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.
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.
In order to meet government out-of-court restructuring demands and to be eligible for more government financing, Chrysler agreed last week to a deal that gave the United Auto Workers union 55 percent ownership and a seat on the board of directors of the restructured company. The UAW stands to exercise major influence on the U.S. government during the impending bankruptcy proceedings.
The handwriting has been on the wall for Chrysler for many, many years, but it appears that the storied 84-year-old automotive corporation, almost three decades after its last government bailout under CEO Lee Iacocca, has reached the end of the line. After the swift breakdown of last-ditch negotiations yesterday, Chrysler Corporation and its creditors are in court today to begin proceedings for the first-ever bankruptcy filing by a major U.S. auto corporation. For the moment, the White House and Chrysler officials are still chirping about a well-ordered bankruptcy that would allow a leaner, retooled Chrysler to emerge from receivership in 30 days or so. But that won’t happen.
The Obama administration is still thinking bank nationalization. In the latest twist to the saga of troubled American megabanks, the New York Times reported on April 19 that administration officials are considering converting bailout loans to the 19 biggest U.S. banks into shares of common stock, allowing them to stretch further the estimated $134.5 billion remaining of the $700 billion bank bailout fund passed by Congress last October.
There's something fundamentally wrong with the world when a country known for being the very embodiment of Old World socialism — Sweden — serves up an object lesson in capitalism to the United States. Amid all the global furor surrounding government bailouts, rescue packages for corporations deemed "too large to fail," and scandalous executive bonuses shelled out with taxpayer dollars, tiny Sweden has been quietly doing the right thing where its own pivotal domestic automaker, Saab, is concerned.
It's official: the Obama administration intends to nationalize the entire financial sector. If there were any lingering doubts as to the intentions of President Barack Obama and Treasury Secretary Timothy Geithner, they were dispelled by an announcement on March 26 detailing the Treasury Department's new "framework for regulatory reform."
The Obama administration is now in the business of subsidizing the auto parts industry. In yet another slug of taxpayer money intended to prevent the collapse of GM and Chrysler, the Treasury announced on April 8 it was making available $5 billion in short-term financing for auto parts suppliers. The money is intended to keep manufacturers and suppliers of parts to GM and Chrysler afloat while the beleaguered automotive giants struggle for survival.
The U.S. Citizenship and Immigration Services (USCIS) announced on April 8 it has received enough H-1B applications to meet the congressionally mandated cap of 85,000 H-1B visas for fiscal year 2009. The H-1B visas are given to foreign workers in “specialty occupations” (science, engineering, law, medicine, computer programming, etc.) where U.S. employers have filed petitions claiming there are not qualified U.S. applicants to fill the jobs.
“The U.S. may suffer further job losses in the coming months” began the April 3 Bloomberg.com story on federal government reports that the U.S. economy shed an estimated 633,000 jobs in March. The same federal report also revised upward the estimate of job losses for January by nearly 100,000, to 741,000 (the earlier estimate for January was 655,000 jobs lost). The unemployment rate now stands at 8.5 percent, the highest in more than 25 years.
In a move heralding the Obama administration’s most aggressive intervention in the business sector to date, the federal government has forced GM CEO Rick Wagoner to step down. The change in leadership was announced by GM in a statement released in Wagoner’s name on Monday. In it, the former CEO said the government asked him to leave. “On Friday I was in Washington for a meeting with administration officials,” Wagoner begins. “In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have.”