the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
Aug 30, 2010
GM was recently on the “verge of death.” Now, just over a year later, it is making so much profit that it is able to issue new stocks it can expect investors to buy. GM says it will use the proceeds to pay back government loans.
GM is making those profits directly from concessions it and the government extorted from its workers: New hires will get $14 an hour, half of what current workers get. And retirees’ medical coverage will be paid by the union, not the company. And that’s not all: GM also took back wage increases and cost of living protections from current workers and pushed back many gains which guaranteed workers’ working conditions: break times were cut, line speed was increased, and pay for daily overtime was eliminated. In short, GM is getting far more work out of fewer workers for far lower wages.
This new stock offering is being touted as a return to normal for a resurgent auto company. And it is: it’s a move to reestablish the financial ties between GM and the banks, ties that will allow those banks to suck up GM’s profits once again.
So long as the government owned a majority share of GM and it was loaning GM money, the big banks made little money from GM. And this particularly hit the Morgan financial interests, which have long been GM’s bankers, funding it and ultimately controlling it – JP Morgan Chase and Morgan Stanley, among others.
These banks are expected to take the lead in orchestrating GM’s new public stock offering. They stand to make billions once the old relationship is reestablished, starting with more than 120 million dollars just on the fees paid by GM to float the stock offering.
But that’s just the beginning: once the stocks are sold and the government is out of the way, the banks themselves will be making the loans to GM, loans that every industrial company needs to take to operate on a daily basis.
To see what this means, we can look to another auto company: Ford never went bankrupt, so it kept taking its loans from the banks instead of from the government. Now, in the second quarter of this year, it paid $1,154 for every vehicle it sold – just on the interest it owes on its debts to the banks. Much of that goes to Goldman Sachs. Ford has had close ties with Goldman ever since the 1950s.
Because the banks control the money that the industrial companies need to operate, they effectively control the companies. They are able to ensure that those industrial companies make decisions that will directly benefit the banks even more.
And, because the workers always produce much more value than they’re being paid for, much of the surplus they create goes directly into the coffers of the banks. This is the relationship the banks have reestablished at GM, the relationship that continues at Ford.