General Motors Is Headed For Bankruptcy -- Again

[Plasmaball]

How so?

What should obama do about sales in europe? Sales in america are good...the bailout worked here.

Obama shouldn't have done anything. And that's the point. Bankruptcy was always a viable option for GM. His massive Bailout was nothing more than a criminal Big Union payoff. It's a despicable theft. He flat-out stole from the American People to pay his Union buddies off. I do not support Corporate Welfare, and i never will. To Hell with your Dear Leader and GM.

Then you don't get to bitch about the UE being 8%

 

[Toro]

GM still owes the tax payer.

Again, it has nothing to do with whether GM will go bankrupt. Bankruptcy means not being able to pay your debts. Common and preferred equity is equity, not debt. It "owes" the taxpayer inasmuch that the Treasury "owns" stakes in the common and preferred equity of the companies. Common stock confers ownership. Preferred stock is a hybrid equity/debt security but non-payment of preferred dividends does not push a company into bankruptcy.

Most of the outstanding TARP money is in the form of equity ownership in 410
institutions as of June 30, 2012 (325 banks in CPP, 82 banks and credit unions in
CDCI, plus AIG, GM, and Ally Financial). Treasury (and therefore the taxpayer)
remains a shareholder in companies that have not repaid the Government.
Treasury’s equity ownership is largely in two forms — common and preferred stock

...

In return for a total of $49.5 billion in loans to GM, Treasury received $6.7
billion in debt in GM (which was subsequently repaid), in addition to $2.1 billion
in preferred stock and a 60.8% common equity stake.84 As of June 30, 2012,
Treasury has an $849.2 million claim against Old GM’s bankruptcy, a bankruptcy
that recently terminated.85 Treasury does not expect any significant additional proceeds
from this claim.86 On December 2, 2010, GM closed an initial public offering
(“IPO”) in which Treasury sold a portion of its ownership stake for $18.1 billion
in gross proceeds, reducing its ownership percentage to 33.3%.87 On December
15, 2010, GM repurchased the $2.1 billion in preferred stock from Treasury. On
January 31, 2011, Treasury’s ownership in GM was diluted from 33.3% to 32% as
a result of GM contributing 61 million of its common shares to fund GM’s hourly
and salaried pension plans.88 As of June 30, 2012, Treasury had received $22.5
billion in principal repayments, proceeds from preferred stock redemptions, and
proceeds from the sale of common stock from GM, including approximately $136.6
million in repayments related to its right to recover proceeds from Old GM. ...

Treasury invested a total of $17.2 billion in Ally Financial. On December
30, 2010, Treasury’s investment was restructured to provide for a 73.8% common
equity stake, $2.7 billion in TRUPS (including amounts received in warrants
that were immediately converted into additional securities), and $5.9 billion
in mandatorily convertible preferred shares.94 Treasury sold the $2.7 billion in
TRUPS on March 2, 2011.95 On March 31, 2011, Ally Financial announced that
it had filed a registration statement with the Securities and Exchange Commission
(“SEC”) for a proposed IPO of common stock owned by Treasury. On a number of
subsequent occasions, Ally Financial disclosed additional details about its proposed
IPO in amended registration statements filed with the SEC. Concurrent with the
proposed IPO, Treasury plans to convert $2.9 billion of its existing $5.9 billion of
mandatorily convertible preferred shares (“MCP”) into common stock.96 Treasury
will exchange the remaining $3 billion of its MCP into so-called tangible equity
units, a type of preferred stock, and will offer a portion of these tangible equity
units alongside the proposed common equity offering.

http://www.sigtarp.gov/Quarterly Reports/July_25_2012_Report_to_Congress.pdf

However GM and GMAC still owe one hundred and fifteen million in tarp correct?

No. It's incorrect. I directly quoted to you the TARP Inspector General's report. The report states very clearly that the debt has all been repaid. The Treasury owns ~$42 billion in common and preferred stock. If you are reading something else from somewhere else, they are wrong.

 

[kaz]

What should obama do about sales in europe? Sales in america are good...the bailout worked here.

Obama shouldn't have done anything. And that's the point. Bankruptcy was always a viable option for GM. His massive Bailout was nothing more than a criminal Big Union payoff. It's a despicable theft. He flat-out stole from the American People to pay his Union buddies off. I do not support Corporate Welfare, and i never will. To Hell with your Dear Leader and GM.

