Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Grand Theft Auto (Greg Palast)Greg Palast's take on the GM bankruptcy:Grand Theft Auto: How Stevie the Rat bankrupted GM by Greg Palast Monday, June 1, 2009 They may be crying about General Motors' bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won't spoil Jamie Dimon's day. Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders—led by Morgan and Citibank—expect to get back 100% of their loans to GM, a stunning $6 billion. The way these banks are getting their $6 billion bonanza is stone cold illegal. I smell a rat. Stevie the Rat, to be precise. Steven Rattner, Barack Obama's 'Car Czar'—the man who essentially ordered GM into bankruptcy this morning. When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what's left. That's the law. What workers don't lose are their pensions (including old-age health funds) already taken from their wages and held in their name. But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi. Here's the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM's stock—or 25%. Whatever, 17% or 25% is worth, well ... just try paying for your dialysis with 50 shares of bankrupt auto stock. Yet Citibank and Morgan, says Rattner, should get their whole enchilada - $6 billion right now and in cash—from a company that can't pay for auto parts or worker eye exams. Preventive Detention for Pensions So what's wrong with seizing workers' pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it's illegal. In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can't seize workers' pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that's because they are the same thing: workers give up wages in return for retirement benefits. The law is darn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as "fiduciaries." Here's the law, Professor Obama, as described on the government's own web site under the heading, "Health Plans and Benefits": "The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits." Every business in America that runs short of cash would love to dip into retirement kitties, but it's not their money any more than a banker can seize your account when the bank's a little short. A plan's assets are for the plan's members only, not for Mr. Dimon nor Mr. Rubin. Read the rest of the article. Labels: auto industry, bankruptcy, General Motors, Greg Palast, JP Morgan Chase, pensions, Steven Rattner Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Mayor of Lansing Defends AutoworkersWhile we're posting items on the auto industry--here is this video from December that I missed. It's terrific. Hat-tip to Mike P.Labels: auto industry, Fox News, General Motors, UAW, Virg Bernero Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Goodbye, GM (Michael Moore)Another statement on GM's bankruptcy (from MichaelMoore.com):I write this on the morning of the end of the once-mighty General Motors. By high noon, the President of the United States will have made it official: General Motors, as we know it, has been totaled. As I sit here in GM's birthplace, Flint, Michigan, I am surrounded by friends and family who are filled with anxiety about what will happen to them and to the town. Forty percent of the homes and businesses in the city have been abandoned. Imagine what it would be like if you lived in a city where almost every other house is empty. What would be your state of mind? It is with sad irony that the company which invented "planned obsolescence" -- the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one -- has now made itself obsolete. It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh -- and that wouldn't start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the "inferior" Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to "improve" the short-term bottom line of the corporation. Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans. The glaring stupidity of this policy was that, when they eliminated the income of so many middle class families, who did they think was going to be able to afford to buy their cars? History will record this blunder in the same way it now writes about the French building the Maginot Line or how the Romans cluelessly poisoned their own water system with lethal lead in its pipes. So here we are at the deathbed of General Motors. The company's body not yet cold, and I find myself filled with -- dare I say it -- joy. It is not the joy of revenge against a corporation that ruined my hometown and brought misery, divorce, alcoholism, homelessness, physical and mental debilitation, and drug addiction to the people I grew up with. Nor do I, obviously, claim any joy in knowing that 21,000 more GM workers will be told that they, too, are without a job. But you and I and the rest of America now