Union wins, investors lose in bailouts

One of the problems with the on-going negotiations involving the automobile companies, government and the union that helped destroy General Motors and Chrysler is that, when it’s all over, the union ends up in the driver’s seat.

The United Auto Workers, an extension of the Democratic Party, will wind up with a controlling stake in Chrysler.  General Motors bankruptcy filing is imminent and expectations are that the UAW will wind up with as much as 20 percent of the surviving company in exchange for wiping out $10 billion of the $20 billion that GM owes the union’s health care trust.  Bond-holders, meanwhile, are being asked to swap the $27 billion they’re owed for 10 percent of the company.  The government would get 50 percent for wiping out half of the $19.4 billion GM has gotten in bail-out money.  Shareholders would be left with 1 percent.

Bond-holders understandably balk, pushing GM to bankruptcy.  In the future, investors should and will be extraordinarily leery of investing in struggling businesses in competitive industries.  Government is, in effect, confiscating investors’ money and transferring it to the union and to government.   In the case of Chrysler, it confiscated money from teachers and policemen in Indiana and transferred it to the UAW.

Lawyers for the Indiana pension funds argued in court Tuesday that their rights were being trampled by the federal government in the Chrysler bankruptcy. The pension funds paid about 43 cents on the dollar when they bought Chrysler’s senior secured debt last August.  The government offered holders of $6.9 billion in senior secured debt 29 cents on the dollar, while giving creditors with a lesser claim — the UAW — bigger payouts.  The UAW, which is at least equally responsible for the auto industry’s plight, will end up with a 55 percent ownership stake.

The federal judge in Manhattan on Tuesday rejected the pension funds’ effort to delay today’s bankruptcy court hearing on Chrysler’s proposed sale.  Pension fund lawyers had argued that the federal government doesn’t have authority to provide Chrysler money for a sale, a point that the judge said could be argued after the bankruptcy court acts. Chrysler filed for bankruptcy on April 30 and a sale is expected to close by June 15.

120 comments Add your comment

Dusty

May 27th, 2009
12:46 pm

Road Scholar..not a scholar..ignorant about the South.

Southerners work for a livng and reject handouts. At one time, it was a disgrace to be on “relief”, a sign of “neer-do-wells”. But many came here from other parts of the country because it was so much better in the South. They started the “handout” business. Soon they demanded “handouts” as a right.

That was never a Southern trait. Southerners have long know the meaning of independence. They welcome the independent ones but will not claim the handout crowd of losers no matter how long they stay.

Be gone, Off the Road “Scholar”

Peter

May 27th, 2009
12:51 pm

Hey Dusty…our current Governor I guess is NOT a Southerner in your estimation ?

Heck he changed the law to save himself personally thousands of dollars alone in Taxes…..

He created his own Personal Hand out !

Glenn

May 27th, 2009
12:53 pm

Lordy, Dusty, is that really you? I’ve never associated you with vicious sectionalism.

RetLTC

May 27th, 2009
12:55 pm

Very very good JLK.

Dusty

May 27th, 2009
12:56 pm

Koz @12:25

Don’t pay any attention to Algonquin J. Calhoun calling foreign car owners “traitors”. He was calling American troops “murderers and rapists” just before Memorial Day. You might say his “judgement” is somewhat impaired.

Cmesmile

May 27th, 2009
1:02 pm

The Obama administration gives control of Chrysler to the unions. The Obama administration cherry picks closing dealerships with a hidden agenda. The Obama administration will tell Chrysler what to build (and *then* the people will come, we have to guess). GM will be next. Better sell your investments in GM now because you as a secured debtor will take an unlawful back seat to the UAW. Ford on the other hand has taken no money and are continuing to do their own thing well. Wait a year or two and I’ll bet those brilliant UAW members at Chrysler and GM will be begging for a job at Ford.

