Pelosi Preparing Haircuts for Detroit; GM to Borrow Three Times Market Cap

by Patrick Gibson

Nancy Pelosi today implied that there will be some big changes in the way that US automakers do business once they become nationalized. "We call this the barbershop," crowed House Speaker Pelosi. "Everybody's getting a haircut here, in terms of the conditions of the bill," she said, noting the likely impact on labor, bondholders, shareholders, car dealers, suppliers and executives. "The management itself has to take a big haircut on all of this."

This sociopath woman just cannot wait to start exercising her power and doling out the pain cash. There is something inherently disturbing about the glee with which the left is approaching the meltdown of our economy, and the zeal with which they are appropriating corporations. Do they really want to help anything, or do they just want control?

Under the House Speaker's fascist plan for the industry, the US taxpayers will own up to $8 Billion in warrants (options to buy stock at a below market price)as their(our?) viggorish on the deal to "save" the beleaguered industry. In an industry where market capitalization has plunged to be estimated less than $15 Billion including privately held Chrysler, the $35 Billion is being promised to turn around the industry. Just in case you missed that let me say it again. Congress will take approximately $8 Billion to loan $35 Billion to an industry that could be bought lock, stock, and barrel for less than $15 Billion. Only the US taxpayer could get screwed this badly without ever taking our clothes off.

General Motors leads the pack by asking for more than three times its market capitalization in loans. Cash flow negative. Losing money. Huge future cost projections in pension and medical costs. Massively unproductive and expensive labor agreement. All of those goodies and the opportunity to rape reform an industry too. How can Congress pass up an opportunity like this?

In other news, lead panhandler and GM CEO Rick Wagoner was seen roadside holding a hand lettered sign saying "Will Work for Bailout Billions."

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