own a car company! I know, I know -- who on earth wants to run a car company? Who among us wants $50 billion of our tax dollars thrown down the rat hole of still trying to save GM? Let's be clear about this: The only way to save GM is to kill GM. Saving our precious industrial infrastructure, though, is another matter and must be a top priority. If we allow the shutting down and tearing down of our auto plants, we will sorely wish we still had them when we realize that those factories could have built the alternative energy systems we now desperately need. And when we realize that the best way to transport ourselves is on light rail and bullet trains and cleaner buses, how will we do this if we've allowed our industrial capacity and its skilled workforce to disappear? Thus, as GM is "reorganized" by the federal government and the bankruptcy court, here is the plan I am asking President Obama to implement for the good of the workers, the GM communities, and the nation as a whole. Twenty years ago when I made "Roger & Me," I tried to warn people about what was ahead for General Motors. Had the power structure and the punditocracy listened, maybe much of this could have been avoided. Based on my track record, I request an honest and sincere consideration of the following suggestions: 1. Just as President Roosevelt did after the attack on Pearl Harbor, the President must tell the nation that we are at war and we must immediately convert our auto factories to factories that build mass transit vehicles and alternative energy devices. Within months in Flint in 1942, GM halted all car production and immediately used the assembly lines to build planes, tanks and machine guns. The conversion took no time at all. Everyone pitched in. The fascists were defeated. We are now in a different kind of war -- a war that we have conducted against the ecosystem and has been conducted by our very own corporate leaders. This current war has two fronts. One is headquartered in Detroit. The products built in the factories of GM, Ford and Chrysler are some of the greatest weapons of mass destruction responsible for global warming and the melting of our polar icecaps. The things we call "cars" may have been fun to drive, but they are like a million daggers into the heart of Mother Nature. To continue to build them would only lead to the ruin of our species and much of the planet. The other front in this war is being waged by the oil companies against you and me. They are committed to fleecing us whenever they can, and they have been reckless stewards of the finite amount of oil that is located under the surface of the earth. They know they are sucking it bone dry. And like the lumber tycoons of the early 20th century who didn't give a damn about future generations as they tore down every forest they could get their hands on, these oil barons are not telling the public what they know to be true -- that there are only a few more decades of useable oil on this planet. And as the end days of oil approach us, get ready for some very desperate people willing to kill and be killed just to get their hands on a gallon can of gasoline. President Obama, now that he has taken control of GM, needs to convert the factories to new and needed uses immediately. 2. Don't put another $30 billion into the coffers of GM to build cars. Instead, use that money to keep the current workforce -- and most of those who have been laid off -- employed so that they can build the new modes of 21st century transportation. Let them start the conversion work now. 3. Announce that we will have bullet trains criss-crossing this country in the next five years. Japan is celebrating the 45th anniversary of its first bullet train this year. Now they have dozens of them. Average speed: 165 mph. Average time a train is late: under 30 seconds. They have had these high speed trains for nearly five decades -- and we don't even have one! The fact that the technology already exists for us to go from New York to L.A. in 17 hours by train, and that we haven't used it, is criminal. Let's hire the unemployed to build the new high speed lines all over the country. Chicago to Detroit in less than two hours. Miami to DC in under 7 hours. Denver to Dallas in five and a half. This can be done and done now. 4. Initiate a program to put light rail mass transit lines in all our large and medium-sized cities. Build those trains in the GM factories. And hire local people everywhere to install and run this system. 5. For people in rural areas not served by the train lines, have the GM plants produce energy efficient clean buses. 