"I’m All Right, Barack" - Gov take over of GM

http://article.nationalreview.com/?q=MmI5MzdkOTQ5YmQzZDczZjdhMjU5N2EyNGE2NDQyMmE=

What we now face is a nationalized car maker, with the government owning 51 percent of the company and the United Auto Workers (UAW) union holding a stunning 38 percent of shares. Bondholders, who normally have first claim on a company's assets, receive only 10 percent instead, and the current stockholders get the remaining 1 percent.

Consider that for a moment. The government and the current administration's political fellow-travelers own 89 percent of an American company. This is a terrible precedent. Just ask the domestic British auto industry. Unfortunately, it won't answer, because most of it went out of business when the British government tried the same tactic in the 1970s. The government attempted to save a dying domestic industry by nationalization and heavy investment in R&D to produce a "product-led" recovery. That recovery never emerged, because the unions put saving jobs before producing good vehicles (as I detail elsewhere). With the UAW now owning 38 percent of the company, should we expect anything different from GM?

The GM nationalization ignores the lessons of history, and its terms are plainly unjust. The UAW, acting for its members who are former workers and GM pensioners, did indeed represent something like $20 billion worth of GM's liabilities. So the idea that the union should get an equity stake in return for that is fair enough. However, the UAW is getting three times as much as the bondholders, who represent $28 billion of GM's outstanding liability. When the bondholders protested, the administration refused to meet with them.