GM et al.: What To Do Part 4

TW: See parts 1-3 below
http://treylaura.blogspot.com/2008/11/gm-what-to-do-part-1.html
http://treylaura.blogspot.com/2008/11/gm-et-al-what-to-do-part-2.html
http://treylaura.blogspot.com/2008/11/gm-et-al-what-to-do-part-3.html

This post focuses on a Robert Reich piece where he surfaces, somewhat ironically given his left-wing reputation, a concept that has been underplayed. UAW concessions in conjunction with the bailout accompanied by severe concessions in particular by automaker bondholders. While I am skeptical that the UAW or the bondholders will provide the concessions as I am confident they would much prefer to play a game of political chicken with the government (e.g. bail us out or we will go bankrupt and test the theory that a GM bankruptcy could be the catalyst for GD 2.0) in an effort to get a no strings bailout. But I like Reich's suggestions.

From Reich:
"The Treasury seems to have lost sight of its real client. It's client is not the creditors, shareholders, or executives of any of these firms. Its sole client is the American people...In exchange for government aid, the Big Three's creditors, shareholders, and executives should be required to accept losses as large as they'd endure under chapter 11, and the UAW should agree to some across-the-board wage and benefit cuts. The resulting savings, combined with the bailout, should be enough to allow the Big Three to shift production to more fuel efficient cars while keeping almost all its current workforce employed. Ideally, major parts suppliers would adhere to the same conditions."
http://robertreich.blogspot.com/2008/11/real-difference-between-bankruptcy-and.html