More information about GM’s Chapter 11 bankruptcy is beginning to emerge. The Kansas City Star reported on June 2 that this is “the biggest such filing by an industrial manufacturer and the fourth-biggest in U.S. history. It will also be one of the largest peacetime nationalizations of private enterprise.” In addition to the $20 billion the federal government has already pumped into the company, President Barack Obama has announced that another $30 billion in taxpayer money will be committed. This will bring the government’s ownership stake in GM to 60 percent.
The Obama administration’s efforts to borrow the U.S. economy into prosperity are meeting more and more skepticism on Wall Street as investors in the bond market are fleeing the U.S. debt market for greener investment pastures. The understandable skepticism of bond investors has forced the U.S. Treasury to increase the interest yields on 10-year Treasury notes, increasing the interest burden of new debt on taxpayers by more than 60 percent since December.
After years of suspense, the bankruptcy that surprises nobody is finally official. One of America’s largest and proudest corporations, GM, has filed for Chapter 11 protection in what is being billed as the fourth-largest bankruptcy in American history and the largest ever for an industrial corporation. The failing auto company claims $82.29 billion in assets against almost $173 billion in debt — this, be it duly noted, after billions in federal government bailout monies were shoveled GM’s way.
A hundred and eight billion dollars — $108,000,000,000. Not exactly an eye-popping sum anymore, in an era of multi-trillion-dollar annual budgets and multi-trillion-dollar annual deficits. Still, even with government spending streaking into the stratosphere, $108 billion is not mere chump change, especially when it’s leveraged as seed money.
Will the Obama spend-a-rama finish off the dollar as the world's reserve currency? It well may, and sooner than most people think. Any day now we may wake up to headlines announcing that the International Monetary Fund's SDR (Special Drawing Rights) is being adopted as the new global currency.