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Why doesn't the UAW buy GM (market cap:$4B) with a loan from the pension fund (assets $104B)? Somebody, please help me....
Upon the temporary cessation of the vertigo induced by contemplating a world in which the whole damn company (factories, inventories, etc), is worth less than Avon Cosmetics, I wrestle with the following conundrum:
Why doesn’t the UAW loan itself some pocket change from its own IRA, as it were, and let Rick Wagoner take his snot stained spare change paper cup out on the corner of Market and Sixth, where they know how to treat panhandlers.
Surely this is the moment for the workers on the factory floor to purchase the instruments of production.
Vive Le Syndicat! Vive l’Internationale!
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And then what?
November 26, 2008 8:15 PM | Reply | Permalink
Then what???
Then we take the day off!
November 26, 2008 8:17 PM | Reply | Permalink
then what?
Then run the business as on ongoing enterprise whose continuity is incrementally more valuable to the workers than to any third party, the more so as in such case any sacrifices extor, er extracted from the workers will at least not redound to the long term benefit of their rentier overlords.
November 26, 2008 8:30 PM | Reply | Permalink
Interesting idea... I was waiting for the market cap to enter my zone ($178), but the UAW appears to be positioned to get there first. DAMN THOSE GROSSLY OVERPAID WORKERS!
(Hmmmmm.... even if the UAW beats me to GM.... I've still got a shot at CitiGroup.)
November 26, 2008 8:16 PM | Reply | Permalink
still got a shot at CitiGroup
Yeah, but with GM you get Corvettes...
Citigroup, meh, toasters?
November 26, 2008 8:27 PM | Reply | Permalink
What about the United Airlines deal? Not really an answer unless he managers get replaced. At UAL the transfer of ownership to employees didn't really improve company performance, because the same people were running things, as I understand it.
November 26, 2008 10:54 PM | Reply | Permalink
And they employees at United didn't get real "ownership". They got 3 seats at the Board of 12.
It was a really bad deal.
November 27, 2008 8:07 AM | Reply | Permalink
managers get replaced
Well, certainly I was not supposing that having bought the company, the workers would find themselves at such a loss for talented managerial personnel that there would be any question of retaining any of he Board of Directors or the executives they hired.
Part of the problem with the UAL employee participations is that they were all partial ownership, mediated through trusts with committee management that is caught between their fiduciary duty to the immediate beneficiaries of their particular trust (eg, the Pilots) vs. the overall health of the business itself.
If all equity reposed in an Employee Stock Ownership obliged to retire the $4billion but relieved of all the diversions of capital represented by the need, (after all productivity gains are factored in), to cream off some dividends for the common stockholders and big dough for the execs and their cronies.
Given the paltry market cap compared to the money the companies are sniveling for (50 billion, so far, is it not?) it's hard to understand why the FEDS themselves, if not the UAW, don't just buy the damn thing instead of funneling guarantees and cash into preferred (read:non-voting) stock.
November 28, 2008 1:18 AM | Reply | Permalink
Huh?
I borrow $4B from my pension fund.
I need to pay the loan back with interest.
I use the $4B to buy a company that bleeds cash.
Since the company doesn't generate any cash, I can't pay back the loan.
I go bankrupt and am forced to sell the company at a loss.
The pension plan gets pennies on the dollars for its loan.
I end up with a smaller pension.
The GM shareholders thank me for transfering their losses to my pension.
November 27, 2008 9:08 AM | Reply | Permalink
You forgot: "The GM workers who are now owners are also out of a job."
But it's only 4% of the pension fund, and "pennies on the dollar" probably underestimates the book/liquidation value. So you're just playing the role of pessimist here.
And just think if the "new" GM could get a $10B bridge loan ....
November 27, 2008 3:51 PM | Reply | Permalink
I do not care about football anymore but the Green Bay Packers would be my favorite team. The people of Green Bay own them. They didn't do the deal that made W a millionaire in Texas--he already was a millionaire per daddy, anyway. Cities putting up hundreds of millions of tax dollars to build arenas and cutting sales tax on hot dogs....
I really like the idea of the workers being able to vote on whether they want a real voting share in the company they work for. Not diluted by unjust corporate laws or union management.
Someone should contact the UAW about this and get their reaction. It must have come up in Union discussions.
November 27, 2008 6:16 PM | Reply | Permalink