Which would make you a member of the UAW (a retiree, in fact):
But in its aggressive dealings with U.S. automakers, most recently General Motors, the Obama administration is coming dangerously close to engaging in financial engineering that ignores basic principles of fairness and economic realities to further political goals.
It is now clear that there is no real difference between the government and the entity that identifies itself as GM. For all intents and purposes, the government, which is set to assume a 50 percent equity stake in the company, is GM, and it has been calling the shots in negotiations with creditors. While the Obama administration has been playing hardball with bondholders, it has been more than happy to play nice with the United Auto Workers. How else to explain why a retiree health-care fund controlled by the UAW is slated to get a 39 percent equity stake in GM for its remaining $10 billion in claims while bondholders are being pressured to take a 10 percent stake for their $27 billion?
Do the math. The retirees get 4 times as much of the equity of GM, even though their claim is less than 40 percent as large. That would be a ten-to-one rejiggering of the deal in favor of the UAW members, which would be dubious even if its priority was equal to that of the bondholders. Since many of the bondholders are secured, and have higher priority than the junior creditors (including the fund), the transfer of wealth from the bondholders to the retirees is even larger.
The above quote is from the Washington Post, by the way. Hardly a right wing publication. If the WaPo is gagging, you know it has to smell really bad.
Update. Well, you won’t love it as much as the WaPo article would lead you to. According to the FT, GM unexpectedly announced that the UAW will only get 17.5 percent of the company, plus about $9 billion in other consideration (preferred shares and a note). Given that their claims amounted to $10 billion, that’s still a much better deal than the (more senior) bondholders are getting. According to the FT article, the latter still get 10 percent of the equity in exchange for their $27 billion in securities.