'THE WOUNDS OF GM'
[Hoje Macau, Macau]
The Nation,
Pakistan
Obama's Handling
of GM's Collapse a Lesson for Pakistan
"The Pakistani government, which
through nationalizations has also become the country's biggest entrepreneur, would
do well to learn from this example, which shows that government has no business
in business."
EDITORIAL
June 3, 2009
Pakistan - The Nation - Original Article (English)
Almost symbolic of the current
plight of global capitalism, General Motors, the corporate model of American
capitalism, has gone under. At one point, about fifty years ago, its chairman said,
"What's good for General Motors is good for America." That was the
apogee of American capitalism and the close bond between government and corporation.
But the corporation that filed for bankruptcy protection on Monday was not the
same one, as it was desperate to avoid being dragged down by its many creditors.
With assets of only $82.3 billion, the corporation faced $172.8 billion in debt.
Officials expect the restructuring the giant to be similar to the one
undertaken by Chrysler, America's second largest automaker. Chrysler filed for
bankruptcy protection about a month ago.
Posted by WORLDMEETS.US
GM enters the process with
billions in federal funding and agreements to lay off huge parts of its
workforce, and will receive an additional $30 billion on top the $20 billion it
has already received. This will give the U.S. government 60 percent of the auto
giant, while the governments of Canada and Ontario will put up $9.5 billion for
a 12 percent stake. GM's Opel and Vauxhall subsidiaries in Europe are already
leaving the GM empire. Under a separate rescue scheme, bondholders are being
offered a debt-equity swap involving $27.1 billion in exchange for a 10 percent
stake and an option on another 15 percent. All this is to avoid bankruptcy - not
because the Obama Administration has any intention of nationalizing the
automaker or participating in its day-to-day operations.
The Pakistani government, which
through nationalizations has also become the country's biggest entrepreneur, would
do well to learn from this example, which shows that government has no business
in business. Islamabad has done well getting out of many businesses, but it
needs to get out of its remaining loss-making enterprises, such as Pakistan
Airlines, Pakistan Railways and the Water and Power Development Authority.
[Posted by WORLDMEETS.US June 3, 3:19am]