6. For the time being, have some factories build hybrid or all-electric cars (and batteries). It will take a few years for people to get used to the new ways to transport ourselves, so if we're going to have automobiles, let's have kinder, gentler ones. We can be building these next month (do not believe anyone who tells you it will take years to retool the factories -- that simply isn't true). 7. Transform some of the empty GM factories to facilities that build windmills, solar panels and other means of alternate forms of energy. We need tens of millions of solar panels right now. And there is an eager and skilled workforce who can build them. 8. Provide tax incentives for those who travel by hybrid car or bus or train. Also, credits for those who convert their home to alternative energy. 9. To help pay for this, impose a two-dollar tax on every gallon of gasoline. This will get people to switch to more energy saving cars or to use the new rail lines and rail cars the former autoworkers have built for them. Well, that's a start. Please, please, please don't save GM so that a smaller version of it will simply do nothing more than build Chevys or Cadillacs. This is not a long-term solution. Don't throw bad money into a company whose tailpipe is malfunctioning, causing a strange odor to fill the car. 100 years ago this year, the founders of General Motors convinced the world to give up their horses and saddles and buggy whips to try a new form of transportation. Now it is time for us to say goodbye to the internal combustion engine. It seemed to serve us well for so long. We enjoyed the car hops at the A&W. We made out in the front -- and the back -- seat. We watched movies on large outdoor screens, went to the races at NASCAR tracks across the country, and saw the Pacific Ocean for the first time through the window down Hwy. 1. And now it's over. It's a new day and a new century. The President -- and the UAW -- must seize this moment and create a big batch of lemonade from this very sour and sad lemon. Yesterday, the last surviving person from the Titanic disaster passed away. She escaped certain death that night and went on to live another 97 years. So can we survive our own Titanic in all the Flint Michigans of this country. 60% of GM is ours. I think we can do a better job. Yours, Michael Moore MMFlint@aol.com MichaelMoore.com Labels: bailout, bankruptcy, General Motors, Michael Moore, UAW Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Nader Statement On GM BankruptcyFrom PR Newswire:WASHINGTON, June 1 /PRNewswire-USNewswire/ -- Consumer advocate Ralph Nader today issued the following statement on GM's bankruptcy filing: Today's bankruptcy declaration in federal court by General Motors is an avoidable, crude weapon of mass devastation for workers, dealers, auto suppliers, small businesses and their depleted communities. For GM's voiceless owners -- the common shareholders -- it is a wipeout. The proximate cause of the bankruptcy was supposed to be the inability of GM and the government's auto task force to reach an accommodation with GM's bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy? The bankruptcy and the GM restructuring plan are the product of a secretive, unaccountable, Wall Street-minded government task force that assumed power because of a Congressional abdication of historic magnitude. By all rights, the restructuring plan should have been submitted to Congress for deliberative review and decision. There is little doubt that GM's chronic mismanagement and the deep recession require restructuring and scaling back the auto giant. But the bankruptcy and restructuring plan appear poised to do so in ways that will needlessly harm the stakeholders meant to be helped by Washington's rescue of GM. Many, many jobs will be lost that could be preserved. There is reason to question whether too many plants and brands are being closed -- a matter that should have been taken up in Congress. Just the closing of hundreds of (GM and Chrysler) dealerships will cost more than 100,000 jobs. These sacrificed jobs will fray communities and impose enormous expenses on government entities that will have to provide unemployment and social relief, while suffering lost tax revenues. The unionized workforce will see the wage and benefit structure slashed -- even though auto manufacturer wages make up less than 10 percent of the cost of a car -- so that new jobs at GM will no longer be a ticket to the middle class. This will drag down the wage structure of the entire auto industry -- exactly the wrong direction for the country. America's manufacturing base will be further eroded, as GM pursues its Grand China Strategy -- increasing manufacturing outside of the United States, and increasingly from China, for import back into the United States. Unanswered questions persist about how GM's valuable operations in China, and unrepatriated profits, will be treated in bankruptcy, or excluded