Probably too late to reach the skulls full of mush that need this the worst, but I'm tired of hearing this whole "GM is alive" bunk. I call it bunk, because GM would have weathered a restructuring with or without Obama's meddling.
You ever eat a Twinkie®? Hostess Twinkies®...yellow cake outside, creamy filling in the middle. When was the last time you ate one? I saw some last time I was in the grocery store. Did you know that Hostess had declared bankruptcy? At least once, maybe twice? And yet, they are still on the shelves...how can this be?
Well, for starters, there's more than one kind of bankruptcy. Chapter eleven gives a company a chance to restructure and reorganize and ideally, come out whole on the other side. Many people are seemingly only familiar with a chapter thirteen bankruptcy, where the door are shuttered, the remaining assets divided up among their creditors.
And every time Democrat, lying through their teeth, politicians (but I repeat myself), spoke of what Romney wanted to do to (or for) the auto industry, they spoke of bankruptcy in terms of chapter thirteen, as if unemployed auto workers were at the top of Romney's wish list.
Enter Obama. Instead of allowing GM and Chrysler to go through a legal restructuring, he imposed a political restructuring. Only, unlike the bankruptcy at Hostess which allowed them to renegotiate unreasonable or overly expensive union contracts, the political deal locked in lavish union salaries and benefits, at the expense of bond holders and the American taxpayer.
Yes, GM is "alive". But, so is Hostess! Obama didn't save jobs at GM so much as he saved overly generous union benefits. And then, he gave a large controlling interest in GM to the unions. This will make it easier for GM to negotiate reasonable contracts with the unions in the future /sarc.
(BRB - all this talk of Twinkies® is making me hungry!)
Much better! Now, where were we? Ah, yes, political restructuring. Businesses need money to run on, to meet payroll, make expansions, buy new raw materials, etc. People who bought GM bonds, did so at a slightly reduced rate or return (how much money they got paid for their investment, like interest on a savings account), for a guarantee of lesser risk. Risky investments pay higher rates of return, because there's less guarantee you'll even get your money back. As such, GM bondholders were supposed to get "first dibs" in any restructuring process. But since Obama's restructuring was political, he could make up the rules as he went along. (Maybe this is what he meant about "not everyone playing by the same rules"?)
GM bondholders got the shaft, in favor of the unions. Non union subsidiaries of GM, like Delphi, had their pensions decimated to cover the union pensions. Welcome to the crazy world of "fairness" under Barack Obama! I cannot tell you the extent, but if I were an investor in bonds, I would keep my money in a mattress before putting it at risk in any company the president might want to restructure for the purpose of his friends!
And even though "GM is alive and bin Laden is dead" makes a lovely bumper sticker, it is based on two lies. One, is that GM would have collapsed without Obama's political restructuring. That is false. Many companies have gone in and out of chapter eleven bankruptcy and are thriving today. The main difference is, that there are very specific rules and laws governing legal bankruptcy. Obama's was more reminiscent of a banana republic.
Second, for all the chest thumping at the Charlotte convention, and Democrats continually "spiking the ball" about the death of bin Laden, al Qaeda did not curl up and die when bin Laden was shot. For the Obama administration to equate the death of one man to the death of a movement is foolishly naive. When Lincoln or JFK was assassinated, did the country cease to exist because we were momentarily leaderless? Or did we pick up right where we left off, only under different leadership?
Instead of "GM is alive and bin Laden is dead", substitute "Al Qaeda is alive and the economy is dead" and you'll be better at summing up the last four years of this administration. Or you could personalize it: "Al Qaeda is alive and Chris Stevens is dead".
America: we can do better! Tomorrow's the day to find out!
Cross posted at LCR, Say Anything.
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This blog post is long on ideology and insult and short on facts.
ReplyDeleteCompanies that file for Chapter 11 do so with the aid of what's called debtor-in-possession financing. That's a technical way of saying that an investor or investors provide funding while the company completes its reorganization. Without such financing, most companies would simply liquidate through a Chapter 7. (Not Chapter 13)
As has been well chronicled, no one in the private sector was willing to provide GM with debtor-in-possession financing. And it's not as if the company didn't look for it. The economy was in free-fall and private financiers weren't willing to take the risk on what looked like a doomed company. Without financing, GM was indeed headed toward liquidation.
So the company turned to the financier of last resport, the U.S. government, and a political decision was made to provide GM with Chapter 11 financing. You may not agree with that decision, but you should have some basic knowledge about the US Bankruptcy Code and the details of GM's Chapter 11 before you opine.
Anonymous: First let me compliment you on your bravery in posting under your real name. Most of the anonymous comments I get here are spam.
DeleteI have often said that liberals are irony impaired. You are no exception. Particularly the "short on facts" allegation. This was not designed to be a treatise on economics or bankruptcy specifically, but a response to the simple minded, knee jerk statement that "GM is alive" and therefore "Barack saved them".
I pointed out another prominent company that survived bankruptcy and is "alive" without some petty, tinpot dictator coming in and superseding long established bankruptcy law, or any laws at all.
Please, Mr. "Short on Facts", tell us the Constitutional authority with which the President of the United States, hereafter referred to as Generalissimo Barack 'Banana Republic' Obama, overrides existing law to restructure failing companies and not just become a simple "financier of last resort"?
The government bailed out Chrysler under Lee Iaccoca, in the form of guaranteed loans. They did not dictate the restructuring of the company. That, my fatuous friend, would be the government as "financier of last resort". Rewriting the bankruptcy code to reward one's friends and screw one's enemies goes far beyond acting as "financier".
According to your standards, perhaps you should at least read the Constitution before you opine? Get back to us on that Constitutional authority for El Presidente to rewrite US bankruptcy law.
And, perhaps the even greater irony, is that since El Jefe bypassed legal reorganization in favor of political reorganization, the systemic problems of GM and their overly generous labor contracts were never resolved. Add to the this idiotic, top down, Green Weenie dictate to push Chevy Volt production, which could scarcely be sold with both government subsidy and tax rebates, over cars and trucks that GM might actually sell, and GM is very likely still on a course for bankruptcy.
Perhaps, if a President who had never run so much as a lemonade stand, had allowed the legal system to run its course, GM would have already been on its way to a genuine, lasting recovery?