The horizon is not so far as we can see, but as far as we can imagine

US To Take Majority GM Stake, United Auto Workers Get 38%

I’d say it’s the right thing to do, though what will really matter is what the government does once it’s in control.  This is what should have been done to the banks, in effect.  Just take them over, put your own board in charge and go to it.  As for giving the UAW a big stake, that’s only fair, as their pensions, health care salaries and very jobs are at stake, and indeed, the workforce will be cut by another third.

For banks, the equivalent would be to give depositors and bondholders a share, turning them into what amount to mutual companies (where the customers own the company.)  Not the worst idea in the world, but it won’t happen.

[Source: Corrente]

Addendum: Apparently the UAW will get 55% of Chrysler.  Clever man, Obama.  If he’d just made the UAW eat all these concessions for nothing, he would have reaped a lot of hatred.  My hat’s off to him on this one.


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1 Comment

  1. senecal

    Both of these auto company developments — the relative results for labor and bond-holders in each of them — are worth considering. In Chrysler’s case, labor gives up its pension rights in return for majority ownership in what may be a failing enterprise anyway. Bondholders (i.e. banks) get $2 billion cash in exchange for something like $6 billion unsecured debt. Labor is left with the dying agonies, while Citibank walks away with cash (another gift from the taxpayers.) My POV is of course simplistic — there’s also Fiat — but something about this says it’s less than a success story.

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