Word: gm
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General Motors' (GM) creditors have rejected a program that would have swapped most of the auto company's debt for equity, effectively driving the firm into Chapter 11. The century that began with the mass production of the Model T in 1909 and ended with the worst collapse of domestic vehicle demand in history is over. It was a 100-year period when Detroit was considered the seat of global manufacturing prowess, a period when the Big Three were among the largest, and often the most profitable, companies in the world...
...According to the Financial Times, "Hopes that GM can follow a similarly rapid path through court are being dimmed by a building backlash from lawmakers, some of whom are claiming that creditors' rights are being given short shrift, while others complain about job cuts and the closure of dealerships...
...process may get some traction. Blue collar workers across the country are becoming enraged at seeing their peers being thrown out of jobs with support from the Treasury. Local towns and cities will have to support workers at dealerships that close. Banking and investment firms not involved in the GM situation will have to ask themselves if their future rights could ever be undermined by a process driven by the financial might of the U.S. government. (Read "Is This Detroit's Last Winter...
...course, the entire GM restructuring process will raise national unemployment...
...pockets of resistance grow, GM may not have as easy a path through a bankruptcy court as Chrysler has had. Congress may decide to have an extended debate over whether the Treasury has the right to disintermediate bondholders and union workers. If the argument goes on long enough, the auto industry's restructuring could still turn into a liquidation...