Sorry about the sensationalist headline, but now you’re here . . . President Obama’s attempt to swindle GM bondholders for the benefit of his UAW allies appears to have failed for now. Despite the union realizing that its initial slice of 39 percent of the GM pie was too big for the public to swallow, the bondholders have rejected the revised deal. This makes normal bankruptcy for GM far more likely, and the bondholders are likely to get much more of what was owed to them.
Of course, that hasn’t stopped some complaining that bankruptcy is still the wrong course of action, mostly on the grounds that people won’t buy cars from bankrupt companies. There is some evidence for that assertion, but this poll from last month suggests that much of that problem can be solved by government-backed warranties.
Of course, the question still remains what future there is for GM when its owners are forcing it not to build the cars it is good at making. David Brooks observes that dynamic perfectly.