from bankruptcy. Victims of defective GM products may find themselves with no legal avenue to pursue justice. In the Chrysler bankruptcy, with complete disregard for the real human lives involved, the Obama task force and auto company have maneuvered effectively to extinguish the product liability claims of victims of defective cars. In a worst case scenario for the GM bankruptcy -- involving an extended court proceeding or severe impairment of consumer confidence in the GM brand -- all of these problems will be magnified. Again, given the path to resolution with the bondholders, this is an avoidable gamble. The GM/task force bankruptcy plans appear geared to saving the General Motors entity -- but at a harsh and often avoidable cost to workers, communities, suppliers, consumers, dealers, and the nation's manufacturing capacity. It will also prove to be a complex political nightmare for President Obama. With the company entering bankruptcy, the next challenge will be to ensure that the government exercises its ownership rights to undo and mitigate, to the extent possible, these damages. Among other measures, this should involve revisiting the serious drag-down, concessionary wage terms imposed on the United Auto Workers; demanding a moratorium on GM's outsourcing of production of cars for sale in the United States; and establishing successorship liability for the new GM, so that victims of dangerous and defective GM cars can have their day in court. Labels: auto industry, bankruptcy, General Motors, Ralph Nader Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Changing the Auto Industry from the Wheels UpWe just posted a new web-only article on the auto industry, by Alejandro Reuss of the D&S collective. Here is the introduction to the article:Changing the Auto Industry from the Wheels Up The problems of the U.S. auto industry call for radical solutions. By Alejandro Reuss | Dollars & Sense | May 13, 2009 The "Big Three" U.S. auto companies are not facing a crisis – they are facing multiple interrelated crises at once. Chrysler, General Motors, and Ford have posted tens of billions in losses over the last few years. They suffer from chronic overcapacity, producing more cars than they can sell, and have ended up selling cars at a loss. Their cars are widely viewed as lagging behind those of international competitors in quality, styling, and reliability. They have focused on fighting fuel-efficiency standards rather than developing new, fuel-efficient vehicles. They have bet heavily on large, gas-guzzling models and are playing catch-up Toyota and Honda in the development of hybrid cars. They face significant cost disadvantages compared to their main competitors, mainly due to retiree health and pension "legacy costs." And, on top of all this, a deep recession has hammered car sales. Already operating in the red before last year, the Big Three have been burning through billions in cash reserves during the current recession. General Motors, having posted losses every year since 2005, lost over $30 billion in 2008. It has reported that, in the first quarter of 2009, it lost another $6 billion (and depleted its cash reserves by over $10 billion). Ford has posted losses since 2006, including about $15 billion in 2008. Chrysler lost $8 billion last year. With their companies teetering on the edge of bankruptcy, GM and Chrysler executives appeared before Congress last November asking for a government bailout. In December, the Bush administration announced $13.4 billion in loans for GM and $4 billion for Chrysler. (Since then, both companies have asked for billions more.) In April, the Obama administration offered additional loans of one-half billion to Chrysler and up to $5 billion to GM. Lacking private sources of financing, the two companies have managed to stay in business this long thanks only to the government loans. The government has required both companies to submit restructuring plans, including concessions from workers and creditors, as a condition of the bailouts. At the end of March, the Obama administration rejected the submitted plans as inadequate. It gave Chrysler 30 days more to conclude a takeover deal with Italian auto giant Fiat, while GM got 60 days to submit a new restructuring plan. In late April, Chrysler appeared to have a deal with Fiat, with the Italian automaker set to take over operations and receive 20% of the company's stock (with a possible future increase to 35%). A United Auto Workers (UAW) retiree health-care trust would own 55% of the stock. The UAW accepted new concessions on wages and benefits, while the company's major creditors agreed to cancel billions in debt for about a third of its face value (plus less than 10% of the company's stock). When some creditors balked at the