Today, Chrysler announced a deal with the U.S. Treasury to avoid bankruptcy. The deal gives the United Auto Workers' union 55% ownership of the firm. The federal government would own 10%, and Fiat would take 35%.
What does this mean? The UAW and the federal government will run the firm....into the ground. Chrysler, which has almost zero chance of being profitable now that they are run by two organizations that hold profitability last on their list of priorities, will be a function of the government. The UAW is too interconnected with the White House and the Democratic party and will owe its allegiance to them. Make no mistake, you and I will now have to subsidize Chrysler for years to come. These taxpayer dollars will then be turned around in the form of multi-million dollar donations to the Democratic Party.
General Motors is also on the same path. They are now entertaining a deal with the government that Larry Kudlow details this way: (HT EPJ)
What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.
That's right. The U.S. Federal Government will own 50% of the company. The UAW will own 40%. Political interference by the White House, the Democratic congress, and the UAW will prevent GM from ever becoming profitable again without government subsidies. Billions of your tax dollars will go to a company that will turn right around and give tens of millions to Democratic party candidates and our current President to help them stay in power.
If you believe in a truly free America you will do the same. Never buy any of their cars ever again.
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Brian,
You must be wrong on this, The president said on March 30th
"Let me be clear. The United States government has no interest in running GM. We have no intention of running GM,"
So it can't be possible that they are proposing that the government will own and run GM. Can it?
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