Monday, November 29, 2010

Putting the UAW once again ahead of everyone else

No surprise here. The recent GM stock offering is helping the union first before the taxpayers who funded the GM bailout.
Thanks to a generous share of GM stock obtained in the company's 2009 bankruptcy settlement, the United Auto Workers is well on its way to recouping the billions of dollars GM owed it — putting it far ahead of taxpayers who have recouped only about 30 percent of their investment and further still ahead of investors in the old GM who have received nothing.

The boon for the union fits the pattern established when the White House pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors — stakeholders that ordinarily would have fared as well or better under the bankruptcy laws.

"Priority one was serving the interests of the UAW" when the White House's auto task force engineered the bankruptcy, said Glenn Reynolds, an analyst at CreditSights. The stock offering served to show once again how the White House has handsomely rewarded its political allies, he said.

The union's health care and pension trust fund earned $3.4 billion through the sale of one-third of its shares in GM last week. Analysts estimate that it would break even if it sells the remaining two-thirds of its shares at an average price of $36 — close to where the stock traded shortly after the offering hit the market. GM shares closed at $33.45 on Wednesday.

For taxpayers to break even, by contrast, the stock would have to rise to at least $52 and by some estimates as high as $103 — levels that would take years to achieve.
We shouldn't be at all surprised - the entire bailout was about saving union jobs in the first place.


Rick Caird said...

The bailout was even more about taking from the senior bondholders and giving to the UAW. GM could have been bailed out while still following bankruptcy law and paid off the senior bondholders. But, if bankruptcy law had been followed, the UAW would have lost on its holdings. Ergo, the UAW went to the front of the line and made out like the bandits they are.

I do not see why anyone bought the IPO. GM has admitted we can have no faith in their books. Second, it someone gives you $50 billion and takes all your debt and bad assets off your hands, it is pretty easy to show a profit for a while. But, the UAW is still there and the management is still essentially there. Neither show signs of having learned any new lessons other than how to stick their collective hands out.

MarkD said...

More to the point, the government is dealing in stolen goods. I won't buy the stock, and I won't buy a GM vehicle, ever.

Tacitus Voltaire said...

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

- Warren Buffet


Rick Caird said...


As Buffet gets old and rich beyond avarice, he thinks differently than he did when he was accumulating his wealth. It is easy to be liberal when the cost of being liberal makes no difference to you. It is easy to be liberal when you think you can push the cost onto someone else.

You can claim you are undertaxed when dividends are taxed at 15-20%, but to make a real comparison you need to be aware the dividend has already been taxed at 35%, so for an accurate measure, you need to add the two rates together. Buffet's dividends are really being taxed at 50%, but he know that. You seem not to.

The class warfare line is a clever little line, but it is not true unless you define his class very narrowly.

Pat Patterson said...

Tacitus Voltaire must be extremely agile as normal people would generally fall down from trying to keep one foot in their mouth all day. That original quote comes from an interview with the columnist Ben Stein who then points out that Mr Buffet pays a smaller percentage in taxes then any of his employees. He doesn't have to take all these deductions but he seems to enjoy the lofty heights of moral certitude.

I can only assume that Mr Buffet and TV operate with a similar disregard for facts and have adopted the Monty Python doctrine of just running away whenever the going gets a little rough.

Tacitus Voltaire said...

since rick, pat, and tfhr have all demonstrated amply that they can read simple english sentences and manage somehow not to understand them, i don't see the point in even reading their replies anymore

Pat Patterson said...

I wasn't aware that TV actually read anything he posted any more.

Rick Caird said...

Pat, agreed. That was kind of a nonsense post from TV. Obviously, we showed we could not only read the Buffet quote, but, unlike TV, we could actually analyze the quote.

equitus said...

Not a good idea to come to a battle of wits unarmed.