I Guess It Depends On Your Idea Of A Good Investment

2010 Ford Mustang photographed in Fort Washing...

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In my head I can hear my stockbroker yelling, “Dump that turkey!” What am I talking about? The current state of the government’s investment in General Motors.

Yesterday the Daily Caller posted an article about the current state of the stock in General Motors that the government still owns.

The article points out:

President Obama glowingly defended the $85 billion auto industry bailout during a speech to Detroit auto workers Friday, saying “the investment was worth it.”

But the government still owns 500 million shares of General Motors which, if sold at today’s market price of $20 a share, would leave taxpayers on the hook for $16.5 billion in losses.

And…under the law of unintended consequences (I’m not sure about the unintended part), the agreement the government signed with General Motors and Chrysler makes Ford (the company that is not partially owned by the government) the only company that the United Auto Workers (UAW) can strike against.  As reported in rightwinggranny.com on October 13, 2011, the UAW is already making plans to strike Ford Motor Company.

Where is this going? Unless someone throws a wrench in the works, it is leading to a nationalization of the American auto industry.

My husband, a drive-by reader of this site, just pointed out to me that if the UAW strikes Ford, forcing them to be bailed out, then the UAW will not be able to strike any American auto company. Payback is a *****!

 

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General Motors (aka Government Motors) and the UAW Have Agreed On A Contract (Or Why I Drive A Mustang)

Normally, I wouldn’t particularly care whether or not GM reached a contract agreement with the UAW, but since the government has made me a stockholder, I thought that maybe I should pay attention.

The International Business Times reported on Saturday that a new contract between GM and the UAW has been tentatively agreed on. The contract includes signing bonuses and better profit sharing for the employees.

The article reports:

Workers at Chrysler Group LLC, whose contract also expired on September 14, continue to negotiate for terms of their new deal.

The UAW is not allowed to call strikes for workers at GM and Chrysler under the terms of the federal bailouts which those companies received.

Workers at Ford Motor (which did not receive a federal bailout, which allows them to strike) are also in talks for a new contract.

Any bets on the possibility of a UAW strike action against Ford this year?

There is one aspect of this contract that I could not find any reporting on. In his book, Car Wreck, Mark Ragsdale explains an auto industry practice called ‘jobs banks.’ Jobs banks require that two and a half years of wages be paid to laid off workers. On February 10, 2009, Ford Motor Company announced it had negotiated jobs banks penalties out of its UAW contracts. Because Ford rejected federal bailout money, the UAW was forced to negotiate in order to avoid the company going bankrupt. I suspect the UAW will try very hard this year to put those jobs banks penalties back in.

Taxpayer bailout money is currently paying General Motors workers for work while they sit at the ‘jobs bank’ all day and do nothing–another example of a total waste of tax dollars. Obviously when this was done by a private company (GM), it was not practical–the company had to be bailed out, so why is the government allowing the nonprofitable behavior to continue? It will be interesting to see what happens to the jobs banks in the new contract and if the UAW decides to strike Ford to put the jobs banks back in there.

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