Monday, June 1, 2009

Government Motors

It finally happened GM, the old reliable American monolith, is filing for bankruptcy.
President Obama will push General Motors into bankruptcy protection on Monday, making a risky bet that by temporarily nationalizing the onetime icon of American capitalism, he can save at least a diminished automaker that is competitive.

The bankruptcy is a moment of reckoning for an industry that was once at the heart of the American economy. The process began early Monday with a bankruptcy filing by a G.M. affiliate, a dealership in New York City, which described the automaker as “a debtor in possession under Chapter 11.”

The move by a New York affiliate will enable G.M. itself to file its own bankruptcy petition in New York. It was expected to do so shortly, along with dozens of related companies.
But that's only the beginning, what's next? Well first the government is going to buy 60% of GM, then they're going to engage in the complex procedure of moving the company five miles down the road to hide from the creditors. No, seriously. They're going to create a new GM which will buy all the assets it needs to run from the old GM. As for the assets they don't need, those will be taken out to sea on a barge and sunk. Old GM is so poorly structured that they aren't even going to bother trying to change things, they have to invent a new company.

For workers GM will be starting a independent trust to cover the costs of retirees and the UAW has agreed to make a bunch of concessions on worker pay and benefits. So for those of you keeping score at home, throughout this entire financial crisis/bailouts/stimulus money hole it was only the working class who didn't have contracts that should be respected. Sounds about par for the course. All in all things will stay the same. Management gets to keep on managin', workers keep getting paid, and GM theoretically makes progress towards making itself leaner, meaner, and smaller. Which is apparently extraordinarily expensive. Get excited America, not only do we own a bunch of shitty banks and investment companies, we now own a shitty car company.

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