Can you say, “fifty billion down a rathole to prop up the UAW?” I knew you could:
June 1 (Bloomberg) — General Motors Corp., the world’s largest carmaker until its 77-year reign ended last year, filed for bankruptcy protection in the U.S. with a plan to create a 21st-century company that can compete in world markets.
GM reported $82.3 billion in assets and $172.8 billion in debt. The U.S. government will bankroll the transformation of the 100-year-old automaker, a victim of tumbling sales and higher gas prices. The U.S. plans to convert much of its $50 billion of loans to a 60 percent stake in the new entity. Today’s filing in New York coincides with a deadline for GM to convince a government auto task force that it could reorganize out of court through debt and cost cutting.
“It’s been a long time coming, but the reality of a GM bankruptcy is still a bitter pill to swallow — it’s a bit like the Titanic sinking,” said Stephen Pope, chief global strategist at Cantor Fitzgerald in London. “This is a step they should have taken more than a year ago, which could have put them in much better shape before the economy went down.”
Yeah, well, the idea was never to sustain GM as a viable independent company, you know. Now sit back and watch as the grasping commissars incrementally go after their only remaining US competitor — Ford — with all the might the federal G can bring to bear. And shake your head in bemused disbelief, as some folks whistle a comfortingly pedantic tune as they stroll past the free-market graveyard.
Update! No denial here: “Welcome to Obama Motors, and what is likely to be a long, expensive and unhappy exercise in political car making.”
The Obama Treasury is portraying this as the best solution to the mess it inherited, leaving GM with much-reduced legacy costs for health care, a cleaned-up balance sheet, a humbler UAW that has forgone some performance pay, and a more efficient dealer network and product line. GM, we are told, will now be able to make a profit and some day even return money to taxpayers. If you close your eyes and imagine that GM’s private managers would be able to make decisions based solely on business judgment, you can even start to believe.
But then you snap out of it.
Hey, didn’t somebody mention Ford a minute ago?
The larger corruption will be when government tries to vindicate its ownership by favoring GM over Ford and the other auto makers that aren’t wards of the state. The TARP legislation contained one blatant example in the form of a $7,500 tax credit for consumers who buy GM’s new electric car, the Chevy Volt. Expect more such favoritism, including huge new subsidies for green cars if consumers prove resistant to their charms.
Mr. Obama likes to say he’s a pragmatist who only prefers a government solution when it will work.
Well, sure. But he’s a radical-Left liar who’s willing to say whatever he feels he has to, and his lifelong Superstate dreams are all coming true before his very eyes.