plan, however, the company filed for bankruptcy. Meanwhile, GM proposed a restructuring plan in which the federal government would own 50% of the stock (in exchange for the cancellation of about $10 billion in company debt), and the UAW retiree health-care trust nearly 40%, leaving the company's unsecured bondholders with just 10%. The plan included the shutdown of the company's Pontiac division and over 20,000 layoffs. Bondholders could still balk, however, in which case GM would go into bankruptcy as well. No matter what the outcome of the current crisis, the "Big Three" are not likely to return to the heights of their post-World War II heyday. In the 1950s and 1960s, the Big Three dominated the U.S. auto market. As recently as the late 1990s, they accounted for over 70% of total U.S. sales of new cars and light trucks. Now, they account for less than 50%. In the mid 1950s, General Motors alone accounted for over 50% of U.S. new-car sales. Today, the company's market share is about 20%. Under the company's proposed restructuring plan, it would employ less than 40,000 union auto workers, less than one tenth the number the company employed at its peak in 1970. There is no way to put Humpty-Dumpty together again, and it does not seem that any of the major players in this drama—the companies' managements, the leadership of the UAW, or the government—really believe that there is. The real question is whether something new and better will be built from the wreckage of this industry. Read the rest of the article. Labels: auto industry, Chrysler, ford, General Motors, UAW, VEBA Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). GM Bankruptcy Clock Ticking FastGM appears likely to follow fellow carmaker Chrysler into bankruptcy court. The company lost $6 billion in the first quarter of the year, with no signs that sales will improve. The company faces a June 1 deadline imposed by the government to drastically reduce its liabilities and expenses, including persuading the United Auto Workers (UAW) to accept stock to cover the company's $20 billion obligation to fund retirees' health benefits, and bondholders to accept pennies on the dollar, again in stock, for $27 billion in current debt. The company must get both the union and 90% of the bondholders to agree to the terms or the government will withhold future loans, driving the company directly into bankruptcy where a judge can impose terms on all parties.Bankruptcy would also ease the company's plans to slash 2,600 of 6,246 dealerships over the next year. --d.f. Labels: auto industry, auto industry loans, bankruptcy, Chrysler, Daniel Fireside, General Motors, GM Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). GM Dumps Pontiac and WorkersIn a last ditch to stave off bankruptcy, GM announced that it will ditch the Pontiac brand by the end of next year (Hummers, Saabs, and Saturns will be done by the end of 2009 but other companies may buy the brand names), cut 23,000 of its 61,000 factory jobs by 2011, and slash the number of dealers by 42% to 3,600, and offering creditors stock for debt. The US Treasury would end up with at least a 50% stake in the company, bondholders up to 10%, the UAW 39%, and existing stockholders 1%.Bondholders, who currently own $27 billion in company debt, are the key to the deal going forward. In a letter to bondholders, the company warned:
The company will close 16 of its 47 US manufacturing plants by 2012, including six this year and seven next year. The automaker has already received over $15 billion in taxpayer funding and must present a restructuring plan by June 1 in order to receive additional funding and avoid bankruptcy. --d.f. Labels: auto industry, bankruptcy, Daniel Fireside, General Motors, GM Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Big Corps Using Bailout Bucks For LobbyingIt's the best game in town. Get taxpayer bailout billions and spend some of the spare cash on lobbyists to press Congressional Reps and Senators into giving more money and ending onerous conditions like limiting executive compensation.There oughta be a law... --df From the Washington Post: Major recipients of federal bailout money spent more than $10 million to lobby lawmakers in the first three months of 2009, including arguing against pay limits for corporate executives, according to newly filed disclosure records. Labels: bailout, Citigroup, Daniel Fireside, financial crisis bailout, General Motors, JP Morgan Chase, lobbyists, TARP program Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). G.M. Loses $9.6 BillionJust posted to the New York Times website. Sorry if this ruins tomorrow morning's paper for you. It probably won't be such a good day for Rick Wagoner either, and he's probably ruining lots of UAW members' days too.DETROIT—The