Now, let’s get this Sotomayer issue laid to rest once and for all. Republicans can’t filibuster because they’ll be called sexist AND racist. It was, of course, okay for the liberal/Dems to vote against or even hint at a filibuster for the two below Bush appointments who were of minority status (and later sworn in):

Clarence Thomas – Black

Samuel Alito – Asian

Grill Sotomayer just like the Democrats did to the above two men. Don’t forget to bring up her laughing comment about legislating from the bench (something the liberals were afraid of with the above two). We especially can’t forget her rule in favor of throwing out promotion tests for firefighters (ruling against the white firefighters who claimed discrimination) because minorities didn’t score high enough (and thus wouldn’t get promoted over whites). <== That’s a real keeper there!

Dusty

May 27th, 2009
1:02 pm

Yes, Glenn, honey chile, I get very vicious when bloggers disparage the South. Are you RedNeck Convert?

Glenn

May 27th, 2009
1:07 pm

Why, Heavens and sassafras, Dorlin’! Seems like I ain’t seen you since the Age of Fleas. Where you been, storing up all this hurt?

Jackie

May 27th, 2009
1:13 pm

@Road Scholar

Those jobs that moved South were because state laws are such they are what is known as right-to-work states. This simply means that if a company in that state chooses to fire an employee, for any reason, they can. As for the unions, if they go on strike because of labor issues, the company can replace the workers and violate the contracts signed with that union. The company does not have to negotiate in good faith, all they have to do is send a representative while the union negotiates with itself.

The average wage of most jobs at southern automobile manufacturers is $15 with no benefits or retirement.

Jackie

May 27th, 2009
1:16 pm

@Dusty

You continue to lie about the discussion relative to American troops in combat. If you would take 10 minutes to read and comprehend news reports concerning actions by troops in war, you would see that many of those things happen.

And, as far as I am concerned, you will be challenged by me anytime you speak those LIES!!!!!

Jackie

May 27th, 2009
1:20 pm

@Dusty

Still not telling the truth about what was said relative to acts some troops commit during war. Why do you think they have Leavenworth?

clyde

May 27th, 2009
1:22 pm

Dusty,In the beginning the South had slaves and they’ve just never come to terms about actually paying wages.

Chadworth

May 27th, 2009
1:23 pm

Jackie is not one to listen too around here. She effectively said the other day that we shouldn’t take the North Koreans seriously in their nuclear tests. The Russians are a helluvalot closer to N. Korea, and they damn sure are. You can also bet the Russians have intel on N. Korea that we don’t have as well.

http://in.reuters.com/article/worldNews/idINIndia-39913120090527

You emotion-driven libs need to leave the critical thinking to the adults living in reality..

DB, Gwinnettian

May 27th, 2009
1:24 pm

Leave it to Jim and the Incredible Shrinking Republican Minority to look at working class pensioners on one hand, and well heeled investment speculators on the other, and say “let’s make sure their losses are treated exactly the same! Else it’s just not fair!”

DB, Gwinnettian

May 27th, 2009
1:25 pm

You emotion-driven libs

Gun Control. Death Penalty. Abortion.

Yep, good thing conservatives don’t go injecting that silly emotion-thingie into political debates, huh?

Redneck Convert

May 27th, 2009
1:25 pm

Well, I’m awful glad they let Sister Dusty loose in that lab to say something. Just because you’re a moran don’t mean you ain’t got a right to put in your two cents worth. Even if some things are overpriced.

ncgreybr

May 27th, 2009
1:27 pm

Fred (speaking of pathetic POS’S)…since you don’t know me from Adam…

Yes, I’m one of those economically ignorant people who DO know that “publicly held” companies are companies that are owned by investors and are on the NYSE.

But you are showing everyone what a pathetic POS YOU are when you try slights like “gay” beard. Yes, as a matter of fact, GM IS in my 401K portfolio and I look forward to the day when it is a viable company again.

clyde

May 27th, 2009
1:30 pm

Redneck,
A genteel Southern Redneck would imitate Daffy Duck and say ,Maroon.

DB, Gwinnettian

May 27th, 2009
1:33 pm

A genteel Southern Redneck would imitate Daffy Duck and say ,Maroon.

Yebbut I’m sure RC was thinking of this famous Moran.

Jackie

May 27th, 2009
1:33 pm

@Chadworth

You are not one to listen to around here as the depth of your conversation is without merit.

