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Old 06-01-2009, 11:23 AM   #41
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GM out of the Dow is almost surreal.........
It is. Hopefully one day they will be back...
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Old 06-01-2009, 11:24 AM   #42
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It is. Hopefully one day they will be back...
If they stay off the public dole, I'd rather see Ford there.
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Old 06-01-2009, 02:11 PM   #43
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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?
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Old 06-01-2009, 05:35 PM   #44
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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.
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Old 06-01-2009, 05:58 PM   #45
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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 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?
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Old 06-01-2009, 06:02 PM   #46
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Sorry - I meant a Ford Fusion.
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Old 06-01-2009, 08:42 PM   #47
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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.
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.
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Old 06-01-2009, 08:54 PM   #48
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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
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.
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Old 06-01-2009, 10:19 PM   #49
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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.
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.

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It's hard to claim you're being treated unfairly when you're getting more than you otherwise would.
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.
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Old 06-01-2009, 10:32 PM   #50
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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).
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Old 06-01-2009, 10:41 PM   #51
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If GM went into BK without gvmt help.... it would emerge as a smaller company at the other end... you can call it liquidation or whatever, but it would not 'go away'...

If I was a senior secured bondholder, I would want to get 100% of my money before any other bondholder or general creditor got ANYTHING... that is where I would sit in the pecking order... the Chrysler senior secured are not getting that, but the UAW debt which is JUNIOR to them is getting a lot more...

And even the general bondholders here should be getting more than the UAW... or at least the same % on the dollar... but they are not...

I see someone like Chavez in the White House... this is a sad day for America...
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Old 06-02-2009, 09:15 AM   #52
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Let me understand this:

The unsustainable labor benefits the management of GM and the UAW agreed to bankrupted the company over time. I'll be nice and give EQUAL blame to both parties.

NOW, we want to make the UAW STRONGER than they were before and have even MORE of a say in how GM is run? How's that going to work?

I foresee another Chapter 11 within 2-3 years AFTER this one, and then GM is probably done for good, and parted out to Toyota and Ford and Honda..........
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Old 06-02-2009, 09:29 AM   #53
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Let me understand this:

The unsustainable labor benefits the management of GM and the UAW agreed to bankrupted the company over time. I'll be nice and give EQUAL blame to both parties.

NOW, we want to make the UAW STRONGER than they were before and have even MORE of a say in how GM is run? How's that going to work?
The problem is that the union has already said they'll sell off their stake in the "new" GM stock as soon as they can for their pension and health care fund. The problem with that is that it removes the alignment between the success of the business and the long-term sustainability of the union's benefit plans. As a result there's less incentive to make sure they don't kill the goose that lays the golden eggs again.
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Old 06-02-2009, 09:51 AM   #54
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The problem is that the union has already said they'll sell off their stake in the "new" GM stock as soon as they can for their pension and health care fund.
If you believe that,I have some prime swampland real estate to sell ya.......

Apparently, the UAW wants to use their newly found power to try to push for unionization in Honda and Toyota plants down south, among other "great ideas".........
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Old 06-02-2009, 09:56 AM   #55
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If you believe that,I have some prime swampland real estate to sell ya.......
I'm no fan of the UAW, but what reason would they have to lie about this? I can see two different ways for them to go:

(1) Hold on to their stock in sufficient quantity to get union representation on the board and start making big promises to the union membership again, or

(2) Sell all their "new GM" holdings so they aren't left holding the bag if they lead the new GM down the road of insolvency again.

Assuming they are truthful, their stated desire to divest of much of their new GM ownership suggests to me that they either (a) don't have much confidence in the prospects of the company or (b) they plan to make the new GM less competitive just as they helped the old GM down that road.
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Old 06-02-2009, 10:01 AM   #56
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I'm no fan of the UAW, but what reason would they have to lie about this? I can see two different ways for them to go:

(1) Hold on to their stock in sufficient quantity to get union representation on the board and start making big promises to the union membership again, or

(2) Sell all their "new GM" holdings so they aren't left holding the bag if they lead the new GM down the road of insolvency again.

Assuming they are truthful, their stated desire to divest of much of their new GM ownership suggests to me that they either (a) don't have much confidence in the prospects of the company or (b) they plan to make the new GM less competitive just as they helped the old GM down that road.
I'll go along with (1) and (b) above. One automotive analyst says he says the UAW using their "new-found clout" to make sure only domestic suppliers are used, try to organize unions at the non-union Asian carmaker plants in the US, etc. he probably is not that far off.......
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Old 06-02-2009, 11:18 AM   #57
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If GM went into BK without gvmt help.... it would emerge as a smaller company at the other end... you can call it liquidation or whatever, but it would not 'go away'....
No, it wouldn't, it would go chapter 7 and liquidate. Yes, that means 'go away'.
Now, some company would likely buy up parts of the liquidated GM and pick up some of the market where GM left off. But without restructuring financing (which no one other than the government offered) a company can't restructure.

FD, the UAW has been trying to move into asian car companies for many years. They have no new clout. They have a proposed seat on the new GM board, but it is a non-voting position.

Yes, I agree they got better treatment than they should have. But I don't see them taking over the industry any more than they already have. And if they do, I expect we will see another bankruptcy declared in a few years.
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Old 06-02-2009, 11:59 AM   #58
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FD, the UAW has been trying to move into asian car companies for many years. They have no new clout. They have a proposed seat on the new GM board, but it is a non-voting position.
If I was working for Toyota as a line worker, I would stay far away from the UAW...their track record is NOT good........
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Old 06-02-2009, 12:42 PM   #59
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If I was working for Toyota as a line worker......
.....you wouldn't be expousing the virtues of your beloved Honda here on FIRE?
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Old 06-02-2009, 12:45 PM   #60
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.....you wouldn't be expousing the virtues of your beloved Honda here on FIRE?
Well, I haven't expoused my latest purchase, so some secrets are safe. DW and I bought 6 new GM cars and SUV's over a 25 year period, so its not like I'm a GM hater..........
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