Then you don't get to bitch about the UE being 8%

Sure we do, our high UE is a result of socialism and we're advocating efficient, free markets. Crony capitalism, like your socialistic bailout of GM, is exactly what's driving economic inefficiency and is directly causing our economic malaise which is leading to our high UE, which is really 20-30%

 

[kaz]

Former General Motors Vice Chairman Bob Lutz responded Friday to a blogoshere brouhaha started by a Forbes.com contributor who predicted the automaker is headed back to bankruptcy court.

A GM exec refuted it, which proves you right. In no way would you ever accept that argument from someone you're against. GM bailout was an abomination to a free people. Capitalism is just a term for economic freedom. Freedom means the ability to pursue, liberty and property and the ability to pursue means the ability to fail.

You libbies say we're the ones in the pocket of "corporate" companies. Corporate being liberal for "boogie man." But when fiscal conservatives wanted to let them die because they killed themselves, it's you who run to the rescue. Then you chastise us for not saving companies. We are consistent, with personal freedom comes personal responsibility.

And you call us "liars" for doing what we advocated, free markets, when you didn't do what you advocated by saving a corporate boogie man?

 

[Bfgrn]

The problem that I see which you failed to add to the equation, the tax payer has yet to be paid back, and the government still has controlling shares in GM which they weren't supposed to be at this point.

What debt does GM still owe the government? The government still owns a fair chunk of GM equity - which they have been getting ready to sell BTW - but what debt do they still owe? "Bankrupt" means being unable to pay back debts or triggering covenants. It doesn't mean "the government still owns the company." There is a difference between "owe" and "own."

I think a better understanding of who wrote the OP and WHY is in order. GM is not following the old business model that led to a glut of rapid turnover creating too many late-model vehicles at auction, depressing used vehicle prices and making depreciation rates for 2- and 3-year old vehicles of the make uncompetitive.

From Former General Motors Vice Chairman Bob Lutz:

Despite a $7.6-billion profit in 2011 and $2.5 billion in the first two quarters of 2012, GM "seems unable to develop products that are truly competitive in the U.S. market," Forbes contributor Louis Woodhill wrote this week.

In his posting Woodhill said he has a bachelor of science degree in mechanical engineering and is a software entrepreneur. He also serves on the leadership council of the ultraconservative, anti-tax nonprofit Club For Growth.

"The fact that he would focus on GM's admittedly-lower U.S. market share as a harbinger of impending doom demonstrates the most profound lack of understanding of the vehicle business," Lutz wrote under a headline "Chicken Little's Second GM Bankruptcy: A Gold Medal for Silly Op-Ed Pieces."

"The company is gaining strength," Lutz continued. "It remembers the lessons of the past. It does not shy from its well-documented problems, such as GM Europe; instead, it addresses them head on. To suggest that a cash-rich, profitable company with these characteristics is about to go under is, to me, 'fatuous twaddle.' "

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But it makes me sick how much people who call themselves Americans can have such utter contempt for fellow Americans who them deem as evil because they belong to a union. EVERY fucking worker right and benefit these right wing turds receive today is because of unions and the labor movement.


"With all their faults, trade unions have done more for humanity than any other organization of men that ever existed"
Clarence Darrow

 

[kaz]

But it makes me sick how much people who call themselves Americans can have such utter contempt for fellow Americans who them deem as evil because they belong to a union

Actually the issue is unions being supported by the artificial power of government guns. As long as you can't state correctly our views, you are just showing the weakness in your argument. If you were right, you'd state our views correctly so you can nail us with them. But you're not, and you know it, so you have to go strawman.

 

[kaz]

"The company is gaining strength," Lutz continued. "It remembers the lessons of the past. It does not shy from its well-documented problems, such as GM Europe; instead, it addresses them head on. To suggest that a cash-rich, profitable company with these characteristics is about to go under is, to me, 'fatuous twaddle.' "

GM is an abomination to freedom. A company which failed in the marketplace and was saved by crony capitalism using the money which was confiscated by their better run competitors and consumers who both pay the money that went to GM as well as the higher prices in the marketplace that result when efficiently run companies have to compete against government shills.

 

[Bfgrn]

But it makes me sick how much people who call themselves Americans can have such utter contempt for fellow Americans who them deem as evil because they belong to a union

Actually the issue is unions being supported by the artificial power of government guns. As long as you can't state correctly our views, you are just showing the weakness in your argument. If you were right, you'd state our views correctly so you can nail us with them. But you're not, and you know it, so you have to go strawman.

I have stated the right's views very accurately and concisely. You can try to spin it anyway you wish. We all saw how the right went after teachers making $47,000 a year in Wisconsin like vultures. And how John Kyl tried to use government 'guns' to negotiate union concession from the floor of the US Senate.

