There are a lot of people throwing that term around here, which is understandable since the media and Obama have been throwing it around, mostly to cover up the fact that this a gov. takeover plain and simple. If anyone else has had a simple bankruptcy class you would know why this is not a real bankruptcy. Sure there are some elements that resemble a bankruptcy, but the features that makes this a gov. takeover is the fact that this was a pre-arranged deal where the gov. would takeover a majority interest in the co. with the remainder going to the UAW and a small portion to the bondholders; all stockholders get nothing, the co. will emerge from bankruptcy in 60-90 days with no continuing obligations, the bad elements of the co. will be stripped but only these will be used to pay back creditors, the UAW contract will still exist. Never has there been a bankruptcy quite like this. Under a Ch11 a co. continues to do business throughout the bankruptcy and emerge from the bankruptcy(supposedly better). The co. usually will get rid of all the bad elements fo the co. and retain only the good elements. The co. will also work out a repayment plan with creditors over the course of a few years trying to repay them back. Some assets will be sold(usually the bad ones) to make the plan work. The process usually takes years and the co. will remain privately owned. All existing contracts and debt(that can't be repaid) will be null and void.

There is no way that the bondholders would have accepted a deal where they get 10% of stock and thats it, from the 'new GM'(see socialism) when they probably would have received more from a Ch11 or worse case scenario Ch7. Stock is very speculative, there is no guarantee that the value they get from this will be anywhere near what the invested. ** MOD EDIT: removed political dig. **

 

I'll cut and paste my response from your post in the other thread.

Certain industries I'd expect the Gov't to take over and keep running for national security reasons (rail, energy, semiconductor, aerospace). GM was a very important part in winning WWII, if we as a nation give up our heavy industry and another big war breaks out we are screwed. We can barely keep up with what is needed for Iraq. Funny how people only care about stuff like that when "their party" is in charge

The US economy is in rough shape and probably couldn't handle a Ch. 7 bankrupt GM. From what I've seen and read, this will work out better for the tax payer/government, GM enthusiasts, and GM employees.

The socialism scare tactic is mostly being thrown around for political reasons by southern politicians that are bought and paid for by companies like Toyota, BMW, and Honda. They don't want what is best for our country, they just want what is best for their pockets. They figure if they put the socialist label on anything they can get their constituents to be against it. The ironic thing is these are some of the same people that claim to be uber pro-military, one of the biggest socialist operations on the planet. The hypocrisy is so think you can cut it with a knife.

 

This is not bankruptcy!

 

I will exercise my best efforts to stay away from political commentary.

So........

The facts......

Never in the history of this country has an unsecured creditor (i.e., the UAW) walked away with far more than those who hold senior, secured debt. The bondholders are very angry for billions of very good reasons.

The net effects of the structure...

1) Those who gained the most are a voting block and there are national elections next year and in 2012.

2) Those who invest in senior, secured bonds will be FAR less likely to buy those bonds regardless if the seller is GM or any other publicly held corporation. That will have far reaching effects over the next 20 years and possibly beyond.

3) Effects #1 & #2 are tightly intertwined.

 

the single most important charter of the federal government is national defense.

 

What about the offense? Still Socialism.

 

You think the military is a "socialist" organization?

 

Huh? Can you explain that, please?

GM should have been "allowed" to file for bankruptcy months ago. Sorry - just don't buy the Gov't owning GM (no pun intended). Maybe it will work out for the short term, but can't find a good reason to go down the socialist road in the long term. If you can....ok. Guess we'll disagree.

 

The offense? Let just say there has been a lot of Corporatism over the last 30+ years.

Eisenhower warned us about the Military Industrial Complex

http://www.youtube.com/watch?v=qdrGK...eature=related

I agree, no one wants the gov't owning GM, There probably could have been better ways to do it a year ago but it wasn't done and here we are today. GM was done long before Obama took office, I don't know if he had much of a choice. I think keeping GM running is the right thing to do. Letting them go Ch.7 would have been a bigger disaster for all of us.

With 3 million more cars being scrapped each year then produced I see a lot of pent up demand that GM/Chevrolet can capitalize on in the coming years. As long as we can get through 2010 I think the future looks bright for the American auto industry.

Yes we have socialized defense.

 

I won't argue the "corporatism" thing. But don't think that covers majority ownership of GM.

I'm a student of military history - most especially WWII. I understand very well the role industry played in winning that war. However, this is 2009 - not 1941 (or 52-60 if talking about Ike), and I don't think direct parallels can be drawn.

As for GM filing bankruptcy....I was referring to early this year, prior to the "bailouts" starting.

 

Yeah, it is a different world and wars are fought differently. I still see this as more of a Government play to protect heavy manufacturing. Maybe in the next 20 year we will need it and this will look like the smartest move ever, or maybe we will just keep the '00s status quo going a little longer and people will see this as poor move. I'm expecting a currency or oil crisis in the next 20 years and I can see where keeping GM is a good move.

Gov't has done a lot of good projects like the Hoover Dam that have paid for them selves and then some, maybe this will be one of them. I doubt it will be, but I can see where there is potential.

 

If by "socialized defense" you mean paid for and run by the government, then sure. Thing is, the government is supposed to provide for our defense via the military. Meddling with, over-regulating, running / owning everyday industries is a bit outside the intended scope of government in the U.S.

Calling the military socialist is a bit strange, but OK. However, it certainly isn't hypocritical to be pro-military and not want the government meddling in the affairs of businesses. Not to mention, the government has played some role in getting the auto industry into the condition it is currently in, so...

 

When President Eisenhower spoke about the "military/industrial complex", he was actually warning about government controlling much of the production in this country via their ability to purchase hard goods. His words are even more presient today.

 

Not the facts. None of GM's bond debt was secured.

If GM had put the money into the UAW VEBA last year like they promised to, it would be gone and the bondholders couldn't touch it.

Not to mention, a big reason the UAW is ending up with equity is because no private investors want to own GM. If there were any Cerberus or Fiat or other company wishing to take over, you can bet the government would have dumped GM off just like they did with Chrysler.

 

It is a Socialized service, it is in the constitution and it is a necessity. I'm just getting tired of the right wing media style lets put a bad label on everything we don't like to scare the uneducated public our way. Police and Fire are socialized too, so why don't they call them that? Nothing is cut and dry socialist, capitalist, what ever. There is no 100% free market, everything is impacted by a government in some way. Some times it takes big gov't help to get something done, like putting a man on the moon, or the interstate highway system or the internet. I think it is important for a 1st world nation to be able to make cars/trucks/planes, but we are under attack by foreign companies with government backing, it is an up hill fight. Look no further than Boeing vs AirBus. We all would like GM to get by without the government, but this time it looks like there is no other way.