Bear Stearns verdict: E-mails lose cred

1

Goldman CEO says he does 'God's work'

2

Ft. Hood killer: Pre-traumatic stress disorder

3

What up, White House?

4

Chrysler bankruptcy 'gives consumers confidence,' anonymous person declares on eve of GM bankruptcy

By Ward Harkavy in Bailouts, Bankruptcy, Featured, Planes, trains, automobiles, Unions
Wednesday, May. 27 2009 @ 7:41AM
GM-red-ink450.jpg
People who go through bankruptcy should be so lucky as Chrysler and GM. Bloomberg News, relying on what it calls "a person familiar with the matter," says today that Chrysler's "swift bankruptcy process will give consumers confidence" that GM can do the same when it officially capsizes in the next few days. This anonymous but optimistic person who no doubt works for either the auto industry or the government offers more spin:

Chrysler's May sales were similar to those in April, showing consumers have taken President Barack Obama at his word that he intends for a retooled company to survive, the person said. That leaves consumers feeling more optimistic that if GM goes through a similar process, warranties and service will be provided, the person said yesterday.

Unbelievable leap in logic and unwarranted certainty that the stats "show" this. If you believe it, then you're someone who takes the salesman's word that paying for undercoating is a smart move.

When GM's bankruptcy does happen, the U.S. government could own about 70 percent of the automaker, but nobody from the government will move into the boardroom, even for a brief period, according to reports. More from Bloomberg:

U.S. ownership would be for the shortest period of time possible and, as a stockholder, the government would participate as minimally as would be responsible, the person familiar told Bloomberg. No government employees will serve on GM's board.

At least Rick Wagoner won't still be there either. While GM was sputtering toward its total breakdown, Wagoner garnered a 167 percent raise and a $1.8 million bonus. And then he was allowed to keep his huge pension package with no cuts even though he "retired early," as the company spun news of his exit last month.

Compare that with the way laid-off employees of the Tribune Co. were denied severance when they were laid off shortly before the big Chicago-based media conglomerate filed for bankruptcy this past December.

Anyway, back to GM: Thankfully, news outlets are no longer buying the bull that Wagoner "retired." As Bloomberg notes:

Former GM Chief Executive Officer Rick Wagoner had said that bankruptcy should be avoided. GM, in its Feb. 18 restructuring plan for the government, cited a study saying 80 percent of consumers wouldn't buy a car from a bankrupt company.

Wagoner said as recently as March 17 that a bankruptcy "might not work." He was forced out by the Obama administration later that month.

GM's workers, on the other hand, have had no choice but accept huge cuts during the bankruptcy process, and the UAW will wind up, in return, with an estimated 17.5 percent of a company sharply reduced in size and still faced with continuing and massive layoffs.