The news that Deutsche Bank considers GM shares to be worthless helps us understand the Detroit bailout talks that are underway.
If GM shares are expected to be worth nothing regardless wehther or not there is a bailout, then the choice is not between rewarding shareholders or punishing them: the choice is between whether we should process the bankruptcy of General Motors through the exeuctive or judicial systems.
Thus, the question becomes more technical, and the ranges of possible answers less troublesome.
Still, some things are clear. GM has attracted workers through a system of unsustainable benefits, and those who “gambled” on a company being able to pull it off are in the same boat as those who gambled on housing pricies always going up. From this disaster we need to build a national health care system that business can love.
It also means that we should use this opportunity, where the corporate structure of GM is dependent on federal generosity and shareholders are going ot be wiped out anyway, to optimize the American auto industry for hydrocarbon efficiency. Cars like the Saturn Vue plug-in hybrid should not be delayed. Likewise, any support for GM must work alongside a geogreen stimulus to get us off foreign hydrocarbons and help protect us from Gap states like Russia,
I have said before that Russian leader Vladimir Putin is notable incompetent. Tom even calls him “stupid.” He is a Saddam Hussein with nuclear weapons and an economy the size of Portugal. Putin and leaders like him are nothing to fight a “new Cold War” over — but we need to think hard about every dollar we send to Putin and buddies.