FINLEY: Turning union cash to ash
Union greed has dismembered Michigan

Legend has it that during a brutal contract bar -gaining session, Harry Bennett, Hen-ry Ford’s enforcer, attempted to break the tension by passing around snapshots taken during a visit to Maxon Lodge, a gorgeous hideaway in the woods of northern Michigan.

Walter Reuther, architect of the United Auto Workers’ rise, looked over the photographs, tossed them on the table and said to Bennett: “Come the revolution, we’ll own that place.”

It was no idle threat. In 1967, flush with cash from a bulging membership, the UAW purchased the lodge and 1,000 acres on Black Lake.

And, as often happens with revolutionaries, the temptations of power were too strong to resist.

The place is closing down. Another union boondoggle. Good riddance.

I hope people will join me in boycotting the purchase of soon-to-be-union-owned GM and Chrysler.

Some on the conservative side of the aisle tell us that we have a patriotic duty to “buy American.” I do that where I can, but not at the expense of my own well-being. Now, with the help of Bush in his last few days in office, Barack Obama is close to realizing his dream of turning every American industry he can get his hands on into a patronage farm for his shock troops.

Here is to hoping 2010 provides a reversal to these awful trends, but that doesn’t mean it isn’t time to start looking for a “exit strategy” of some sort.

UAW to Get 55% Stake in Chrysler for Concessions

The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal.

Fiat SpA “eventually” will own 35%, and the U.S. government and Chrysler’s secured lenders together will end up owning 10% of the company once it is reorganized, that summary said.

The summary was distributed Monday evening at a gathering of union leaders in Sterling Heights, Mich. The deal was first disclosed Sunday night. The UAW aims for Chrysler workers to vote Wednesday on the proposed agreement, which requires changes to the union’s current Chrysler contract.

According to the summary, Chrysler will also issue a $4.59 billion note to the health-care trust fund that the union will manage for retired workers. The agreement said Chrysler will pay $300 million in cash into the trust fund in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023.

The trust fund will own a “significant” amount of Chrysler stock and will be allowed to appoint a representative to Chrysler’s board, the summary said.

“While we realize the proposed sacrifices for UAW members are painful, we fought to maintain our wages, our health care and our jobs,” UAW President Ron Gettelfinger wrote in a letter with the summary. The UAW summary also said the accord would provide the union with regular updates from the company on its long-term strategy and product plans.

GM Offers U.S. a Majority Stake

General Motors Corp. outlined a new turnaround plan that would leave the U.S. government controlling the auto maker, as it set up a showdown with bondholders that could determine whether the company lands in bankruptcy court.

Under the plan, GM is asking the Treasury Department for an additional $11.6 billion in loans, on top of the $15.4 billion it has already received. It envisions giving the government at least half ownership of the company as payment for half of the loans.

At the same time, GM said it would use stock instead of cash to pay off half the $20.4 billion it owes a United Auto Workers fund to cover retiree health care. That stock would leave the union owning about 39% of GM.

The upshot would be the transformation of a troubled American icon, leaving it in the hands of the government and its main union. The situation, fraught with complications and potential conflicts, comes on top of the U.S. government taking stakes in banks and insurer American International Group Inc.

Also Monday, the UAW and Chrysler LLC disclosed that the union would own 55% of that restructured car maker, while Fiat SpA would get 35% and the U.S. and lenders would own the rest.

GM told bondholders it wants to swap up to $27 billion in unsecured debt for a 10% company stake. If bondholders tender less than 90% of the debt, GM is prepared to file for bankruptcy protection, Chief Executive Frederick “Fritz” Henderson said.

These were two horribly managed companies whose Unions and Executive leadership lead them to disaster. They should have been allowed to go under. Here is a note to all the Union Drones in the EU and the US…

…there isn’t enough money in the world to fund your insane demands!!!

You’ve bankrupted entire states, large companies once thought invincible, and corrupted the entire financial industry. You are the new “robber barons.” Anything that isn’t tied down, you steal, and anything thing you can pry loose isn’t tied down.”

Unions have become the new definition of greed.

Of course, the goose had a strong hand in its own destruction

UAW grants concessions, exec warns of depression

DETROIT—- Worried about their jobs and warned that failure could lead to a depression, hundreds of leaders of the United Auto Workers voted overwhelmingly Wednesday to make concessions to the struggling Detroit Three, including all but ending a much-derided program that let laid-off workers collect up to 95 percent of their salaries.

When I read that sentence above, I want heads to roll. I want UAW management (Note to lefties: Unions are corporations too, and just as corrupt as any “for profit” corporation!) to be tarred and feathered by their workers. I want GM engineers and salespeople to ransack the homes of every board member and top management at GM. WHAT WERE THESE IDIOTS THINKING!

I really no longer care about kicking this can down the road so future generations can deal with the “something for nothing” mentality that has metastasized through out EVERY STRATA of American culture. Maybe a REALLY BAD depression is what these people need. With the loss of character and growing moral hazard that comes from every bailout, a huge depression/collapse is going to happen anyway. We may as well trigger it now, because it will only be worse, and bigger, later.

