A Government Motors Reorganization Update

Details are "leaking" on the proposed reorganization that is turning General Motors into Government Motors.

Here's a quick snap-shot.

Bondholders are owed $27 billion in secured debt. This is supposed to be ironclad stuff, and it would be in any other sensible universe. However ...

... Big Brother (the U.S.) has loaned GM $15.54 billion. This tail will wag the dog.

The Obama Auto Task Force proposes that the U.S. government wind up with a 50 percent stake in the company.

The United Auto Workers will be awarded 39 percent of the company as a reward for making concessions this past week on wages and benefits. Add it up: 50 plus 39 equals 89 percent.

For their $27 billion, the bondholders get a 10 percent stake in the company, and the bonds are being converted to common stock. At least they have something, you say? Consider this:

Debra June, a substitute teacher from Florida, reports today’s Wall Street Journal — will see her $70,000 in GM bonds swapped for GM stock worth about $280.

Or consider Dennis Buchholz:

... a 67-year-old retired tool-and-dye supervisor from Warren, Mich., has $98,000 in GM bonds. Mr. Buchholtz, who gets no pension, uses interest from the bonds that amount to about $600 a month to supplement his social security payments. About 10% of Mr. Buchholtz’s life savings is invested into GM bonds.

His new stock will be worth $392.

These are the people who are being demonized by the Obamatrons.

Who are the real demons here?