General Motors...RIP

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.
 
Zathras said:
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).
Click to expand...

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.
 
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.......
 
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.
 
samclem said:
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.
Click to expand...

Same here. I had a Ford Torino in college. A pretty sharp looking car in it's day.

http://www.seriouswheels.com/pics-1960-1969/1968-Ford-Torino-Green-g-ra-sy.jpg
 
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.
 
Maurice said:
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.
Click to expand...
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)...
 
Arif said:
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.
Click to expand...

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...
 
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.
 
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...
 
Texas Proud said:
It is not fair at all, but unless someone fights in the courts AND the courts decide to follow the rule of law.... well...
Click to expand...
It looks like the fix is in.

Link to WSJ article.

In part:
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%.
Click to expand...
Here's my favorite part (bold added):

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.
Click to expand...
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.
 
GM out of the Dow is almost surreal.........:(
 
I know what you mean, but then for the last year or so GM *in* the Dow was surreal. Remember when they used to kick out companies when they traded under $10?
 
Interesting NYT piece about our 31 year old car czar. Seems like a bright young man, but as shareholder of Government Motors not very happy that he is the chief analyst.
 
Maurice said:
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.
Click to expand...

I am currently renting a Ford Focus. It has a boring design and absolutely no zip whatsoever. I have to coax it up the hills. This the first time I have driven this model and there is no way I would buy one. I wonder if we are driving the same car? Oh wait, that's exactly what used to happen with Ford: one car would behave differently than another....poor Quality Control. But I thought Ford was supposed to have improved in the Quality department?
 
bsmup said:
Secured lenders were screwed in these bankruptcies. They were told by O's administration to accept the government's plan or else. The plan striped the senior lenders of protections under law. Why buy the safest form of debt if your not first in line to receive any proceeds from a bankruptcy, answer: you don't.
Click to expand...

Except they didn't.

In GM's case, secured lenders are getting paid out 100 cents on the dollar in cash, as I understand it.

In any event, in both cases the reorganization plans are consensual. Bondholder's have the right to say no and liquidate the company. They're not doing that because what they are getting from the government is a better deal. If what they're getting from the government is better than the alternative its kind of hard to say bondholders are getting screwed, even if someone else is getting even more.
 
samclem said:
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
Click to expand...

Small bondholders are never, NEVER, part of a creditor's committee in bankruptcy. They're interests are protected by the bankruptcy judge, which still has to approve any bankruptcy reorganization plan.

What people conveniently overlook in all this is that, by all accounts, liquidation of these companies results in LESS value to all creditor classes than is likely under the current arrangement. It's hard to claim you're being treated unfairly when you're getting more than you otherwise would.
 
. . . Yrs to Go said:
What people conveniently overlook in all this is that, by all accounts, liquidation of these companies results in LESS value to all creditor classes than is likely under the current arrangement. It's hard to claim you're being treated unfairly when you're getting more than you otherwise would.
Click to expand...

Liquidation? Of course the present "deal" is better for the bondholders than liquidation, but liquidation isn't seriously being considered. This is a Chapter 11 filing (reorganization). And the bondholders are getting a very bad deal--far less on the dollar than the UAW is getting for their investment in GM. The UAW has a friend in the White House (the ones brokering the deal) and the bondholders do not. It stinks, and hopefully the bankruptcy judge will agree. He should be looking out for bondholders and for me--since every US taxpayer now owns a piece of this mess.

It's hard to claim you're being treated unfairly when you're getting more than you otherwise would.
Click to expand...
Not at all. Nobody is getting anything for free here, and the pain of this needs to be shared according to the established debt seniority.
 
Liquidation was mentioned as liquidation is the only alternative GM had last December to the hand out from the government. It is not happening now (well, unless things really go unexpectedly south in court).
 
You must log in or register to reply here.

Similar threads

Koolau
RIP Tom Smothers
Replies
13
Views
1K
Calico
Calico
easysurfer
RIP-Carl Weathers
Replies
2
Views
132
cyber888
C
O
RIP Norman Lear
Replies
5
Views
592
Dreamer
D
Koolau
RIP Gary Wright
Replies
21
Views
1K
GhostofTomJoad
G
jollystomper
RIP Richard Roundtree, AKA "Shaft"
Replies
4
Views
577
easysurfer
easysurfer

Latest posts

Back
Top Bottom