Government ownership of GM doesn’t benefit anyone
The government has a plan for General Motors. The government will continue to give GM money, which will benefit GM and its suppliers. Adding money to the economy will benefit the economy.However, as part of the plan, the government will wind up owning about 50% of the company. This ownership does not benefit GM, its suppliers, its employees, its shareholders, its creditors, taxpayers or the economy. The economic value of government ownership is not just zero. It is a strong negative. GM loses because its leaders will have to contend with business-ignorant, government bureaucrats, when making decisions. Suppliers too, will need to deal with arbitrary, politically-inspired rules, that will impact efficiency and creativity. Employees will pay for government ownership through a reduction in salaries and benefits. Shareholders will pay through a dilution of share ownership. Creditors will pay by being cheated out of the money due to them. Taxpayers will not receive any part of the stock; only the government will own it. The economy as a whole will receive no advantage from government ownership. There is, in fact, not one good reason for the federal government to own GM stock, and myriad reasons not to. The mere fact that government bureaucrats want this harmful ownership of GM stock demonstrates the government’s lack of economic and business sense. Rodger Malcolm Mitchell |
“Nobody is putting party ahead of country…”
— budb1969
12:19 pm June 2nd, 2009
“Okay, I’ll send you a response, but I don’t need 400 words, I need four: I hope he fails.”
Rush Limbaugh
Jan. 16, 2009
http://www.rushlimbaugh.com/home/daily/site_011609/content/01125113.guest.html
Aw hell let’s just sell em to the Chinese…..
http://hosted.ap.org/dynamic/stories/U/US_AUTOMAKERS?SITE=MOSTP&SECTION=HOME&TEMPLATE=DEFAULT
You make your bed, you sleep in it. If you run a business into the ground, you deserve to face the consequences. Competition will move in and pick up the slack. That’s the way things USED to work before government became everyone’s sugardaddy.
Would it suck having GM go bankrupt the ole fashion way? Yup! But you take your lumps and adapt. Unfortunately, government is now there to alleviate any short-term pain in our lives. My business was down last year, I guess I should pursue a bailout.
Ronnie, how come your folks in DC haven’t stopped the illegal war then? They had the purse strings for two years and now they have the whole shebang. They can stop it tomorrow even though a great many of them gave the ok for it in the first place.
Looney…”The Surge didn’t work”.
This comment from Secretary Gates on March 4, 2009.
We told you 7 years ago this was a corporate sponsored Cheney/Haliburton/oil war….You keep mumbling something about democracy in Iraq and said you were afraid of getting your head chopped off if you left your mom’s basemement..
You can’t just fold your tents and walk away leaving hundreds of billions in military supplies in the sand. Obama has called for a gradual withdraw to get us out of this $3 trillion dollar Bush fiasco.
Saturday, six car bombs in Bahgdad killed 48 people in 4 hours.
Where’s the famous Iraqi voter with the purple thumb you guys paraded around for 6 months while Bush stood under the “Mission Accomplished” banner?
Looney..you were questioning why lazy union workers can’t find other employment….And you’re right, we are still suffering from the Bush economy and Republican anti-worker, pro-business/corporate profit/outsourcing agenda resulting in high unemployment.
Our financial collapse didn’t just start 18 weeks ago.
You can blame Obama for this mess, but most informed people know better.
— Garrison
12:31 pm June 2nd, 2009
No stupid. I was commenting on how amazed I was at your lack of confidence in you fellow union brethren. You automatically assumed that as soon as GM let them go, they would be on welfare and food stamps. I actually thought higher of them in that the pride and work ethic of most would encourage them to seek other employment. You are the one that automatically put your brothers on welfare and food stamps. I hoped they would pursue work.
Wow you guys are all over the place on this one. This was about GM being owned by the government and now sold to the Chinese and now it’s about Iraq.
Crazy folks….
Looney..you need to read your words before posting.
Au Contraire, misguided Garrison. Like I said, I was “amazed” at how little credit you gave your union brothers. You put them on welfare and food stamps. I put them in the job hunt. I actually had more faith in them than you did.
Better say a few Hail Hoffas and wash with some Anhueser-Inbev so the union god will forgive your sins.
They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.
Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders, led by Morgan and Citibank, expect to get back 100% of their loans to GM, a stunning $6 billion. The way these banks are getting their $6 billion bonanza is stone cold illegal. I smell a rat.
Stevie the Rat, to be precise. Steven Rattner, Barack Obama’s ‘Car Czar’, the man who essentially ordered GM into bankruptcy this morning.
When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.
But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.
Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM’s stock or 25%. Whatever, 17% or 25% is worth, well just try paying for your dialysis with 50 shares of bankrupt auto stock.
Yet Citibank and Morgan, says Rattner, should get their whole enchilada: $6 billion right now and in cash, from a company that can’t pay for auto parts or worker eye exams.
So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.
In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing: workers give up wages in return for retirement benefits.
The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as “fiduciaries.” Here’s the law, Professor Obama, as described on the government’s own web site under the heading, “Health Plans and Benefits.” “The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits.”
Every business in America that runs short of cash would love to dip into retirement kitties, but it’s not their money any more than a banker can seize your account when the bank’s a little short. A plan’s assets are for the plan’s members only, not for Mr. Dimon nor Mr. Rubin.
Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker’s spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another “Guantanamo” moment for the Obama Administration, channeling Nixon to endorse the preventive detention of retiree health insurance.
Filching GM’s pension assets doesn’t become legal because the cash due the fund is replaced with GM stock. Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must “act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.” By “diversify” for safety, the law does not mean put 100% of worker funds into a single busted company’s stock.
This is dangerous business people. The Rattner plan opens the floodgate to every politically connected or down on their luck company seeking to drain health care retirement funds.
IF, tell that to the people swindled out of 27 billion that they loaned GM.