The North Koreans are posturing, hoping that their bluster will get someone to help them out of their dilemma. Now genius, tell us what they are going to do after they have expended all their missiles and exploded all their nuclear weapons, unleash their million-man Army across the DMZ?

If North Korea is such a threat to the USA, why has it not attacked? Secondly, how would you solve the problem SLOW MOTION?

PeachState.com

May 27th, 2009
1:33 pm

I’m glad to see some of the socialist pretenders on this site have FINALLY come out of the closet. Fortunately, these ignorant Demtards will only be in power long enough for Obama to eff-up the economy. But it’s still informative to watch how they talk like little Castros. At heart, they’re just incompetent communists who want to enslave the productive classes.

Let the battle begin.

Peter

May 27th, 2009
1:36 pm

WOW….look at the REPUBLICAN’S……for generations they have discriminated against everyone….now everyone is a reverse RACIST………

Rush……Gingrich…….. Fat old white guys with BIG Mouths !

HA HA HA……… talk about watching a party come unglued……. makes you wonder if they all now have Alzheimer’s, or forgotten about US History !

The Republican’s have spent years making White folks RICH ! “Cost Plus Contracts”…….now that is some current History !

clyde

May 27th, 2009
1:38 pm

D.B.,
Good one.

Mort Merkel

May 27th, 2009
1:48 pm

The Steam and Pipefitters Union created jobs with their Konocti Vista Resort in NoCal. Lots of folks work there, including fading rock and country stars.

Atlanta Native

May 27th, 2009
1:48 pm

DB Gwinnettian

The rule of law says secured creditors come first. It has nothing to do with “well heeled investors”. You are buying the rhetoric, hook line and sinker.

It reminds me of Congress and the President complaining about the AIG bonuses that they required by law in the rushed through “stimulus package”. Everyone blamed AIG for doing what Congress and the President ordered them to do.

As for Mr. Wooten’s column, he too has bought into the rhetoric. Management designed, marketed and promoted crappy cars and the UAW demanded way too much money to build the pieces of $&*$. Both are at fault. The investors, however, are not at fault. Don’t listen to the left or the right, use your brains.

Mort Merkel

May 27th, 2009
1:49 pm

Sorry, Konocti Harbor. Konocti Vista is a Pomo casino.

Jackie

May 27th, 2009
1:50 pm

@Chadworth,

North Korea THREATENED to attack U.S. and South Korean warships if their ships are stopped and searched for weapons smuggling. Do you think they are going to carry out that threat against our Navy?

Care to respond with astute analysis?

Mort Merkel

May 27th, 2009
1:57 pm

In 1968, the North Koreans captured the USS Pueblo and held its crew, hanging them outside windows in the cold in their underwear and feeding them kim chee as every meal. Yuck.

Mac

May 27th, 2009
1:59 pm

Whaddya expect from a Cardinals fan?

DB, Gwinnettian

May 27th, 2009
2:01 pm

ATL Native wrote of the UAW and their employers: Both are at fault.

To be sure, but not for the reasons you gave, nor for what you usually hear about in the media.

I think it was mostly their unholy alliance that continued to legislate artificial props for vehicles that could be profitable only here in the US–monstrous “light trucks” that enjoyed CAFE breaks and (for the over-6000 pound class) huge tax breaks for businesses. Both parties lobbied for this nonsense for years, and we were left with an industry building stuff that we didn’t need.

And now you have a whole generation, practically, of American drivers who think they “need” to have three tons on four wheels to be safe on the road. It will take years to purge this toxicity out of the system.

Wow

May 27th, 2009
2:07 pm

Wow.. all republicans have, for generations, discriminated against everyone! Hyperbole really doesn’t stamp a statement with credibility, now does it? And, if this statement were true, how does that make discrimination from Democrats alright? And that’s the only logical conclusion one can make with this argument.

This is born from that age old argument used in fourth grade – “Nu-uh. You, too.” Shouldn’t people on this blog be at, at least, a high school level of debate?

ncgreybr

May 27th, 2009
2:16 pm

DB…I agree with you completely.”…monstrous “light trucks” that enjoyed CAFE breaks and (for the over-6000 pound class) huge tax breaks for businesses. Both parties lobbied for this nonsense for years, and we were left with an industry building stuff that we didn’t need.

