Can't Blame It On The Speculators or CEOs Now--posted by Tony Garcia on 6/02/2009
Listening to an interview this morning (6/2/09) with a Vice President of General Motors made it more clear why investors, businesspeople, capitalists and Americans should all be scared to death of the Obama administration (as well as all who are complicit in Obama's takeover of private business).
As we should all be aware by now General Motors has filed bankruptcy. We have also heard about the closing of many dealerships and the sell off of many of GM holdings such as Saturn. What we may know already is that the union was able to have the government (aka Obama & gang) strongarm GM into trading token legacy cost cuts for ownership to the United Auto Workers Union. The UAW will own approximately 17+% of GM (now needing to be renamed UAW GM). So the next contract negotiations between GM and UAW will present an immediate conflict of interest which will (a) give UAW an incredible and unfair negotiating advantage and (b) be unaddressed or uncorrected on a permanent basis.
Through the facade of "bailout" the government will own approximately 72+% of GM (now needing to be renamed Obama UAW GM...and eventually just US UAW GM). While the rhetoric from both the Obama administration and GM claims control of "day to day operations" will not involve the government the fact is the government is already dictating longer term strategies for GM. Product lines are being "suggested" and modifications to current product lines are being "suggested".
In fact, one set of questions to the VP that was being interviewed was about the Corvette. Will it still be a fast performance car or will it become a fluffy V-6 engine. The answer was that GM is being "allowed" to continue with certain "niche" lines which includes the Corvette...but there was no response to the questions about the questioner's implication that the V-8 engines are finished at GM. Sometimes silence speaks volumes.
If you are doing the math at home you will notice that there is still around 10% ownership remaining. Will that be for the stockholders? Remember, when you buy stock you are buying actual equity ownership! Or will it be for the secured creditors who have loaned money to GM with collateral as a promise for repayment of some sort?
Nope. The remaining ownership will go to neither stockholders or secured creditors.
The outstanding stock (exact words from the VP coming) "will be wiped out". If you own stock in GM you have worthless paper now. You paid for ownership (either for an investment or to have ownership) and you are getting ZERO. GM will be de-listed from the NYSE...no longer will it be a public company.
Instead the remaining ownership of GM will go to unsecured creditors. Repeat: ownership will go to UNSECURED creditors.
Yet one more nail in the coffin of capitalism and free markets being forged and hammered by the Obama administration.
But what I really want to know is why are we not hearing cries of corruption because of investors who are losing everything. I mean, there had to be investigations because investors got burned by their own bad investment decision (like staying in Enron stocks for far too long) and pillorying of "speculators" when oil prices were skyrocketing. Where are the tar & feather crews now that GM stockholders are having their investments robbed at a rate of 100%?