Forget the UAW, the average American should be on strike
Today's Financial News - Posted March 17, 2009
They act like they are fighting for our best interest. But when it comes to Washington politics, facts are an obstacle to re-election. Do not expect the truth to get in the way of General Motors getting its cash.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): There are just two weeks left until Detroit’s next crucial deadline. General Motors (NYSE:GM) knows it is under the gun, so it is turning up the heat on its campaign to pull more money from Uncle Sam’s pockets.
The news today comes from the investors unlucky enough to be holding the company’s debt. GM bondholders are sitting on investments that are worth a fraction of their par value. They are being asked by executives to exchange the debt for equity at prices that represent pennies on the dollar.
But the conversion rate, from debt to equity, is not equal for all debt holders. The average investor will get one rate while the all-powerful UAW will get another.
Come on, did you expect anything else?
I should not have to tell you most bondholders are outraged at the offer. The labor organization whose greedy hand helped get GM into this deadly position remains a damaging figure even as the company is desperate for survival.
But of course, the UAW loves the fact GM is offering it a premium conversion rate. If I were getting something I was not owed, I would be happy too. And just to prove that the UAW and Obama’s Detroit task force are walking hand-in-hand, one of the group’s members recently said the UAW had been “very constructive,” while the group representing bondholders have been “quite difficult.”
Give me a break. If that is not a pre-conceived message aimed straight for American emotions, Obama missed a pretty darn good chance.
The real deal is GM is in serious trouble. In order to please the UAW, it has to rip off its “lower-level” bondholders. In a politically free world, it would never happen. But since the UAW helped get the Dems in charge, the P.R. machine will be working overtime to spread a positive message.
Pull up your boots
We have just 14 days until Washington has to make an official decision. But we all know the decision is already made. In a nation where politics rule, GM will never go bankrupt, at least not until the federal government goes broke.
Over the next two weeks, we are going to hear all sorts of junk from Detroit and our elected officials. They are going to discuss the so-called progress. They will tell us they fully considered a bankruptcy option and the unforeseen changes in the global economy.
They will blame the downturn on the unwillingness of the consumer to spend. And most importantly, they will do their best to show us GM and the UAW have really tried their hardest.
It is all an attempt to veil the fact that GM has not been able to produce a product that consumers want.
In the end, GM will go through a Chapter 11 filing. But it won’t happen in a Detroit courtroom. It will happen in Washington, in the Oval Office. Shareholders will get wiped out. Contracts will be re-written and the taxpayers will guarantee the company’s debt.
It will look like bankruptcy. It will have the fiscal impact of bankruptcy. But you can be sure Obama will never call it a bankruptcy. Big government at its finest.
Next Article: Sun sets on solar? SPWRA, FSLR, DSTI, ENER in double-digit tailspin
One Response to “Forget the UAW, the average American should be on strike”
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down
March 28th, 2009 at 5:31 pm
Another typical right wing media reporter too in love with the GOP. GM/Ford/Chrysler BARGAINED for the contract with the UAW and they agreed that the contract was acceptable or they never would have signed it. It takes 2 to negotiate and yet this “neutral” reporter is going to put all the blame for the demise of GM on the worker/Union? Oh please, give me a break.