You right wing turds LOVE government when it crushes the working man, makes him piss in a cup, profiles, kills, incarcerates and bombs human beings.

 

[bigrebnc1775]

Again, it has nothing to do with whether GM will go bankrupt. Bankruptcy means not being able to pay your debts. Common and preferred equity is equity, not debt. It "owes" the taxpayer inasmuch that the Treasury "owns" stakes in the common and preferred equity of the companies. Common stock confers ownership. Preferred stock is a hybrid equity/debt security but non-payment of preferred dividends does not push a company into bankruptcy.



http://www.sigtarp.gov/Quarterly Reports/July_25_2012_Report_to_Congress.pdf

However GM and GMAC still owe one hundred and fifteen million in tarp correct?

No. It's incorrect. I directly quoted to you the TARP Inspector General's report. The report states very clearly that the debt has all been repaid. The Treasury owns ~$42 billion in common and preferred stock. If you are reading something else from somewhere else, they are wrong.

You are right I was incorrect it's one hundred and nineteen billion in tarp
The president's new campaign video narrated by actor Tom Hanks claims GM has "repaid" its loans. But in a revelation by the special inspector general monitoring the TARP bailout program, GM and GMAC together still owe the biggest share of the remaining $119 billion TARP debt.

Obama's Bailout Success Story GM Still Delinquent On Its TARP Debt - Investors.com

at least according to this source and their are many like it with the amount in question some are lower and some are much higher.

 

[thereisnospoon]

The problem that I see which you failed to add to the equation, the tax payer has yet to be paid back, and the government still has controlling shares in GM which they weren't supposed to be at this point.

What debt does GM still owe the government? The government still owns a fair chunk of GM equity - which they have been getting ready to sell BTW - but what debt do they still owe? "Bankrupt" means being unable to pay back debts or triggering covenants. It doesn't mean "the government still owns the company." There is a difference between "owe" and "own."

Umm there is no "equity". The stock price is LOWER than when the federal government bought it's shares.

 

[Shelzin]

Well, the 'Conservatives' are certainly hoping that GM will go bankrupt, and would raise Bin Laden up from the dead, were they able. They really want to demonstrate their love of America.

I am a conservative and I want GM to succeed; however, success comes only when a company provides a product of competitive qualify at a competitive price. The public may by duped, at least temporarily, by creative advertising but only to a point. Eventually, the concepts of quality and price become the controlling factors in consumer choices. When government subsidizes a product, the true cost includes not only the purchase price but also the amount of the subsidy which is ultimately paid by the taxpayers.

You think that ALL bankruptcies are a bad thing but it ain't so, Joe. Bankruptcies have salvaged many failing companies by giving them a chance to reorganize and begin anew. Contrary to complaints from liberals, there is no evidence that jobs were saved by the GM bailout. If GM had gone through normal bankruptcy procedures, they would have been able to restructure the UAW wages and benefits package to make GM competitive again. Not only would everyone's job be saved but it is even possible that reduced manufacturing costs would have resulted in increased sales and seven more employment at GM. What, you didn't know that lower cost can lead to more sales and more employment?

Also, had GM gone completely down the tube no one knows how many total jobs would have been lost. My best guess would be …. none. If consumers cannot buy GM cars, they will purchase another type of vehicle which means other companies will have to hire more people. Consumers are not going to start walking and taking public transportation just because they cannot buy a GM car. When the government intervenes to help one car company, all other auto makers suffer as a result.

No one mourns the loss of all those blacksmiths jobs lost as a result of the automotive industry, and many big name companies have folded over the years due to changing consumer demand. If GM bites the dust, that's what is called the survival of the fittest. Competition – without government favoritism – is the best thing going for consumers. Only open and honest competition can assure the public of the best quality at the lowest possible price.

This concept of “too big to fail” is not just stupid, it is totally insane. Any company that cannot withstand competition deserves to fail. The bigger the company is, the more foolish it is to expect the public to support it with taxpayer-funded subsidies. Outright competition is something that should only be feared by business owners, never by consumers.

Actually, as a result of the bailout many dealerships were forced to close costing many people to lose their jobs, and 20,000 non-union workers at Delphi lost their health care and most of their retirement benefits. Those dealerships that had gained favor with the Obama administration were allowed to continue while others were terminated, and all union workers retained their plush benefits packages while those who were not union lost almost everything. That's Obama: reward your friends and punish your enemies.

But that is just my own humble opinion (OK, I lied about the humble part).

A post ell thought out is worth repeating, wouldn't most people agree?

I absolutely agree. And I'm not that fuck'n humble either.