Union leaders also agreed to let the cash-starved automakers delay billions of dollars in payments to a union-administered trust set to take over health care for blue-collar retirees starting in 2010.

Here again, the Unions and the incompetent management are in cahoots. Appear to compromise, get the federal bailout, and both go crying to the Government for “nationalized health care,” selling the silly notion that by getting government to pay GMs health care bill, they can drop the cost of their fleet of cars. They seem to have forgotten that the overtaxed American won’t be able to afford the cars because THEY will paying for everyone’s health care. Again, something for nothing!!!

In addition, they decided to let the Detroit leadership begin renegotiating elements of landmark contracts signed with the automakers last year, a move that could lead to wage concessions.

The UAW, along with bad management that gave into them, has killed the Goose that lays the golden eggs. Now they want to bring it back to life a little bit, in the hopes that they can kill it again, when “times get better.”

Look folks, the US Auto Industry had horrible management, the US Gov. has horrible “auto” policy, (like forcing CAFE standards, but then allowing for a “class” of trucks, so that the industry could manufacture its way into a dead-end - big gas guzzlers), and the UAW had awful, greedy, and stupid leadership.

Americans, once the most dynamic people on earth, have been led by the Big 3 collectives (Big Unions, Big Corporation, and Big Government) to become stupified, fat, intellectually lazy, and expectant of bailouts and rich early retirements, all at the expense of fewer and fewer productive citizens.

You got what you asked for. You followed collectivism to where it leads. Bankruptcy.

Here are all my posts regarding swapping gas taxes for the worker’s portion of Social Security taxes. Once again, Extreme Wisdom is ahead of the curve.

Holman Jenkins is one of my favorite Wall Street Journal columnists. He writes from a “libertarian” perspective that I don’t always agree with, but he cuts away at the absurd “sound bite” nature of “conventional wisdom” surrounding most issues.

Here, he nails it regarding Detroit.

A Car Wreck Made in Washington

The wrong folks were in the witness chairs in last week’s congressional hearings on auto doom. A fantastic moment was Massachusetts Rep. Stephen Lynch assailing Rick Wagoner about whether GM was asking China for a bailout too. The implication seemed to be that GM can’t afford its inflated UAW pay packages because it’s squandering money to build cars in China.

Mr. Wagoner mildly answered that GM’s China operations are profitable. They actually help to underwrite the massive losses in the U.S.

Mr. Lynch showed no sign he was actually listening, having illustrated his disapproval of foreigners. He didn’t ask the obvious question: If GM can make cars profitably in China, why doesn’t GM import them to the U.S.?

Why indeed? Because the UAW won’t let them, that’s why. This isn’t to forgive the management of the big 3 for incompetence. Like all toady business weenies these days, they would rather cave to Unions than to fight them. They deserve to go under based upon their cowardice alone.

What you wouldn’t know is that the single biggest factor in preserving the UAW’s monopolistic power has not been labor law but Congress’s fuel-economy rules. These effectively have required the Big Three to lose tens of billions making small cars at a loss in UAW factories. Not only were the companies obliged to forgo profits they might have earned importing such cars, but CAFE deprived them of crucial leverage to control labor costs by threatening to move jobs to a factory in Spain or Taiwan or Poland. (Let’s face it, that’s what other successful U.S. manufacturers do.)

All this was deliberately designed to give the UAW the means to defend uncompetitive wages in the face of a globalizing auto business. It had nothing to do with making sure Americans have high-mileage cars. Yet not a single legislator last week breathed a hint of recognition that something might be behind Detroit’s woes other than an improbable series of “stupid decisions” (as another Massachusetts congressman put it) by 18 CEOs over 30 years.

Caving to DC and Washington WAS and IS a stupid decision. But next comes the REAL fun part. First, people are starting to realize the DC based bureaucracy is throwing everything out of whack. Next, everyone is starting to talk about a GAS TAX.

[Obama] asked on Monday for Detroit to deliver a “plan” somehow to reconcile, at long last, the fantasy life of Washington, with nobody losing a job, with super energy-efficient cars, and yet somehow all this being done at a profit to Detroit.

Here’s a plan, but it requires Mr. Obama to play a role too, finally relinquishing such chronic free-lunchism where autos are concerned. He should simply get rid of the CAFE rules and impose a gasoline tax to move the country to a “new energy economy,” if he really believes in panicky climate predictions and/or that “energy independence” would be a net improver of American welfare. And be prepared for Detroit to shift jobs offshore if the UAW won’t concede competitive labor agreements.

Not acceptable? Here’s an alternative plan: Buy out the UAW with taxpayer dollars and free the Big Three to staff their factories with nonunion workers the way Toyota and Honda and BMW do. Last week’s Hill circus notwithstanding, the negotiation that really needs to take place now is between Democrats and their union allies. The Big Three executives are just in the way.

As I said, Jenkins has a great way of cutting through the nonsense.