GM Declares Bankruptcy

Good morning comrades fellow shareholders!

Under the proposed restructuring, about 60 percent of the new GM would be owned by the United States, about 12 percent by the governments of Canada and Ontario, a union health trust would own 17.5 percent, and the company's current bondholders would get 10 percent.

The United States will invest another $30 billion during and after the GM bankruptcy process, officials said last night, bringing the U.S. commitment to $50 billion.

Following that infusion, "the U.S. Treasury does not believe or anticipate that any additional assistance to GM will be required," a senior administration official said last night, calling the restructuring a "permanent" solution.

Once again, union trust funds received a greater percentage of the new company than bondholders even though the bondholders held a greater amount of debt in GM.

Remember the old campaign urging people to "Look for the Union Label"? Well, if you find it don't invest in that industry, you'll go to the back of the line.

Aside from the specter of government run automakers, if you are of a certain age the idea that GM would be bankrupt and de-listed from the Dow Jones Industrial Average is pretty shocking.

I wanted to make a joke about Obama's plan for GM...

Step 1: Dump a ton of cash into failed company

Step 2: ?

Step 3: Profit!

Unfortunately, the government does have a Step 2 in mind. Force US car buyers into smaller cars through a combination of business decisions and regulations. Alas, that's unlike to lead to Step 3 but some people see continued government ownership of a large industrial corporation as a feature not a bug.

Meanwhile, Ford hasn't taken any bailout money. Just saying.

posted by DrewM. at 09:45 AM

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