President Obama uses New Math in GM Bailout

His view is that it is the workers that are the only ones that are important in the company. If you did not have workers then you would not have a company. He does not realize that they are only one part of the formula and they have the least risk in the company. The stock holders are taking the most risk while the bond holders have the most invested in the company and expect a fair return. In bankruptcy, the workers have been paid all along and have very little risk. The Bond holder has given money to the company and has only been paid interest on their money and could lose all or part of their investment if the company goes under. They have moderate risk and will paid first when the assets of the company are sold. The Stock holders have invested money that is unsecured and they have the most risk. As the company starts losing money the value of their stock decreases. If the company goes bankrupt the stock could be come worthless.

In bankruptcy the worker may be out of a job but they will be paid for most of their work and the government will pay them unemployment while they are looking for another job. The Bond holder who has $10,000 loaned to the company and has been receiving interest of 5% a year could lose their $10,000, but in most cases they will get a percent of what the company is worth. If the company is worth 10$10,000,000 and has $20,000,000 in debt the bond holders will get 50% of the value of the bond. The person who has $10,000 in stock will get nothing in the final settlement. Why should the worker who has the least risk get the most benefit?