And now you have a whole generation, practically, of American drivers who think they “need” to have three tons on four wheels to be safe on the road. It will take years to purge this toxicity out of the system.”

My accountant tried to get me to buy an Ford Excursion for the “business” because I could get a tax write-off for it. The origonal intent of the law was for farmers who use large trucks on their farms but that was hijacked by everyone with an inferiority complex that needed to keep up with the Joneses and get something bigger than their neighbor.

God only knows how many times my “little” nimble car has kept me out of accidents with those tanks driving down the road oblivious to everyone else.

ncgreybr

May 27th, 2009
2:19 pm

Sure wish this blog had spell-checccccck!

Munch

May 27th, 2009
2:24 pm

Cmesmile: Alito is of Italian descent, not Asian. I know you wingnuts live in a fact-free zone, but at least pretend to care.

Atlanta Native

May 27th, 2009
2:25 pm

DB,

I agree, though I think we are saying the same thing. However, the old adage “No one ever lost money underestimating the intelligence of the American people” doesn’t really ring true with the automakers anymore does it?

Wow

You just sent those who know how scrambling to find out what this “hyperbole” thing is and whether it as a Democratic handout program or a Republican gift to the rich. How disappointed they will be to find what it means. Fourth grade education level = high school graduate in reading these days.

To the rest

Think when it comes election time in 1 1/2 years – the Executive branch (president) and legislative branch (Congress) need to be from different parties. For 6 years Bush had a Republican Congress and stunk things up. Now Obama has a Democratic Congress and is stinking things up just as bad, if not worse. Clinton (Dem) had a Republican Congress and things went quite well – because they had to compromise and work things out. (And distract the country with fellatio stories, but I digress).

SO if you want the American People to win, not your “side”, make sure we get a Republican Congress for two years in at least one house. Next presidential election cycle, it’ll be up for grabs again.

Peter

May 27th, 2009
2:26 pm

WOW..Jim’s is a stock broker……. amazing comment !

“In the future, investors should and will be extraordinarily leery of investing in struggling businesses in competitive industries.”

Great call Jim……… Duhhhhhhhhhhhhh !

DB, Gwinnettian

May 27th, 2009
2:26 pm

The origonal intent of the law was for farmers who use large trucks on their farms

Well, and tradesmen, but the stupidity behind having a separate light-truck category actually goes back way farther than that, to some ill considered protectionist regs going back to the 60s, to protect Detroit from the scary, can’t-possibly-compete-with-it…

wait for it…

VW pickup truck. Ooh, save us Washington, from the evil German menace!

It really dates back to that, and didn’t get any more rational thereafter.

blondval

May 27th, 2009
2:29 pm

ncgreybr: Don’t you mean “spill chick”?

get out much?

May 27th, 2009
2:33 pm

Funny, I seem to recall a few months back that Mr. Wooten was all for bankruptcy for GM and Chrysler. At that time all he was concerned with was sticking it to the unions. Now, when it looks like he might get his wish, he suddenly realizes that there are other parties involved.

Dusty

May 27th, 2009
2:41 pm

Jackie@1:16

You can take up for your liberal buddy A. J. Calhoun but I wiil not agree with his indictment of American troops in general as “murderers amd rapists”. You are a veteran so what does that make you? Is that what you did in the army?

There are 2,475,967 Americans in our military forces fighting and protecting us. And you think it is OK to brand our troops as “murderers and rapists” because a few misfits out of millions did something wrong?

I have veterans in my family and I think such remarks are disgusting. You can sit around and approve of offensive remarks against the American Military but I won’t. And I don’t lie and neither do the archives of these blogs. Those rotten accusations are right there.

DB, Gwinnettian

May 27th, 2009
2:49 pm

ATL Native, yeah, I didn’t think we were that far apart. As to the investors’ rights, obviously they matter, but Jim is overstating things when he would have us believe that a bunch of schoolteachers banded together to purchase Chrysler stock in august 2008.

