Wheels keep turning: A production line at Holden's Elizabeth plant in Adelaide, Australia. Holden Australia is a wholly owned subsidiary of GM and employs thousands of workers in South Australia and Victoria. Australian Industry Minister and Senator Kim Carr, says GM's bankruptcy, which is the biggest in US manufacturing history, will have no immediate effect on Holden Australia. "We've spoken directly with the company. Its future is guaranteed," he told ABC News. Caption & Image Credit: Australian Broadcasting Corporation (ABC News)When A Government Takeover Of A Business Sector ... Nukes
Okay, okay, okay ... so now we all come to the point where we can understand why it does not make sense to anyone why a Government can not, and should not take over the running of a business enterprise.
Two words - UNION CONTRACTS.
When a free market enterprise goes belly up due to changing demand or poor management decisions, everyone who was involved in that business has skin in the game.
What happens when a Government owns a business enterprise? Everything ... including the culture the enterprise, gets twisted until it becomes unrecognizable.
This excerpted and edited from the New York Times -
Automaker Pensions Underfunded by $17 Billion
By NICK BUNKLEY - NYT - Published: April 6, 2010
The pension plans at General Motors and Chrysler are underfunded by a total of $17 billion and could fail if the automakers do not return to profitability, according to a government report released Tuesday.
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If either company’s plan must be terminated, the government would become liable for paying benefits to hundreds of thousands of retirees. The effect on the government’s pension insurer, the Pension Benefit Guaranty Corporation, would be “unprecedented,” the report said. The agency manages plans with assets totaling $68.7 billion, less than the $84.5 billion in G.M.’s plan alone.
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The Treasury Department owns 61 percent of G.M. and 10 percent of Chrysler as a result of the [FORCED] emergency loans the carmakers received last year. The government spent $81 billion bailing out the companies and others in the auto industry.
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“In the event that the companies do not return to profitability in a reasonable time frame, Treasury officials said that they will consider all commercial options for disposing of Treasury’s equity, including forcing the companies into liquidation,” the report said.
In addition, the report said the government’s interests as a shareholder of G.M. and Chrysler could clash with those of pension participants and beneficiaries.
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G.M. is scheduled to release its financial results for 2009 on Wednesday. Chrysler plans to provide an update on April 21.
[Reference Here]
We, at Maxine, will update when these financial results become available.
