The GM bankruptcy in effect was a bailout for the union pension plans at the cost of bondholders, many of which held GM paper in their retirement account. The net effect was someone (goes by the initials of B.O, B.S. or JPL) took money from some people's retirement and gave it to others. The only protection we has investors and taxpayers have is in the bankruptcy code and laws. If GM had been forced into a conventional bankruptcy the people holding secured GM debt would of been paid first if GM didn't have enough assets to satisfy all secured debt the assets would of been apportioned to the secured debt holders on a percentage, say if the assets would only cover half the debt secured creditors would get $.50 for each dollar of debt they held. If the assets were more than the secured debt the secured parties would be paid in full and then the remaining assets apportioned among non secured creditors like stockholders, vendors and workers. This didn't happen the individual previously named seized assets that were securing debt and gave them to someone else (the UAW). The net effect is it's going to be a lot more expensive for American Corporations to borrow money, why? We've added the risk that our government will jump in and seize secured assets to give to their political supporters, more risk means more cost. I say the only protection we have as taxpayers or investors is in the bankruptcy code and laws is because they should direct remaining assets of a failed business to the appropriate creditors. The big question is when Cities, counties states and corporations fail the pension plans are usually not a secured debt. Our protection from unreasonable worker demands is to let the company fail, be declared insolvent and make the workers (and shareholders) take the settlement mandated under the law usually pennies on the dollar, the GM bankruptcy changes the rules, unsecured debtors got paid first. This eliminates the concept of reality in labor negotiations, meaning the union has nothing to lose by forcing the company into bankruptcy, in fact with GM and Chrysler they were rewarded. In the current law the threat of bankruptcy is supposed to force unions or binding arbitration on a labor agreement to accept a settlement that might allow the business to continue to provide goods and services and hire people. With the GM bankruptcy a union contract can be used to seize assets. I just really have to wonder about the folks that lost money in GM and Chrysler and that in effect bailed out the union and their pension plan that are now being attacked as not paying their fair share and being greedy and stealing food from the mouths of starving children. I suppose it'll balance out because their beachfront vacation homes destroyed in the recent "superstorm" will probably be rebuilt with taxpayer money.
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Today's Featured Article - Old Time Threshing - by Anthony West. A lovely harvest evening late September 1947, I was a school boy, like all school boys I loved harvest time. The golden corn ripens well and early, the stoking, stacking,.... the drawing in with the tractors and trailers and a few buck rakes thrown in, and possibly a heavy horse. It would be a great day for the collies and the terrier dogs, rats and mice would be at the bottom of the stacks so the dogs, would have a busy time hunting and killing, all the corn was gathered and ricked in what we c
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