An interesting news story...
The White House-appointed autos task force has given GM 60 days to come up with a restructuring plan and it is trying to determine whether the automaker can be a viable company.
Quoting sources who had been briefed on the GM plans, the Times said the goal was to prepare for a fast "surgical" bankruptcy.
The newspaper said preparations are aimed at assuring a GM bankruptcy filing is ready if the company is unable to reach agreement with bondholders to exchange roughly $28 billion in debt into equity in GM and with the United Automobile Workers union.
A plan under consideration would create a new company that would buy the "good" assets of GM after the carmaker files for bankruptcy, the Times said.
Less desirable assets, including unwanted brands, factories and health care obligations, would be left in the old company, which could be liquidated over several years, according to the paper.
In the finest example of "new-speak," at least today, we are told that GM needs to be ready for a "surgical" bankruptcy. Or those of us who aren't morons like to call it, the bondholders getting hosed and the UAW getting a cash settlement before moving over to the "new" company.
What I love is how when a company screws the pooch like GM has done, the government needs to step in and create a "new" company to purchase the "good" or "bad" assets of companies that fail as they pose a systemic risk to the system. This used to be handled by the market-place through what is referred to as "creative-destruction," but obviously we are not smart enough to know what is good and what is shit.
Insulting. Here's an idea. How about a "new" company not involved with the FEDS "buys" GM and proceeds to "shed dead weight" or tell the unions to "piss against an electric fence" as a "good" company makes GM "profitable." Now, I know this sounds crazy, but I think that it has worked before. Here's another crazy idea. Maybe we should hop in our way-back machine and bail-out the buggy whip industry. The market needs to work. This is not a free-market.