'Saving' auto industry still out on a test drive

info@islandpacket.comSeptember 26, 2012 

Did the Democrats state often enough at their national convention that they saved the U.S. automobile industry? They tried to squeeze it in so much they didn't have time to point out the first bailout loan to GM happened on President George W. Bush's watch. General Motors wound up going through bankruptcy anyway.

In doing the structured bankruptcy, the administration had to choose who got short-changed: the bondholders or the unions.

The bondholders were primarily pension funds and people with their 401(k)s. The rationale seemed to be this: The unions substantially supported Obama's campaign. The middle class bondholders would hardly know they took a loss for some time. Besides, we can tell the middle class we're on their side. They believed it in the past. We'll do it again, and they'll forget about it by Election Day. The unions win.

Also not mentioned in Charlotte was that GM would stand for Government Motors by virtue of the U.S. getting a large chunk of GM stock. Sounds good, but even with the stock market rising, the current price of GM stock would have to double for taxpayers to break even. GM is shifting more production to plants overseas; the Volt is a failure even with the subsidies to the buyer.

From time to time, there are rumors that GM may have to file for another bankruptcy. Let's hope not. From the structured bankruptcy they still owe us $279 billion.

Richard Geraghty

Hilton Head Island

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