Time to let GM go?
The seeds of GM's demisse were sowed in the 1980s. In those days of boomer driven sales, executives essentially conspired with the UAW to loot the company. Union contracts were agreed to that were very rich comparatively speaking making the UAW look great to its members, and the executives skimmed off a large piece of the company knowing that it would be a long time before what they did would doom the company. The executives knew the company would one day implode, but that they would be long gone, only appearing in a underread academic papers or incompletely researched newspaper articles. There is no doubt at this point that the execs knew the scheme, and that the UAW was just not smart enough to realize it was complicit in the looting or its leaders too were scamming.
Unfortunately, looting is easy to do when things are good. Just look at what the banks, investment banks and shadow banks recently pulled off.
Since the GM looting scheme was put into place, GM has defiantly refused to change its ways for years, even in order to save the company. They, management and the UAW, have chosen to allow the company to slowly bleed to death rather than make the necessary changes the company needed. Both management and the UAW allowed their conflicts to destroy a company with such a headstart in its industry that it should never have fallen from a top 2 status in the world (there are logical reasons why an Asian company could catch it as Toyota did).
Now, GM and the UAW have gone to the government and the U.S. citizenry and asked- now that the company is on the morphine drip- to give it more pain killers. Unfortunately, GM is not asking for a cure. GM continues to make silly, frankly dishonest, projections of sales, while the looting continues with instead of earned money, gifted money.
And to pile on, bondholders of the company, a group of investors who should have known, and I'm positive did, that the company was in trouble years ago, are now asking for handouts to bail out their bad, and likely unethical, decision making.
My friends accuse me of being a liberal. To which I routinely respond, I'm a moderate pragmatist. They would expect me to want to save GM to save the employees and the employees of all the companies that deal with GM. My initial inclination is to do that. However, the time has come to say enough is enough.
GM has become a ponzi scheme and nobody involved is innocent, even the employees- though they are clearly the least culpable. The only solution is to blow it up. Now whether blowing it up is via bankruptcy or not, I don't know. But with management now conspiring with bondholders, it is too much. It is time to kill them all in the pocketbooks, they have been eating at the trough that they did not earn a place at. Congress should unequivocally stick to it's guns and refuse to give any money to GM unless the bondholders take diluted equity in return. To force the hand of management and the bondholders, Congress should also write and pass a law that defines pension recipients senior to bondholders in a bankruptcy. Congress should also make it clear that they will not back any financial institution that goes under because of derivitive contracts tied to insuring the bondholders.
With such a law, the GM problem would be solved. In bankruptcy, if pension obligations are senior to bond obligations, the bond holders in this case would get pennies. Without bailing out financial companies insuring the bonds, the bondholders lose their last bit of leverage as well.
Even if GM shrinks by half, that is fine. Nicely, that would resolve a lot of problems at Ford and Chrysler, saving taxpayors money in those places.
It was all a scam folks, do not let them take more out of your pockets.
GM can be that top company I mentioned (probably not 2 however, but for sure top 5), but not until the bloodsuckers have been stabbed in the heart.