Tuesday, December 9, 2008

I hate being right on stuff like this

For full effect, listen to this music clip from Youtube while reading the article below and recalling what I said in a previous post.

U.S. Could Take Stakes in Big Three

Lawmakers negotiate legislation that would give the U.S. government a substantial ownership stake in the auto industry and a central role in its restructuring.

Greg Hitt, The Wall Street Journal/Monday, December 08, 2008

WASHINGTON -- Congress and the White House inched toward a financial rescue of the Big Three auto makers, negotiating legislation that would give the U.S. government a substantial ownership stake in the industry and a central role in its restructuring.

Under terms of the draft legislation, which continued to evolve Monday evening, the government would receive warrants for stock equivalent to at least 20% of the loans any company receives. The company also would have to agree to limits on executive compensation and dividend payments, much like those contained in the government's $700 billion rescue of the financial industry.

In the case of General Motors Corp., such a move could give the government a large stake in the company and may hurt existing shareholders. GM is seeking about $10 billion in short-term loans and has a market capitalization of about $3 billion. The legislation didn't specify what kind of stock the government would take, leaving open the option it could be preferred, common, voting or nonvoting.

Assuming congressional Democrats and the White House come to agreement on the plan, the car industry would be the latest to submit to strict government scrutiny in return for a bailout, joining most prominently the banking sector.

The auto industry would undergo a restructuring process akin to bankruptcy reorganization, only with fewer rigors and with the government, not a judge, in control, and with many associated political complications.

The program would be overseen by an official, tapped by President George W. Bush, whom congressional aides and lawmakers describe as an "auto czar." This person would act as a kind of trustee with authority to bring together labor, management, creditors and parts suppliers to negotiate a restructuring plan. He or she also would be able to review any transaction or contract valued at more than $25 million.

"We call this the barbershop," said House Speaker Nancy Pelosi, a California Democrat. "Everybody's getting a haircut here, in terms of the conditions of the bill," she said, noting the likely impact on labor, bondholders, shareholders, car dealers, suppliers and executives. "The management itself has to take a big haircut on all of this."

Senior congressional Democrats and top Bush aides wrestled late Monday with final details of the package, which the White House would prefer were even tougher on the car makers. GM, Ford Motor Co. and Chrysler LLC have asked for a total of $34 billion to weather the downturn in the economy and steep slump in vehicle sales. GM and Chrysler say they need a cash infusion before the end of December to avoid shutting down.

Look out, a clone army might be next...


Frontier Forest said...

I agree, the music fits the mood. But you avoided the bigger question of quest, “Will the Force be with them?”

Vader said...

I find your lack of faith disturbing.

Michael Lockridge said...

For some reason this reminds me of a story a WWII veteran (British Navy) once told me.

He said that he participated in the liberation of France as part of a Navy escort fleet. One day, off the coast of France they were buying fish from a fisherman who had brought his boat along side.

"Bet you are glad to see us!" said one of the British Sailors.

The French fisherman looked up and said, "Before the Nazi were here, I sold fish. While the Nazi were here, I sold fish to the Nazi. Now you are here, I sell fish to you."

He then returned to unloading the fish he had sold.


Nathan said...

The Caminoans have already been at work cloning and the troops are being prepared by order of Sipher Diez. http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=77052

Michael Lockridge said...

Vaguely encouraging and frightening at the same time.