GM the gift that keeps on losing

[usmcstinger]

The Wall Street Journal reported that taxpayers are expected to lose this year at least $10 billion on the bailout of GM, due to the company’s failure so far to repay the money and the fact that Treasury has to close its books with the outstanding debt listing.
Taxpayers still waiting for General Motors to pay back $10B bailout - Washington Times

GM recalls 1.5 million more vehicles
http://www.reuters.com/article/2014/03/18/us-gm-recall-idUSBREA2G1522014031

Still smarting from controversy involving a faulty ignition switch, General Motors announced three new recalls involving another 1.5 million vehicles.
GM announces new recalls - Mar. 17, 2014

 

[iamwhatiseem]

Once again - you just can't make this stuff up.
Remember when the GM CEO made the national TV spot announcing "we have paid back the American taxpayers 100%"?
Remember that?
And then within 24 hours we found out that they actually borrowed money from the government to pay back the borrowed money from the government.
It boggles the mind.

 

[asterism]

Once again - you just can't make this stuff up.
Remember when the GM CEO made the national TV spot announcing "we have paid back the American taxpayers 100%"?
Remember that?
And then within 24 hours we found out that they actually borrowed money from the government to pay back the borrowed money from the government.
It boggles the mind.

Then the government infused more cash and converted some of the debt to stock which was then sold for a loss.

This whole deal is the definition of "crony capitalism."

Here's what we do know about where the money went... Bondholders got 10% of the new GM – about $4 billion worth of stock at the time of the IPO. However, they weren't allowed to sell until much later, so that value dropped about one-third by the time they could have actually liquidated. Thus, bondholders ended up getting about 10 cents on the dollar. The unions, on the other hand, got paid 100% of the pension liability – about $10 billion, which was simply passed onto the new GM and has now grown to $13 billion.

In addition, the union's health care trust got 17.5% of the new equity (worth about $6 billion), plus $9 billion in preferred stock and notes. These securities are not only worth more, but they will also likely end up with essentially all the company's cash flows for the next decade.

In total, the unions walked away with about $28 billion in cash and stock (out of $30 billion owed). Not surprisingly, that's almost exactly the amount of money that's gone missing from the government's accounts. The union also retained a position of absolute control over the company's earnings.

In short, the unions got paid 93% of what they were owed and will likely continue to have a legal claim to virtually all of GM's cash flow. The bondholders got a few pennies. The taxpayers lost $25 billion. And GM still can't make a real profit. Bravo!

GM and the Truth About One of America's Biggest Bankruptcies

 

[iamwhatiseem]

Once again - you just can't make this stuff up.
Remember when the GM CEO made the national TV spot announcing "we have paid back the American taxpayers 100%"?
Remember that?
And then within 24 hours we found out that they actually borrowed money from the government to pay back the borrowed money from the government.
It boggles the mind.

Then the government infused more cash and converted some of the debt to stock which was then sold for a loss.

This whole deal is the definition of "crony capitalism."

Here's what we do know about where the money went... Bondholders got 10% of the new GM – about $4 billion worth of stock at the time of the IPO. However, they weren't allowed to sell until much later, so that value dropped about one-third by the time they could have actually liquidated. Thus, bondholders ended up getting about 10 cents on the dollar. The unions, on the other hand, got paid 100% of the pension liability – about $10 billion, which was simply passed onto the new GM and has now grown to $13 billion.

In addition, the union's health care trust got 17.5% of the new equity (worth about $6 billion), plus $9 billion in preferred stock and notes. These securities are not only worth more, but they will also likely end up with essentially all the company's cash flows for the next decade.

In total, the unions walked away with about $28 billion in cash and stock (out of $30 billion owed). Not surprisingly, that's almost exactly the amount of money that's gone missing from the government's accounts. The union also retained a position of absolute control over the company's earnings.

In short, the unions got paid 93% of what they were owed and will likely continue to have a legal claim to virtually all of GM's cash flow. The bondholders got a few pennies. The taxpayers lost $25 billion. And GM still can't make a real profit. Bravo!

GM and the Truth About One of America's Biggest Bankruptcies

Hail to the oligarchy!
Long live the CEO's!
May we be blessed by our offerings to the exalted ones!