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"Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others."

Ayn Rand

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BANKRUPTCY INEVITABLE FOR GM

By
Neal Boortz
@ May 11, 2009 8:32 AM Permalink | Comments (7) | TrackBacks (0)

Experts say that Chapter 11 bankruptcy filing is all but inevitable for General Motors. If it wanted to avoid bankruptcy, GM would have to persuade bondholders to swap $27 billion in debt for 10% of its risky stock. That's not all .. you also have the UAW to deal with, and you have to close factories and dealerships. Oh and all of this has to be done by a June 1 deadline.

Bottom line is that it doesn't seem like it is going to happen.

Experts say that GM is currently lining up majority stakeholders to make a court-supervised reorganization go more quickly. But some say that the threat of bankruptcy is just a ploy to con any reluctant bondholders into the equity swap deal. The government requires that 90% of the thousands of bondholders agree to this stock swap. Why would they, considering that the government and the UAW would get far more stock in exchange for debts owed by GM? Consider what the White House tried to pull last week with Chrysler .........

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What others are saying

  • To Ivan
    American cars cost what they do largely because we pay union workers outrageously high wages for totally unskilled jobs. I know this first-hand.

    Not only do they make an excessive hourly wage, they also do everything they can to work as slowly as possible. This accomplishes two things. First, it guarantees them a larger paycheck through overtime. Second, it helps the union bosses to pressure the company to add even MORE workers.

    Where I work, the union workforce takes 10 hours to do 6 hours worth of work. And they get paid 4 times what non-union workers doing the exact same job at another company just a few blocks away are making.

    Car prices will never come down significantly as long as the automakers are forced to pay union wages and employ worthless people.
    By Reason @ 05/12/09 01:27:50 AMreport abuse
  • Buss
    Sure we'll give them more, we're giving Chrysler more. Oh wait that's the UAW. Oh and future payments at 9% interest.

    So I'm quite sure GM (UAW) will get a sweet deal and we'll see NONE of that $13.4 billion ever again.
    By Joyce M/Blythe @ 05/11/09 12:53:31 PMreport abuse
  • And how many
    of us said the bailouts wouldn't work at the onset? They didn't work in the past so what makes government think it'd work this time? They are truly insane.
    By JoeShmoe @ 05/11/09 12:45:44 PMreport abuse
  • GM Bankruptcy
    GM has gotta file bankruptcy. Otherwise, the debt discharge/forgivness/compromise is TAXABLE INCOME to GM. No taxable income occurs from Discharge of Indebtedness in a formal bankruptcy.
    By CPA @ 05/11/09 11:30:16 AMreport abuse
  • Bailout
    Is anyone suprised that the bailout last year didn't work? We gave General Motors and Chrysler $13.4 billion and they both are pretty much done.

    Who think's that Congress is goign to try and approve of giving them more of our money?
    By Buss @ 05/11/09 10:49:17 AMreport abuse
  • I am neutral on this one...
    On one side I am upset about how the Fed is handling this and on the other hand I am happy to see such an inefficient horribly mismanaged company go away. Horribly overpriced for what you get. I mean who decided that a muscle car with a V8 in it should cost more than $40k? That is hilarious. A muscle car should be ALOT cheaper. I mean why would I want to pay $40k or more on a car that has a VERY good chance of having massive problems that will keep me in and out of the service department constantly? How about you reduce the prices of your vehicles to a price people can ACTUALLY afford in this economy.
    By Ivan @ 05/11/09 10:30:05 AMreport abuse
  • what will future historians think
    Many years from now(if mankind still exists) historians will look at these times and events.They will carefully examine records,issues,speechs,elections,laws made and laws broken.They will carefully piece together the "cause and effect puzzles" that created this mess that we are in with the perfect 20/20 hindsight that always comes with passage of time.Distinguished scholars will sit down to write long essays on this era just to answer this question..."WHAT THE F*#K WERE THESE IDIOTS THINKING??!!"...as they write out their checks to pay their share of the inherited debt,drawn on their gov.owned bank account,with funds from working their gov. provided job,from the comfort of their gov. owned housing project.Of course this check, the government and everything else will be Chinese by then.
    By damifino @ 05/11/09 10:22:40 AMreport abuse
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