chief executive of General Motors met with government overseers on Thursday to explain the carmaker's financial situation, hours after G.M. reported a $9.6 billion south-quarter loss and said it was rapidly spending its cash reserves. The G.M. chief, Rick Wagoner, is expected to ask for more assistance as he sits down with the auto industry task force created by President Obama. The panel, led by Treasury Secretary Timothy F. Geithner and Lawrence H. Summers, the White House economic adviser, will oversee the restructuring at G.M. and Chrysler. Even as the meeting unfolds, G.M. finances were reaching a crucial point. The company said Thursday that its cash reserves were down to $14 billion at the end of 2008, including $4 billion it had borrowed from the government that month. G.M. spent $19.2 billion of its cash reserves in 2008. It spent $6.2 billion of the reserves—$2 billion a month—in the fourth quarter alone. Since then, G.M. has borrowed $9.6 billion more, but the company expects to go through that money quickly, and says more aid is necessary to remain solvent. "The economic situation is having a dramatic impact on our industry, on General Motors," G.M.'s chief financial officer, Ray Young, said on a conference call Thursday. "We're still forecasting a cash flow burn of $14 billion in '09, so we will need some additional funding support." The company has said that it needed a minimum of $11 billion to $14 billion in reserves to finance operations, but the estimates were made before the recent drop in auto sales and cuts by G.M. in response. G.M. lost $30.9 billion, or $53.32 a share, in 2008. For the fourth quarter, it lost $9.6 billion, or $15.71 a share, as its global sales fell 26 percent. In 2007, the company lost $43.3 billion, a record, mostly the result of a noncash accounting charge; it adjusted the figure higher by $4.6 billion on Thursday. The losses, though, are unlikely to shake investors, who have already realized the automaker's perilous state. G.M. said last week that it might need as much as $30 billion to complete the restructuring plan that it has submitted to the Treasury Department. Read the rest of the article. Labels: auto industry, auto industry loans, bailout, financial crisis, General Motors, Rick Wagoner Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Who Rules GM?GM is famous for being one of the world's largest transnational industrial corporations, for laying off its U.S. factory workers before it lays off its cheaper labor in its factories outside the Untied States, for manufacturing tanks for both the German Army and the U.S. Army during World War II, and for being so mismanaged that it can't compete successfully with Japanese Establishment-owned automobile manufacturers. So what's good for General Motors is not necessarily what's good for most people in the United States.But as the GM web site reveals, in recent years GM's board of directors has included the following U.S. Establishment businesspeople: 1. Morgan Stanley, North Carolina Mutual Life Insurance, Cousins Properties and Erskine Bowles & Co. Director, Carousel Capital Senior Advisor, University of North Carolina President and former Clinton White House Chief of Staff Erskine Bowles. 2. Goldman Sachs Group Director, former Sara Lee Chairman/CEO and University of Chicago and Art Institute of Chicago Trustee John Bryan. 3. Merrill Lynch, Home Depot, AMR Director and Flagler Development CEO Armando Codina. 4.Coca Cola Chairman/CEO, former Sun Trust Banks Director and Center for Strategic International Studies and U.S. Council for International Business Trustee E. Neville Isdell. 5. Deutsche Bank Advisory Board Member and former Compaq Computer CEO Eckhard Pfeiffer. 6. BP and Union Pacific Director, former Alliance Energy Chairman/CEO, University System of Georgia Chancellor and University of Chicago and Carnegie Mellon University Trustee Erroll Davis Jr. 7. Harris Corporation, Home Depot, Catalyst Director, former Pfizer Vice-chairman, Pfizer Foundation Chairman, Essex Woodlands Health Ventures Senior Adviser and University of Chicago Trustee Karen Katen. 8. Former Northrup Grumman Chairman, Fluor, Avery Denison and Mannkind Director, MIT Lincoln Library Advisory Board Member, California Institute of Technology and Haynes Foundation Trustee Kent Kresa. 9. E.I. DuPont de Nemours Executive Vice-President and Tufts University Trustee Ellen Kullman. 10. Former Ernst & Young Chairman/CEO and Loew's, Discover Financial Services and Henry Schein Director Philip Laskawy. 11. Former GE Fleet Services CEO and Ceridian Chairman/CEO Kathryn Marinello. 12. Kohlberg Kravis Roberts Senior Advisor and former Eastman Kodak Chairman/CEO George Fisher. 13. Former Astra Zeneca PLC-UK Chairman Percy Barnevik. 