Cultural Gadfly

The GM bankruptcy has come, as expected, and as expected, the Government is favoring UAW over the GM investors. Surprised? Ed Morrissey notes:

Creditors hold $27 billion in notes, for which they will get 10% of the company, or $2.7 billion for every percent of ownership they receive.  The government owns 60% for its investment of $50 billion, a rate of $834 million per percent of ownership.  The UAW has a $20 billion stake in the company, but the settlement would replace that with 17.5% of GM along with $9 billion in notes and preferred stock, according to the Washington Post.  That puts their investment at $11 billion (what they surrender in this process), making their cost per percent of ownership $629 million — by far the lowest of the three major stockholders.

It comes as no shock that the entire process is politicized, especially when you are dealing with the powerful, massive UAW. And it doesn’t really matter to the Obama group how mad the investors get, because the UAW will always have more voter influence. And who needs investor dollars if you can simply tap the taxpayer shoulder and throw another 30 billion after the already disappeared 20 billion of last fall? Who needs investor money? In fact, the investors probably don’t need their money, since their investment isn’t worth beans, so lets raise taxes on them…

Via Michelle Malkin, I read the White House’s fact sheet on the situation, which includes this gem:

The UAW has made important concessions on compensation and retiree health care that, while difficult, will help save jobs for active employees, pensions and health care for retirees, and make GM more competitive. In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded in its loan agreement with GM. Among other things, the UAW’s existing VEBA – to which GM has a $20bn obligation – will be replaced by a new VEBA as described below

One might go on to speculate why the Obama administration still finds it necessary to justify actions through reference to the prior administration, but of course, without Bush’s policies as a springboard, Obama would be more lost than he already is.

Keep in mind, as the news filters in throughout the day, that the reason why we bailed out GM before, was to avoid the craziness of this bankruptcy. I will add that I predict this as a minor model of what is going to happen in about a year after the whole TARP money disappears, and the economy is still in shambles. But at that point, can he still blame Bush? Probably.

As Ed Morrisey notes, and as I have written several times, the only way to fix this problem is to, in effect, strangle the UAW. Do not buy GM cars. Do not buy any cars that are made by a government owned company. It is pretty simple, and if people actually act on it, we could see tangible repercussions.

UPDATE: One further thought, in line with my linguistic and rhetorical interests. By sheer chance, GM was called GM. It is one of the luckiest brakes for conservatives trying to thump home a media message in a long while. “Government Motors” is simple, accurate, and catchy. And it doesn’t rely upon a distortion of the acronym, or reading knowledge of what conservatives argument is. It simply gets the point across. In our battle to frame the arguments as they properly stand, “Government Motors” is a great step. One needs only glance at Drudge to get the gist, and it will be a powerful media tool.

Categories: Economy, Obama Craziness