General Motors...RIP

[mickeyd]

[ziggy29]

Goodbye General Motors, hello Government Motors.

[soupcxan]

And nothing of value was lost.

[calmloki]

My gal worked for a number of GM dealerships as a service adviser, then long time service manager, now warranty clerk/personnel manager/one who knows where the right switches are type person. She's loyal as can be, not swayed by a paycheck, and she was talking last night about where she would be if we hadn't gotten together. At one time GM corporate was courting her, she turned them down because we were together and i was staying here. I can easily imagine her having all her assets in GM stock - instead we only have a thousand shares or so and have no plans to sell. If the share value goes to zero so be it - might have to find some old July 4th skyrockets and pop a champagne cork to say farewell to General Bullmoose.

[Arif]

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.

[kumquat]

Quote:

Originally Posted by Arif 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.

Ding, ding, ding.

Someone noticed.

[ls99]

'cause the bankruptcy would have allowed Gm to can the union, and the new gummint did not want a bunch of unemployed union members voicing their opinion in a protest.

[clifp]

Quote:

Originally Posted by Arif 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.

Here is what I said back in Dec.

Quote:

Why not have Uncle Sam provide a guarantee that they will honor a warranty of the Big 3 cars. That gets rid of the argument that consumers won't buy from a bankrupt car company and clearly there is a 3rd party industry that already handles this. Albeit not on GM's scale but it would certainly provide work for GM dealers. Say it cost $2K/car and the big 3 make 10 million cars while in bankruptcy the cost to Uncle Sam is only 20 billion, cheap by comparison. The second argument which worked was this. A speculator can buy GM debt at roughly $.25 on the dollar, e.g an 8% GM bond for $250 meaning that they are collect 32% interest with the potential of a 4x return if the company is still in business 10 or 20 years from know. As long as GM is out of bankruptcy the speculator collected their ridiculous interest rate at the taxpayers expense. Once bankruptcy happens no more interest payments to speculators (or other bondholders for that matter). Eventually the bankruptcy court sorts out who gets paid what and what percentage of new GM stock each bondholder, suppliers, banks etc own. Uncle Sam providing the bankruptcy financing is also a reasonable compromise but the only way GM survives is it has to stop paying interest on its debt.

I was far from alone in advocating this, with even the most free market folks on the board reluctantly supporting Uncle Sam providing debtor in possession financing.

6 months latter this pretty much exactly what has happened, except bond holder have been generally received an additional payment, workers have gotten full wages, suppliers have been paid, with many tens of billions expended all courtesy of we the taxpayers.

[bsmup]

By far the worst part of this entire fiasco is the adminstration's outright fraudulance by destroying the capital structure. The way the bondholders were told to bend over on this one changes the entire risk structure for corporate debt. Who's going to buy corporate debt now when they see Chrysler and GM bondholders told to shut up and take whatever the gov't deems appropriate?

[Zathras]

I like to deal in realities, not soundbites.
Why specifically to some people refer to it as becomming Government Motors.
And why the talk about the administration destorying the capital structure?
The government brokered a deal, the bondholders refused (in Chrysler's case) and the case rightfully went to court.
In GM's case, the bondholders refused until they got what they thought was a better deal and most likely GM is STILL going to go to bankruptcy case, so that deal my be null and void.

GM started to turn things around, but did so too late. I will be happy to see them as a leaner more nimble company that can put more money into the customer experience.

[ziggy29]

Quote:

Originally Posted by Zathras I like to deal in realities, not soundbites. Why specifically to some people refer to it as becomming Government Motors.

Because the government will own a majority of the restructured company?

Seems like a pretty darned good reason to me.

[bsmup]

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.

Quote:

GM started to turn things around, but did so too late. I will be happy to see them as a leaner more nimble company that can put more money into the customer experience.

Haha, I like to deal in realities.

[JOHNNIE36]

Quote:

Originally Posted by soupcxan And nothing of value was lost.

What the hell kind of statement is that?

[kumquat]

The ultimate question will be 'does the new GM build cars people want to buy, or will they build cars the government wants them to build'?

I think everyone here can figure out how many they will sell under both assumptions (or at least under assumption two).

[Snidely Whiplash]

Quote:

Originally Posted by kumquat The ultimate question will be 'does the new GM build cars people want to buy, or will they build cars the government wants them to build'? I think everyone here can figure out how many they will sell under both assumptions (or at least under assumption two).

They will sell more than most think especially once the increased government gasoline tax kicks in and takes us well above several dollars per gallon. And the other shoe will be strict emissions testing for older and "obsolete" vehicles.

[Snidely Whiplash]

Quote:

Originally Posted by ziggy29 Goodbye General Motors, hello Government Motors.

I think that aside from the taxpayer, Ford may be the biggest loser in all of this. They played the game as they should have, put themselves in a position to have been the last man standing, and now wont benefit from an increase in market share due to government support of their primary competitors.

[samclem]

Quote:

Originally Posted by Zathras I like to deal in realities, not soundbites. Why specifically to some people refer to it as becomming Government Motors.

If you like "realities", welcome to the new reality.

[ziggy29]

Quote:

Originally Posted by Snidely Whiplash I think that aside from the taxpayer, Ford may be the biggest loser in all of this. They played the game as they should have, put themselves in a position to have been the last man standing, and now wont benefit from an increase in market share due to government support of their primary competitors.

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.

[kumquat]

Quote:

Originally Posted by Snidely Whiplash They will sell more than most think especially once the increased government gasoline tax kicks in and takes us well above several dollars per gallon. And the other shoe will be strict emissions testing for older and "obsolete" vehicles.

Why? Do you think that Government Motors will supply a car that is "better and cheaper" than Ford, Honda or Toyota?

If I was a "buy domestic" type of guy, who would I choose? Ford, GM or the other company?

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?

[Midpack]

Quote:

Originally Posted by ziggy29 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.

My fear too. Ford deserves to benefit from being the one major domestic automaker that has not taken a taxpayer bailout, but I don't see how that shapes up. Just another aspect of the current mess that does not make any sense to me...