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Old 05-30-2009, 10:12 AM   #21
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The bondholders have 10% of the new company, the current shareholders got nothing. The major shareholders were mutual funds that people put the 401k money in, pension plans, and small investors. Hardly big fat capitalist pigs.

Let's hope the new company that is mostly owned by the government will not be run like the US Postal Service, or the British Leyland Motor Company. British Leyland , when it was taken over by the British Government in the 1970s, was producing such poor quality cars, made by a disinterested work force, that it was a nonentity and persistent drain on the public coffer. As to whether the new GM will be making cars that the public wants or the governement wants, take a look at the new model car they trotted out, in ghoulish green color. It looks ugly and flimsy, but put together to cater to new proposed government fuel economy goal. It may be the new subject of a 2010 edition of Nader's "Unsafe In Any Speed"
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Old 05-30-2009, 11:34 AM   #22
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Hmmm, my appologies, I should have phrased that differently.
Yes, the government will own more than half of the common stock. No, they will not hold a seat on the board, they will not (at least they have said) be making any management decisions.
Most of the time when I have heard people use the phrase 'government motors' they have not been refering to simply 51-75% common stock ownership, but complete decision making control as well.
Yes, regulations are coming down the pike for more efficient cars. Not only for GM though.
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Originally Posted by bsmup
Secured lenders were screwed in these bankruptcies. They were told by O's administration to accept the government's plan or else.
I still don't see this. The government tried to broker a deal. In Chrysler's case they failed, the lenders said 'no way' and the company went into chapter 11.
In GM's case, a deal was attempted, the bondholders said 'no way' and a deal more to their liking was reached.

Personally I would rather the government stay out of it as of last year and let both companies liquidate (as they could secure no restructuring financing from banks). However, I understand how much that would have hurt the economy (it is yet to be seen if this path will hurt more or less over the long run).
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Old 05-30-2009, 12:12 PM   #23
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Government will own more than half of the common stock. No, they will not hold a seat on the board, they will not (at least they have said) be making any management decisions.
.
The government forced out Rick Wagoner in March and install someone who would dance more to the administration's tune. They had made management decisions.

They will not hold a seat on the Board, but they have a say as to who should be on the Board, and they have the car czar to oversee corporate decisions. So, small difference.
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Old 05-30-2009, 12:44 PM   #24
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Or are you suggesting (and it might happen) that the gov't will make laws about CAFE or some other thing so that only GM can supply?
Yes, I do believe that is what will hapen. I look for the government to insist that GM produces smaller, much more fuel efficient vehicles that meet very much stricter emmisions standards regardless of whether there is demand for that type of vehicle. Now, I recognize the benefits to that type of vehicle, I'm just not convinced the majority of car buying North Amercians do, especially at a price that doesnt make sense (a-la Volt estimates).

So in order to increase demand for said vehicles I can very much see a push for increased gasoline taxes to "nudge" buyers into selecting those vehicles. Emmisions standards will be the second shoe to drop that will increase demand by making standards so burdensome and costly buyers will look to trade-in their older vehicles to get the newer more emisions friendly "government motors" vehicles.
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Old 05-30-2009, 12:48 PM   #25
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I hope you're wrong, but I'm afraid you're not. I'd really like to see Ford be the big winner in all of this.
I'm not sure now how that can happen. Ford is competing against domestic manufacturers that have access to government funds, and as has been the case so far, with no reasonable expectation that the billions will be be paid back.

Had Dodge and GM been allowed to go into bankruptcy, either to reorganize or go-away, Ford would have benefitted tremendously. All those buyers of Dodge Rams and Chevy pickups wouldnt have went to Toyota for their next truck. Ford's increased market share of the very profitable pickup market would have been VERY lucrative.
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Old 05-30-2009, 01:25 PM   #26
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Agree with Snidely Whiplash about how the Obama administration can use GM and the congress to control other car manufacturers and bring forth the environmental agenda.

