Who'll Blink Over GM? - Newsweek Business - MSNBC.com

Newsweek's Allan Sloan on GM
A 3-way Game of Chicken

One of my favorite columnists, Allan Sloan of Newsweek describes what he calls a "three-way game of chicken" that is driving General Motor's stock price. The players are GM, Delphi, and the UAW. Specifically, Delphi CEO Steve Miller, by daring the UAW to strike with a low-ball wage cut proposal, is also daring General Motors to come in with some cash to head off the strike.

I mentioned before how economists familiar with game theory may be able to come up with a potential way out of this mess. On the other hand, it may be that there is no winning scenario. It's possible that there may not be enough money to get Delphi out of bankruptcy. It's possible that there never was, and GM knew it, and that's why Delphi was created in the first place, as the primary mirror in a house of smoke and mirrors. If that's the case, then GM investors have just been bamboozled.

Consider this, four years ago, in 2001, GM decided in its "Keep America Rolling" campaignnn that it couldn't shrink its way to financial health. It had to keep production up because its retiree commitments weren't going down. They've only gone up since then. Nevertheless, GM announced a plan to cut 9 plants today. Many, if not most, of the workers from those nine plants are just going to retire. Were is the money going to come from to pay the costs of the new retirees?
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