Obama to Buy GM for $30 Billion

Obama announced today that his administration will buy a 60% to 70% stake in the failed automaker GM (General Motors) with $30 Billion of American taxpayers money.

Obama said that GM's bankruptcy will be longer than the 31 days it took to settle the Chrysler bankruptcy. Obama defended his actions with GM stating that his people inherited a severe financial crisis "unlike any we have seen in our time" that put the government in an "unwelcome position."

However, those statements are an attempt to convince people that GM's problems were solely caused by the previous administration, when in fact, GM has been digging their own grave of debt and bad business practices for over 30 years and through at least 4 different administrations.

Here are some of the things that are going to happen with the GM bailout.
In the US:
14 US plants to close
21,000 more workers to be layed off, about 1/3 of all workers.
Union contracts to be drastically restructured and will effect past, present and future workers' wages and benefits.
It is not completely clear how the GM bailout will effect their suppliers and what closures will ultimately take place and which debts will be paid or negated.

Foreign operations:
GM is selling part of it's European operations, Opel, to German Magna for $2.1 billion.
Restructuring of union contracts and debt in Canadian operations.
China, GM's second largest market, are to be mostly unaffected by the bailout and GM will continue to advance operations with their joint venture partner the state-owned Shanghai Automotive Industrial Corp.

The news of Obama's bailout of GM has found favor with the markets as the DOW has jumped up 200 points so far today. Yet, over the past 12 months GM lost 97% of its stock value. The bailout of GM by Obama will not save common shareholders and preferred bondholders appear to receive some special treatment with respects to a "new" GM.