Of Bailouts, Buyouts and Bankruptcy

Why the big push to bailout the banking industry? the automobile industry?

One word:  PENSIONS

Pension funds are invested in stocks. Bankrupcy wipes out those stocks, leaving pension funds unfunded. If it’s a private fund, retirees will suddenly stop getting their checks.  If it’s a public fund, taxpayers will have to make up the difference.

Mainstream media, even non-mainstream media, has not reported on this, but it’s out there, the unheard, unseen elephant in the room. To my knowledge, this is the first report that mentions this looming economic disaster:

SUPREME COURT ASKED TO BLOCK CHRYSLER SALE TO FIAT

The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund claim the deal unfairly favors the interests of Chrysler’s unsecured stakeholders ahead of those of secured debtholders such as the funds.

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If States have to take general fund money to finance their Pension fund obligations, less money will be available for services. There will be a new round of cascading effects, more State cut-backs and layoffs, more people unemployed and losing their homes.

This downward cycle is extremely difficult to stop, especially with Republicans seeking to obstruct every effort. They clamor about the deficit spending necessary to put the brakes on the collapse of the economy initiated under Bush. Meanwhile no one in Mainstream Media is bothering to point out that when the economy turns around, government revenues will increase and deficit spending will decrease.

Let’s face it, the powers that be, the very few, very rich ruling class, see a total economic meltdown under Obama’s watch to be their best bet for continuing to remain in power.

Notice how the price of gas is creeping up again, although there is no shortage in supply right now? The discretionary spending money of those still working is being siphoned off, once again, into the pockets of Big Oil. This, too, will trigger another round of businesses failing, another round of massive layoffs, unemployment, personal bankruptcies and foreclosures. Republicans seek to regain a majority in Congress with the 2010 elections. This is how they intend to win.

5 thoughts on “Of Bailouts, Buyouts and Bankruptcy

  1. Greg Palast has a really good article on this:

    Grand Theft Auto: How Stevie the Rat Bankrupted GM

    Screw the autoworkers. They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.

    Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders – led by Morgan and Citibank – expect to get back 100% of their loans to GM, a stunning $6 billion.

    The way these banks are getting their $6 billion bonanza is stone cold illegal.

    I smell a rat.

    Stevie the Rat, to be precise. Steven Rattner, Barack Obama’s “Car Czar” – the man who essentially ordered GM into bankruptcy this morning.

    When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

    But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi…

    Keep reading…

  2. Muse, thanks. I had the feeling that Obama was bowing to some mighty powerful behind-the-scenes players. I had no idea how much, or how bad, it really was, until now.

    I am disillusioned, to say the least.

  3. This all feels very much like “Shock Doctrine”, Chicago School, [not so free] Free Market Capitalism crap.

    It doesn’t feel good at all. It feels like a continuation of the shift of wealth and power upward, with everyone at the other end of the spectrum taking it in the shorts. As usual.

  4. So the employees of these companies work hard all their lives, paying into their retirement accounts, and the powers that be are doing EVERYTHING they can to screw them out of their pensions.

    Jesus fucking christ.

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