In my previous post, I advocated that GM consider a pre-packaged bankruptcy. In an example or great minds think alike (or maybe it is fools never disagree), noted hedge fund manager Bill Ackman apparently agrees with yours truly and also advocates a pre-packaged bankruptcy for GM. Mr Ackman states:
"It (GM) has been hamstrung for years because it has too much debt and
it has contracts that are uneconomic. The way to solve that problem is not to lend more money. They should do prepackaged bankruptcy."
Nancy Pelosi has other ideas. She wants to throw money at the so-called "Detroit Three". Her idea to protect taxpayers is to limit executive compensation, but will not ask the UAW to give any concessions. Although I am no fan of Detroit mismanagement, UAW contracts are way out of line with the rest of the country and need to fall in line. Ideology aside, the Detroit Three's labor costs are not mathematically feasible. There is no way around the math, like it or not. Look for a big fight in DC with GM's life on the line. The fight could change the nature of all government bailouts. Ding, round one!
2 comments:
The biggest thorn in the BigThree's sides is the UAW; something tells me they'd balk at any discussion of a pre-packaged bankruptsy, preferring to go down in flames instead.
Reminds me of the old joke:
Q: how many Teamsters does it take to change a light bulb?
A: 15 - you got a problem with that??
No arguement from me, but with resistance in Congress, the alternatove may be a traditional Chapter XI. The UAW would have no choice.
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