GM’s World Headquarters, Detroit, MI. photocredit: mandj98
The rumors around GM’s impending bankruptcy are like rumors about Clay Aiken’s sexuality. Exactly. Now the suspense (if any) is over, and GM looks ready to sign on the dotted line. Chapter 11, meet America’s dinasour.
There is still hope, but it’s unlikely anything will change the course of this doomed ship. There is a June 1st deadline the government imposed on GM to either restructure or file. After failed attempts to woo bondholders to eat up $27b of their debt for a 10% share of the company, and a soon-to-be ridiculed offer made to union workers, GM will probably be mostly owned by taxpayers by June 2nd.
The US government will effectively own 70% of GM. 70%! This makes the American taxpayer the primary shareholder of one of the largest companies in the country. The possibility that Obama would go Stalin or Chavez with GM is unlikely (no purges or profiteering should be expected), but the acquisition of GM makes many other of the administration’s ambitions, like green energy and the promotion of hybrids, much more feasible.
The recent meeting between Obama and auto executives (the same which David Brooks panned), promised all cars will meet higher mileage per gallon standards (35.5mpg) by 2016. This, in addition to the probable adoption of GM and the creeping gas prices, might make Obama’s job a bit easier. The fallout of the demise of an American icon might end up being the resurgence of a cleaner, better auto industry.
There is, of course, the whole “socialism” chant opponents of the administration might sing, and the possibility that GM is unrescuable, no matter how much money the government injects into it (current estimates are above $50b). But what’s the chance of that happening? Happy thoughts.
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Tags: GM · gop · green energy · obama · The Great Recession1 Comment
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