There are things behind the "closed" curtain of deception in the refusal of President Obama denying to lend more billions to GM. I do not disagree that it is correct to not throw good taxpayers money after bad, because the structure of the Union contracts is such that no matter how much money they get they will eventually be in receivership!
The problem I have is the devious way Obama and his "mob" are going about the forced bankruptcy. They will use the Bankruptcy code to break up the company.
It would be split into "good" parts and "bad" parts,(govt. language) with the stronger brands – such as Cadillac, Chevrolet, Buick and GMC – sold to a new GM, financed by the government. This could potentially be completed under section 363 of the US bankruptcy code – which allows a judge to approve the sale of assets over creditor objections in an emergency. The emergncy that Obama and his Cabinet with the aid of an bias press has been calling the 2nd "great depression".
Rather than let the company just go bankrupt the Obama plan will set up a "puppet" executive board and management staff that will be marionette's for Obama, and the bond holders and stock holders will be left out in th cold.
This is the beginning of the seizing of private assets held by the taxpaying public and will not stop here I am afraid. Total government control of our main industries including the banks is in the future, I am a sure.
GM faces a challenge which proved tortuously difficult for Mr Wagoner – agreeing concessions from unions and bondholders.
The company has liabilities of $27.5bn in debt held by bondholders, and $20.4bn in obligations to a union-run health care fund. Bondholders have so far resisted GM proposals to write off two-thirds of their debt in exchange for equity, while the United Auto Workers (UAW) rejected plans for health care contributions to be paid in the company's stock, which has tanked over fears for GM's survival.
The UAW and bondholders have entered talks with the belief that GM was too big to be allowed to fail and that restructuring via Chapter 11 was not an option.
However, President Obama's comments appear to have changed that.
By confirming that the government will guarantee customer warranties, the major concern GM had about bankruptcy has been removed.
For creditors, bankruptcy raises the risk of serious losses in court. Despite the involvement of the president also meaning the complete collapse of GM is highly unlikely, some bonds in the company fell to record lows on Wednesday amid the heightened threat of bankruptcy.
The head of the UAW is the Ron Gettelfinger, who has won significant benefits for workers in the industry including generous wages, pensions, holidays and cost-of-living allowances.
However, Mr Gettelfinger, a notoriously rough negotiator, would have to agree to
far greater concessions at GM than those he struck at Ford – which included annual savings of $500m from cuts in bonuses, overtime pay and financial support for children's education – even before the health care fund for retires and workers is addressed.
In the bankruptcy court, the new GM could potentially end its present benefit schemes – leaving staff with smaller, leaner plans – if it can prove their expense impedes the company's future survival. It will not be hard as the facts already support that charge.
However, despite the potential benefits for GM of bankruptcy, it would likely be a messy process for President Obama and the company. The backing of some creditors would be needed, while any losses endured by the unions risks upsetting a key supporter base of the Democrat administration. My hope is that Bond and stock holders will raise loud objections to this devious government take over. They are being treated as chaff!
Industry experts in the US are questioning whether the threat of bankruptcy is realistic or simply a method designed to increase the urgency of negotiations,
Senator Carl Levin, a Michigan Democrat, said: "What they're trying to do is signal to the bondholders that 'Folks, you've got to come to the table'." He is the Senator who represents the Michigan voters!
Whatever the outcome for GM's restructuring – and Chrysler's alliance – the increased government involvement in the companies threatens long-term problems.
President Obama wants the car makers to pursue more environmentally friendly vehicles and return to profitability as quickly as possible. But these issues could prove contradictory. Sports utility vehicles (SUVs) and trucks dominate GM's best-sellers list, while the company's electric car, the Volt, was deemed "too expensive" by the US Treasury's own report.And from my point of view are dangerous to drive on the highways as semi-trucks get larger and larger!
The future of the US industry faces serious questions, but we won't have to wait long for many of the answers. And the end result is the Obama Administration is involved in a serious abuse of power with the obsequious Congress and a fawning Press aiding and abetting it!
THE FOLLOWING ARE CAR FACTS Source:Graham Ruddick
$14.4bn: The capital injection GM and Chrysler received from the US taxpayer.
-41%: The fall in US auto sales in February from a year earlier to the lowest monthly level since December 1981.
50,000: The number of Americans out of work as a result of the closure of 1,000 dealerships over the past year.
$5,566: Chrysler's average incentives per vehicle, up from $3,520 a year earlier. GM's averaged $3,584, up 8%.
-51%: Fall in GM sales in the year to date, Chrysler's are down 49% and Ford Motor (excluding Volvo) and fallen 48%.
30: The number of days of working capital Chrysler has been given by the US auto task force to complete a definitive agreement with Fiat.
1,200: How many dealers are expected to go out of business in 2009.
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