14. Former GM de Brasil President, Duke University Trustee and Harvard Business School Dean's Advisory Board Member G. Richard Wagoner, Jr. Similarly, in the early 1990s, GM's board of directors included the following U.S. Establishment businesspeople: 1. Citibank/Citicorp, PepsiCo and Johnson & Johnson Director Roger Smith. 2. Chevron/Gulf Oil, Bechtel and Boeing Director George Shultz. 3. J.P. Morgan & Co./Morgan Guaranty Trust Director Dennis Weatherstone. 4. Citibank/Citicorp, AT & T, Metropolitan Life Insurance Director and Rockefeller Brothers Fund Trustee James Evans. 5. National Bank of Detroit/NBD Bancorp and American Airlines Director Charles Fisher III. 6. Merck & Co. and NCR Corp. Director John Horan. 7. Marriott Corp. Director J. Willard Marriott Jr. 8. Chase Manhattan Bank/Chase Manhattan Corp., International Paper Co., and Pfizer Inc. Director Edmund Pratt Jr. 9. J.P. Morgan & Co./Morgan Guaranty Trust and Procter & Gamble Director John Smale. 10. AT&T Director Thomas Wyman. So don't be surprised if the corporate folks who still rule the privately-owned and not yet-nationalized GM eventually get a big corporate welfare grant from the U.S. Establishment's federal government—-before GM's rulers once again start laying-off more of its U.S. factory workers in 2009 who are members of the UAW. --b.f. Labels: bailout, Bob Feldman, General Motors Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Big Three Spent $30 Million on Lobbying in '08From Bob Feldman:If you check out the Center for Responsive Politics, you'll notice that General Motors, Ford, and DaimlerChrysler have already spent $20 million in 2008 on lobbying Congress, the White House and federal government agencies to serve their special transnational corporate interests. GM, for example, spent over $10 million on lobbying the federal government in 2008, while Ford and DaimlerChrysler each spent over $5 million on lobbying federal agencies, the U.S. Congress and the White House in 2008. In addition, during the 2008 election cycle, U.S. automobile industry political action committees (PACs) and U.S. automobile industry executives made over $14.6 million in campaign contributions to Democratic or Republican candidates for federal office. To see a list of all the Members of Congress who accepted campaign contributions from the U.S. automobile industry in 2008, click here. --bf Labels: auto industry, bailout, Bob Feldman, Center for Responsive Politics, Chrysler, financial crisis, ford, General Motors Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). GM Shares Plummet On Analyst ReportA Deutsche Bank analyst forecast that GM's shares would soon be valued at $0 sent the car company's stock plummeting another 24% today. The analyst took the view that GM would either enter into bankruptcy or would enter into a government bailout that would leave shareholders with no equity.The stock fell to $3.02 in early trading, their lowest in over 60 years. Shares climbed back to $3.36 by the end of trading. Labels: auto industry, financial crisis bailout, General Motors, GM Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). $600 Billion Plan: Not Enough to Sustain RallyDespite a stimulus plan of historic scale, the announcement of China's $600 billion program, though sufficient to fuel major rallies on equity markets in Asia and, to a lesser degree, Europe early, has been eclipsed by a continuing stream of bad bad news from the US. And the article doesn't even mention Circuit City's filing for bankruptcy. From Reuters:Oil falls, recession concerns outweigh China plan Mon Nov 10, 2008 1:46pm EST By Edward McAllister NEW YORK (Reuters) - Oil prices fell on Monday as concerns about the mounting global financial crisis offset Saudi Arabia's move to cut supplies and China's launch of a $600 billion economic stimulus plan. U.S. stocks cut gains as General Motors shares slumped, Fannie Mae recorded a record $29 billion loss and the United States pledged further support for struggling insurer AIG. U.S. crude fell 91 cents to $60.13 a barrel by 12:41 p.m. EST, after rising as high as $65.56 on news of China's stimulus plan. London Brent crude was down 63 cents at $56.72. "The crude futures rally didn't last even half a day today because the oil markets are vulnerable to the steady drumbeat of bad economic data," said Gene Mcgillian, an analyst at Tradition Energy in Stamford, Connecticut. "Bad news from Fannie Mae, AIG and earlier GM all point to demand destruction," he added. The U.S. government restructured its bailout of American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant. China's spending package aims to boost domestic demand and help the world's forth largest economy ride out the credit crisis, but analysts said it would take time to filter through to the energy