White House tells GM boss to step down

[Admiral Yi]

I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.

One would think that a more direct and just method of achieving this result would be to fire the head of the UAW.

[saskganesh]

I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.

One would think that a more direct and just method of achieving this result would be to fire the head of the UAW.

I'm reading the bondholders are more of an obstacle, and the UAW head has little influence on those institutions.

[DontSayBanana]

He wasn't great from what I can tell.  I've read lots about how decent a guy he is but I don't know if that's really enough.  The new guy, I believe, helped turn around GM in Europe which is now one of their most profitable areas so he could be better.

I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.

I think the party *is* more or less over. The weird thing is that these people are showing no sense of self-preservation. You would think they would take what they could get and then cut and run, when faced with what looks like a crippled or dying industry. Instead, they're just determined to follow the business burning into the ground.

[Berkut]

He wasn't great from what I can tell.  I've read lots about how decent a guy he is but I don't know if that's really enough.  The new guy, I believe, helped turn around GM in Europe which is now one of their most profitable areas so he could be better.

I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.

I think the party *is* more or less over. The weird thing is that these people are showing no sense of self-preservation. You would think they would take what they could get and then cut and run, when faced with what looks like a crippled or dying industry. Instead, they're just determined to follow the business burning into the ground.

How so?

The Dems won't let the unions fail. They will fight to the last trillion dollars to make sure they stay afloat. It's the least they can do, under the circumstances.

[saskganesh]

won't the unions  fail if the bondholders drive this to bankruptcy protection, where they will try for a better result on their value? I don't see it.

[DontSayBanana]

If they think they're going to get better returns in a fire sale, then this country really is populated with idiots, and it's time for me to emigrate.

[The Minsky Moment]

The bondholders would be killed in a liquidation . . . unless they are hedged with CDS.

There are approx $37 billion in CDS contracts outstanding on GM right now.  How much is held by members of the bondholding group and who holds it is unknown.  But the bottom line is that it is likely that signficant players in the bondholders group actually have an economic incentive to drive GM off a cliff (an incentive perversely subsidized by the US treasury which is guaranteeing the peformance of at least some of these CDS contracts).

This one of the dark secrets of the CDS market - it can create massive undisclosed conflicts of interest within a creditor group as the company nears the brink of insolvency.

[Caliga]

There's a ticker thing on CNN this morning that says GM will likely file for bankruptcy this week.

[grumbler]

There's a ticker thing on CNN this morning that says GM will likely file for bankruptcy this week.

Yep.  About time, too.  GM is too big to succeed.

[Neil]

Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done, why not merge GM with Chrysler, so that the union isn't competing with itself?

[Ed Anger]

yay! My ford stock is over 5 dollars!

[grumbler]

Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done, why not merge GM with Chrysler, so that the union isn't competing with itself?

When all is said and done, there will not be a GM, so the point is moot.

[Caliga]

yay! My ford stock is over 5 dollars!

I have Ford stock too 

[The Minsky Moment]

Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done,

The Union just agreed to 17.5% 

[Berkut]

Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?

There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.

This is nothing more than federal welfare for union employees.