I am not quite sure how Ford will become the big winner after GM and Chrysler's bankruptcies if the Ford family run the Ford Motor Company the way they run the Detroit Lions.
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Old 05-30-2009, 08:02 PM   #27
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I still don't see this. The government tried to broker a deal. In Chrysler's case they failed, the lenders said 'no way' and the company went into chapter 11.
In GM's case, a deal was attempted, the bondholders said 'no way' and a deal more to their liking was reached.

Personally I would rather the government stay out of it as of last year and let both companies liquidate (as they could secure no restructuring financing from banks). However, I understand how much that would have hurt the economy (it is yet to be seen if this path will hurt more or less over the long run).
There were two distinct groups of lenders that were squaring off. The first group is those institutional lenders who both received TARP funds from the gov't (and will accept the gov't offer if they want to continue to receive support from the gov't) AND who purchased CDS bond insurance sold by AIG (who had no business backing that much insurance coverage). It was in the best interest of those institutions to in fact see GM go bankrupt as they would receive 100% on their principal. Then you have the pension funds and small bond investors who wanted no part of the bankruptcy, especially in the form the gov't proposed which violated seniority claims.

This entire process is marxist. The big banks were bailed out by government yet again in this case. It has little to do with GM and a lot to do with giving the banks more money. The bailout of AIG was specifically for this kind of deal. AIG wrote reams of CDS insurance for bankruptcies like GM. The money that was used to bailout AIG is being paid out for these deals.
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Old 05-30-2009, 08:26 PM   #28
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Good riddance.
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Old 05-30-2009, 09:02 PM   #29
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The Administration will blame GM's management for not making cars folks want to buy. The UAW will go away to a large extent, but will NOT blame President Obama because he "tried". Life goes on, and the union vote stays with Obama for re-election. Not too hard to see this coming.......
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Old 05-30-2009, 09:16 PM   #30
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I do wonder about Ford. They would seem to be at a competitive disadvantage since they don't have the huge cash inflows GM got from Uncle Sugar. On the other hand, at least until they take the government's money, they are free from the daily meddling of the auto czar and the helpful attention of 535 automobile engineers in Congress. Will Ford's contract with the UAW look like GM's once the bankruptcy is over?
I have never owned a Ford and have not been a fan of theirs in the past. But their cars are a lot better today, and their refusal (to date) to take taxpayer money is starting to win me over.
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Old 05-31-2009, 06:48 AM   #31
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I do wonder about Ford. They would seem to be at a competitive disadvantage since they don't have the huge cash inflows GM got from Uncle Sugar. On the other hand, at least until they take the government's money, they are free from the daily meddling of the auto czar and the helpful attention of 535 automobile engineers in Congress. Will Ford's contract with the UAW look like GM's once the bankruptcy is over?
I have never owned a Ford and have not been a fan of theirs in the past. But their cars are a lot better today, and their refusal (to date) to take taxpayer money is starting to win me over.
Same here. I had a Ford Torino in college. A pretty sharp looking car in it's day.

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Old 05-31-2009, 08:37 AM   #32
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Generally speaking, I hate American cars. I hold a personal grudge against Ford, as they nearly bankrupted me when I was in my early 20s.

Having said that, I rented a Ford Focus a few months back, and it was a fine car. It had that solid feel of a Toyota, not that cheap interior one usually associates with Detroit cars.
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Old 05-31-2009, 08:58 AM   #33
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Generally speaking, I hate American cars. I hold a personal grudge against Ford, as they nearly bankrupted me when I was in my early 20s.

Having said that, I rented a Ford Focus a few months back, and it was a fine car. It had that solid feel of a Toyota, not that cheap interior one usually associates with Detroit cars.
I rented a 6-cyl Mustang a while ago and was badly disappointed, it was a POS. However, I rented a Ford Fusion a few weeks later and was pleasantly surprised. I own a Toyota Camry, and the Fusion is a legitimate competitor in terms of what it offers and how it handles. If the Fusion proves to be as reliable, they're on to something IMO. Last Ford I owned was a used 1975 Granada (bet most have forgotten that model)...
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Old 05-31-2009, 09:24 AM   #34
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So why couldn't they have declared bankruptcy back in Jan before they got the money from the government? Seems like the billions of tax dollars just delayed the inevitable.
Yes, Bush giving them money was bad...