markets. "If you step back, you realize China's stimulus could take months, or even years, to affect energy markets," said Phil Flynn, an analyst at Alaron Trading. "After the initial boost to the market, the excitement is wearing off. It's an admission that China's economy is slowing." Saudi Arabia told refiners in Asia it would cut December supplies by 5 percent, signaling its adherence to an OPEC plan to cut output. Oil prices fell nearly 10 percent last week and dipped below $60 the previous week to their lowest level since March 2007, after a string of dismal economic reports from the United States sharpened fears of a protracted recession. (Additional reporting by Gene Ramos and Robert Gibbons in New York, Fayen Wong in Perth and Barbara Lewis and Alex Lawler in London; Editing by Walter Bagley) Labels: AIG, China, Circuit City, Fannie Mae, financial crisis, financial crisis bailout, General Motors Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). No GM/Chrysler DealAfter losing a staggering $4.2 billion in the 3rd quarter, GM has been forced to call off talks about it buying fellow beleaguered car maker Chrysler.Cerberus Capital Management, the private company that owns Chrysler, is still on the hunt for some kind of public or private lifeline. In a side note (in case you missed it here), Cerberus is chaired by former Bush administration Treasury Secretary John Snow and its board includes Dan Quayle, who was vice president under former president George H.W. Bush. Labels: auto industry, Cerberus Capital Management, Chrysler, Dan Quayle, General Motors, GM, John Snow Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). GM Chrysler Deal Would Cause Massive LayoffsAs sales at US automakers continue to fall through the floor, Chrysler and GM are trying desperately to hammer out a merger as their sales and cash reserves evaporate. They are currently seeking $10-12 billion dollars in government support to cover merger-related expenses. It's unclear how the merger of two money-losing companies would combine to make a profitable one.UAW President Ron Gettelfinger has expressed alarm at the deal's potential for massive job losses. The latest estimates are that Chrysler alone would have to cut more than half of its current workforce of 67,000 employees, and an additional 50,000 jobs in related industries would be in danger, according to the consulting firm of Grant Thornton. To complicate matters, the two cash-starved companies are currently facing payments of $7 billion each by 2010 into a the voluntary Employee beneficiary association, or VEBA, a trust fund designed to cover the future health care costs for union retirees. Any changes to the fund resulting from a merger would need union approval. The UAW is trying to reinsert itself as a major player in the talks, and has recently hired top ex-auto industry execs to help with its lobbying efforts. Labels: auto industry, Chrysler, General Motors, GM, Ron Gettelfinger, UAW, VEBA Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Automakers Ditch Jobs, 401Ks, and NASCARA quick gloom and doom update on the US auto industry today.Chrysler announced that it was cutting 1,825 jobs. The cuts are about 6% of the company's hourly workforce of 33,000. General Motors announced that it is indefinitely suspending company matching contributions to employee 401K retirement accounts. The Washington Post reports that Detroit automakers are pulling out of NASCAR: GM's annual investment alone was rumored to be $120 million-$140 million at the peak of its involvement in NASCAR. But it severed sponsorships with Bristol Motor Speedway and New Hampshire Motor Speedway this summer, and deeper cuts are promised as part of GM's $10 billion cost-savings program. Labels: 401K, auto industry, Chrysler, General Motors, GM Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). General Motors In a DitchGM shares plunged to their lowest price since 1949 before recovering slightly, reports the Washington Post. Analysts are concerned that the global auto industry is on the verge of "outright collapse." Standard & Poor said on Thursday that it is considering cutting the rating of both GM and Ford to "junk" status, which would sharply increase their cost of borrowing.Both domestic and imported car sales have been plummeting in the wake of the financial market meltdown. According to a company statement "Clearly we face unprecedented challenges related to uncertainty in the financial markets globally and weakening economic fundamentals in many key markets," GM said in a statement on Friday. Somehow this doesn't inspire a lot of confidence. Labels: auto industry, financial crisis, financial crisis bailout, General Motors, GM, Washington Post Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