And I don’t think the automakers were helped by mass consumer stupidity (maybe that’s not what you meant but that’s kinda how I read it); I think consumers were directed into “light trucks” for a lot of reasons, not all of them irrational. Fact is though, if you’re going to have CAFE standards for passenger vehicles, have them–don’t exempt minivans, don’t call a a P/T Cruiser convertible a light truck, etc.

Actually, it seems painfully clear by now that we all would’ve been better off had we slowly increased gasoline taxes to pay for improved road infrastructure AND mass transit AND encouraged fuel economy, the way most of our competitors already did (Japan levied taxes on large-displacement engines, at least for awhile,w hich encouraged small-engine efficiency… hey, whatever works.)

But instead we went for cheap and easy. Chickens, meet roost.

TW

May 27th, 2009
2:53 pm

Mr. Wooten – while I disagree with much of what you say, I nonetheless have a high respect for your intellect. Yesterday’s pre-emptive strike in the form of leaving the SC appointment alone was the best move for the right. Unfortunately, the blowhards haven’t listened. Rush and Newt will drive the party even deeper into the septic tank with their recent antics. Stupid, stupid move on the part of Newt today.

I guess lay down with dogs, wake with fleas is for real.

Jackie

May 27th, 2009
2:58 pm

@ Dusty

No one said ANYTHING about rapists and murders in general during that conversation.
You are trying to do what you usually do, conflate, obfuscate and extrapolate.

Even some of the so-called conservatives on the blog during that conversation said to you directly, they would not participate in the conversation with you as you tried to disparage veterans. REMEMBER??????

Jackie

May 27th, 2009
2:59 pm

@ Dusty,

Apparently you have a problem recalling your statements or you have lost the ability to comprehend WHAT YOU SAID? Do your own research!!!

Jackie

May 27th, 2009
3:01 pm

@Dusty,

Amazing how my 3 replies to your scurrilous comments have disappeared!

Munch

May 27th, 2009
3:14 pm

Dusty plays the last refuge of the scoundrel card again, drumming up fake outrage over imaginary slights. It’s the Way of the Wingnut. It’s what they do when they have nothing of substance to contribute.

Now, turning again to the problem of allowing “empathetic” judges to impose their sorry personal history on the Sacrosanct Law of the Land, what can one say about an SC nominee as blatantly “empathetic” as this one? Surely this “activist” “empathizer” should be voted down for the good of the Nation!

“Because when a case comes before me involving, let’s say, someone who is an immigrant — and we get an awful lot of immigration cases and naturalization cases — I can’t help but think of my own ancestors, because it wasn’t that long ago when they were in that position.

[...]

When I get a case about discrimination, I have to think about people in my own family who suffered discrimination because of their ethnic background or because of religion or because of gender. And I do take that into account.”

That’s Sam Alito from his own confirmation hearings. What a Dirty Fu(|6ing Hippie.

Peter

May 27th, 2009
3:18 pm

Yes this is a silly statement……………..

“If you aren’t driving an American made automobile you are a traitor to the nation!”.

HA HA HA……….Our trade deficit is huge……..why ?

Because we don’t produce much…….most of the manufacturing jobs went away as Corporate America makes it money from cheap Foreign labor.

It is Corporate America who is the Great American Traitor !

Dusty

May 27th, 2009
3:26 pm

Jackie,

What’s YOUR problem? I know exactly what I said. I also know what A.J. posted.

Do you think I run this blog? Some of my posts have also disappeared. Soooo what? A vast conspiracy of some kind? More like a technical problem.

I hope you can get your mind unraveled soon. In the meantime, I have to leave for the day. Have fun!

Jackie

May 27th, 2009
3:39 pm

@Dusty,

I have told you many times, you are entitled to your opinion, you are not entitled to your own set of facts.

Having a comprehensive debate about anything does not present me with a problem, as I feel that I can hold my own with you and others. However, when you try to disparage veterans to bolster to argument(s), the line is drawn for me.

AJ Calhoun and others were in a combat zone and they saw and heard events that you may not believe. You, being a keyboard warrior, have not idea as to what you are talking about!

Again, my defense of any vet will be just that, as I know what each of us had to endure to come back to “the world.”

Peter

May 27th, 2009
3:52 pm

Jim is really Funny today……….. when did a investor ever WIN, as a company went Bankrupt ?