it was those evil hedge funds who were at fault. At any rate, demonizing creditors in GM’s case will not be as simple as it was in Chrysler’s:
In Chrysler’s case, a handful of the company’s 46 lenders presented the biggest roadblock. Mr. Obama could portray them as obstructionists who put their demands for repayment ahead of preserving the company.
But General Motors’ creditors number in the tens of thousands and include pension funds that bought the company’s unsecured bonds. G.M. bondholders have no claim on its plants or inventory, but they will probably attract more sympathy than Chrysler’s Wall Street lenders did.
Is it just me or does it seem like the Times gets off on the White House’s strong arm tactics?
The government is only trying to help, you say? Well, hopefully they’ll do a better job of helping GM than pairing it with mediocre FIAT. Is the plan to “revive” domestic auto manufacturers or to have them die a long, undignified death?
Not to worry. GM will be spared such an unseemly demise:
G.M.’s case…differs from Chrysler’s in [a] crucial sense: there is no Fiat in the wings, no big private investor ready to bring new money and new technology. Instead, Mr. Obama will effectively use taxpayers as that investor, with the federal government getting slightly more than a 55 percent stake in the company in exchange for forgiving $10 billion in the automaker’s outstanding federal loans. The United Automobile Workers’ retiree trust would have just under 40 percent of the stock, under the G.M. plan.
Yeah, nothing to worry about. Same old GM, but controled by retired auto workers and Uncle Sam…with the added bonus that now the American taxpayers get to see their money sucked into its vortex.
UPDATE: Insta-lanche! Thanks for the link, Professor Reynolds!