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Tuesday, December 02, 2008
UAW Warns of GM Bankruptcy Without Aid
Donna Fuscaldo
FOXBusiness
General Motors (GM) may have to file for bankruptcy before the end of the month if the government doesn’t step in with funding, according to United Auto Workers officials.
The Wall Street Journal, citing people familiar with the matter, reported heads of the UAW are telling some officials that GM may have to file for Chapter 11 bankruptcy before Christmas if the government doesn’t intervene and provide funding.
The UAW is gearing up to hold an emergency session to determine what concessions they can provide. News reports said the meeting, to be held Wednesday, could center on restructuring the union-administrated health care fund so the car makers can delay payments and potentially eliminating the jobs banks, which pays laid off workers. Both the car makers and the UAW are facing intense pressure to help the struggling auto industry, which saw a perceptions decline in sales. GM posted a 41% decline in sales for the month of November.
According to media reports, Mark LaNeve, vice president of vehicle sales at GM said during a conference call earlier Tuesday GM is not working on a plan that involves bankruptcy. He blamed media speculation over what will happen to its brands as one of the reason sales were hurting. GM is expected to release it turnaround plan at 5:00 p.m. Tuesday. LaNeve said the plan will highlight cost cutting efforts to make the company more efficient.
Earlier Tuesday GM said it was ending its corporate aircraft operations and was looking at options for transferring the aircraft to another operator. According to Dow Jones GM is aiming to close the facility at Detroit Metro Airport on Jan. 1. GM reportedly said it will work with the airport to find a tenant for the balance of the lease, which expires next year. The company said travel volume no longer justified a dedicated corporate aircraft. GM, Chrysler and Ford came under fire when the companies' CEOs traveled to Washington to testify before Congress via corporate jets.
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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
