Forget the UAW, the average American should be on strike

[Omaha Steve]

http://www.todaysfinancialnews.com/us-stocks-and-markets/forget-the-uaw-the-average-american-should-be-on-strike-8259.html

Today's Financial News - Posted March 17, 2009

Forget the UAW, the average American should be on strikeThey act like they are fighting for our best interest. But when it comes to Washington politics, facts are an obstacle to re-election. Do not expect the truth to get in the way of General Motors getting its cash.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): There are just two weeks left until Detroit’s next crucial deadline. General Motors (NYSE:GM) knows it is under the gun, so it is turning up the heat on its campaign to pull more money from Uncle Sam’s pockets.



The news today comes from the investors unlucky enough to be holding the company’s debt. GM bondholders are sitting on investments that are worth a fraction of their par value. They are being asked by executives to exchange the debt for equity at prices that represent pennies on the dollar.

But the conversion rate, from debt to equity, is not equal for all debt holders. The average investor will get one rate while the all-powerful UAW will get another.

Come on, did you expect anything else?

I should not have to tell you most bondholders are outraged at the offer. The labor organization whose greedy hand helped get GM into this deadly position remains a damaging figure even as the company is desperate for survival.

But of course, the UAW loves the fact GM is offering it a premium conversion rate. If I were getting something I was not owed, I would be happy too. And just to prove that the UAW and Obama’s Detroit task force are walking hand-in-hand, one of the group’s members recently said the UAW had been “very constructive,” while the group representing bondholders have been “quite difficult.”

FULL story at link.

[Earth Bound Misfit]

1. WTF?

http://www.entertonement.com/clips/64837/Playing-chicken

GM, Chrysler bankruptcy not Obama task force goal

http://www.google.com/hostednews/ap/article/ALeqM5gA2mr12dJLiWM1QN59MYfpM9OQfwD96VFBQO0

Steven Rattner, a Wall Street financier who is advising Treasury Secretary Timothy Geithner on the auto industry panel, said in an interview with The Associated Press that the task force was trying to successfully restructure the companies during a difficult economic downturn.

"Bankruptcy is not our goal," Rattner said. "Bankruptcy is not an ideal place for any company to be. It is sometimes necessary but something that ideally one wants to avoid and so we're very focused on solving the problem, not on filing for bankruptcy."

General Motors Corp. and Chrysler LLC have received a combined $17.4 billion in government loans to stave off bankruptcy and have requested billions in additional aid. The loan agreements negotiated with the Bush administration set a March 31 deadline for restructuring the companies, with the possibility of a 30-day extension.

Rattner said he expected more work would be done on the restructuring beyond the March 31 deadline. "We feel that we do owe it to all the stakeholders here to have something thoughtful to say, ideally, prior to the end of March. But it will not be the last word."

snip

Rattner stressed in the interview that the government could not solve all the problems faced by the industry's stakeholders, suggesting the need for more intense negotiations between the parties.

GM is negotiating with its bondholders to reduce its level of debt by two-thirds and seeking additional givebacks from the UAW. Chrysler is seeking similar concessions.

"All the stakeholders would like to see the situation resolved but virtually all of them think that the U.S. government can solve all problems,and we can't," Rattner said, noting the panel's interest in making the companies viable.

"The bondholders have suggested that we help solve their problems, and I think that is a bit of a tough ask," he said. Asked about the UAW's efforts, Rattner said he was impressed by "the thoughtfulness and fact-based nature of the UAW's presentation to us."

snip

Bondholders have been reluctant to accept concessions that would leave them with only a small portion of the face value of their bonds but they could lose everything in a bankruptcy proceeding. They have discussed whether the government would guarantee new bonds that GM would issue as part of its restructuring.

Aaron Bragman, an analyst for the consulting firm IHS Global Insight in Troy, Mich., said Rattner's comments about GM's bondholders appeared to be designed to entice more productive negotiations.

"I think it may be the attempt to get that one last party to the table," Bragman said. "They don't want bankruptcy necessarily but will use it if necessary. By specifically naming the bondholders as a potential trouble area, that's going to draw more attention to them."

AP Auto Writer Tom Krisher contributed to this report from Detroit.

More at link