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http://www.phoenixmotorcars.co m/company/index.php

If the big three fail, there are small companies waiting in the wings to fill the void. If we keep bailing out these failing dinosaurs, we’ll never be free of them – and that includes the financiers and their ‘bailout’."

40. Response by SJ

DJ Scorns Demicans

I listened to Senator Cocker (rep, Tenn) today. He seemed rather rational in his argument that the bailout proposed by the Bush/Dekm coalition was fatally flawed because it left GM with an unsustainable debt. If his numbers are correct, this proposal was more of an effort to protect bond holders and the pension fund than to help restructure GM. (I suspect Chrysler is a basket case).

As I understood him, the pension funds are going to be hit no matter what happens here. This means the taxpayers, who now underwrite PART of the funds, will be hit and that hit is going to be big. UAW retirees are going to be hit by a huge cut in their takehome to the guarantee level. Non-UAW folks may get really pissed that their taxes are bailing out the relatively highly paid UAW retirees.

BUT, the real issue, as Cocker preneted it, may be whether there is model that leaves GM and the union viable? Cocker's proposal sounded the best I have heard: Squeeze bondholders to 35% or debt, do the same to pension fund, convert both to stock. This would result in a smaller company but one with a realistic debt level. The now smaller union would have an investment in the company's future that could, IF the company does well, reduce the taxpayer contributions to the retirement fund. Not a win-win but perhaps a plan the shares the pain.


The most likely opponent would be the UAW ... assuming that their goal now IS to let GM go into bankruptcy and maximize the eventual pension fund over the levels of the fed guarantee. This also would cut the number of jobs and force Detroit UAW workers to compete on an even footing with Tennessee's non unionized workforce. Perhaps painful but isn't this better for the country?

This issue, like so much else since Reagan, is hidden behind a miasma of misinformation. The conservatives spin the Union wages by adding in the pension debt. (In real wages and bennies Toyota and GM pay out similar amounts now). The dems wring their hands and talk of cataclysm and seem more driven by a new civil war, this one ironic in that once again the Union is Opposed to the Sout over a labor issue. The Bushies ... well they never was a there, there anyway.

The real demon n all this is the LACK of leadership. Someone, presumably the real President whoever that is now, needs to gather the facts and present them as simply and clearly as Cocker did this AM.

While I remain an Obamist, this seems to me to be an occasion whre he could step in.