But then Obama saw an opportunity to give something to labor for helping him get elected.... that is why the UAW is getting so much of Chrysler and GM...

It is not fair at all, but unless someone fights in the courts AND the courts decide to follow the rule of law.... well...
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Old 05-31-2009, 09:30 AM   #35
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I have heard some really good things about the Ford Fusion hybrid.
If that had been available 2 or 3 years ago I may have bought that instead of one of our Prius.
They are catching up which is great. I would love to see them take the lead.
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Old 05-31-2009, 09:54 AM   #36
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To the people who think that Ford would be the big winner if the gvmt had not stepped in....

IMO both would have gone through bankruptcy... and both would have shed lots of bad contracts, reduced their debt as they would more than likely convert the bondholders over to new owners...

They then would have come out of BK as stronger companies able to compete with Ford....

I doubt very seriously that either of them would have been killed outright...

And even if there was a liquidation... such as selling Chrysler to Fiat... well, Fiat would still want to sell cars and trucks that made them a profit... so we are still back to having them there to compete against Ford...

Ford probably would win in the short term... and probably increase some in the long term... but with what is going on today there is a good possibility that people will be choosing Ford over these two anyhow.... so in the end all we got was wasted tax funds and the gvmt taking over control of two major companies..... and giving a big stake in both to the UAW...
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Old 05-31-2009, 10:17 AM   #37
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It is not fair at all, but unless someone fights in the courts AND the courts decide to follow the rule of law.... well...
It looks like the fix is in.

Link to WSJ article.

In part:
Quote:
A majority of investors holding $27 billion in General Motors Corp. bonds have agreed to forgive the debt for equity in the new company, people familiar with the situation said, smoothing the way for the auto maker as it prepares for a bankruptcy filing expected Monday. A battle with the group was one of the biggest hurdles biggest hurdles GM faced in orchestrating a quick exit from Chapter 11.
. . .

Although the committee supported the deal, a group of dissident bondholders represented by Thomas Lauria, a lawyer for holdouts in the Chrysler case, fought against it. They argued small, individual bondholders were left with no voice as the U.S. Treasury negotiated directly with GM's large institutional bondholders.

Bondholders had until Saturday evening to voice support for a new offer that would give them more than a 20% stake in GM -- a 10% share of the restructured company and warrants for another 15%.
Here's my favorite part (bold added):

Quote:
The government sweetened the offer last week after bondholders overwhelmingly rejected an earlier proposal that would have left them with 10% equity in the new GM. Analysts' estimates have bondholders coming out of the new deal with around 10 cents on the dollar, compared to as little as nothing under the old offer.
An ad hoc committee representing major bondholders agreed to support and encourage other big investors to back the deal.
So, the smallest bondholders don't get to even vote, the US Treasury decides in private if 50% of the bondholders have agreed to the deal, and you can bet that many of the bigger bondholders are under the government's thumb in some way--takers of TARP money, hoping for other bailout funds, hoping for favorable treatment by regulators, or not wanting "special attention" by the IRS. The small bondholders were royally scr**ed. This is the kind of thing that happens in third-world countries. I hope the BK court smells a rat, throws the whole pre-packaged "agreement" out, and starts from scratch. Unlikely, but it would send an important signal to the other two branches of government that the judiciary, at least, will perform its duty to uphold the Constitution.
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Old 05-31-2009, 12:43 PM   #38
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Thumbs up samclem, good to know some out there get it.
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Old 06-01-2009, 10:03 AM   #39
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GM and Citi are out of the Dow. Travelers and Cisco are in.
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Old 06-01-2009, 10:46 AM   #40
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GM out of the Dow is almost surreal.........
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