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Freedom's Phoenix

GM Shows America that Bankruptcy is a New Beginning to the End

July 9, 2009 - 6:58pm
Jim Iannuzo by Jim Iannuzo


General Motors established record time in reorganizing their company. The Obama administration is taking credit for streamlining the process, leading GM to a new life under government ownership. I can't help but ask, didn't someone get screwed?

U.S. Bankruptcy Court Judge Robert Gerber allowed only four days for creditors to file appeals objecting to the automakers restructuring agreement. Gerber wrote in his decision that the failure of GM would have been disastrous for employees, suppliers and communities that rely on the automaker. This ridiculous statement shows a lack of economic completeness and moral consistency. First rewarding failure generally results in more of the same. Second, taking from one group of people to give to another group is morally wrong. Bailing out an auto company in Detroit by increasing taxes on a fisherman in Maine is truly bankrupt. Forced charity is theft.

Creditors upset with the short time period appealed to U.S. District Judge Lewis Kaplan without success. Has the American legal system stopped working? Anyone who has ever been a creditor on a simple bankruptcy knows how long the process takes. It could easily last one to two years. A company as complex and segmented as General Motors can't possibly sail through this quickly, unless the new major shareholder happens to be the government. Notice I didn't say citizen, just try to go down to your local federal courthouse and get your share certificate. Good Luck!

The "New GM" is substantially like the "Old GM". Sure there are less workers (mostly non union) but at least management retained their positions. GM's CEO Fritz Henderson has already scheduled a press conference for Friday to celebrate the swift reorganization plan. The "New GM" will include only the best dealerships, money making brands that include Chevrolet, Cadillac, Buick and GMC. Gone are the 50 billion in debt and many liabilities that will now be held by the &quor;Old GM&quor;. The truth is, the company can't cover these liabilities with many individual people getting stiffed.

There are many reasons why the "New GM" won't make it. Ignoring government ownership for the moment, just look at all that annoying junk mail GM is sending out like the extended service contracts. I thought the "New GM" is environmentally friendly aka "New Green GM". Maybe printing trees does not count.

Consider the fact that it requires a union worker to move a piece of equipment from one room to the next. With the increased union ownership this won't be eliminated. Watch when the "New GM" pushes for a single payer government run health care system.

Don't get me wrong, I am a GM owner through and through but facts are facts.

Breakdown in “New GM” ownership:

U.S. Government: 60.8%
Canadian Government: 12%
Unions: 17.5%
Old Bondholders: 10% - Screwed
Socialism is defined as an economic system in which the basic means of production are primarily owned and controlled collectively, usually by government under some system of central planning.


Related Content:

Shame on you America, Freedom Comes With a Cost! - Jim Iannuzo
Government Doesn't Invest, They Waste - Nick Coons
President Obama's Bailout Plan Results in Job Losses at General Motors - Jim Iannuzo

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