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Old 03-31-2009, 08:00 AM   #41
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The Nova was a beaut, too. And the 70s/80s Mustangs....
At least you are up to date...
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Old 03-31-2009, 05:46 PM   #42
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Well, Airlines have gone Broke and survived as many other " Too Big to fail" co.'s in the past..They go bankrupt one day and reopen the next.. Some Chain stores just went thru Bankruptcy a few mos ago and doing it again now...probably different chapter filings..

Pouring $ down a Black Hole it seems..but, The Pres. & His Dems have a Debt to repay the UAW for Helping Elect him..and that is what I understand is the Real reason for all this.. But, who knows.. maybe it's because GM is Making some Secret Weapons or Something else ? The whole situation doesn't sound right.. Bond Holders are going to get big losses and the stock? Well, It's already in the dumps, I'd be waiting until the day after it Goes Belly Up..

That's what I did with Kmart..
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Old 03-31-2009, 05:54 PM   #43
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Pouring $ down a Black Hole it seems..but, The Pres. & His Dems have a Debt to repay the UAW for Helping Elect him..
But you'll recall that it was a Republican President who bailed them out in the first place.
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Old 03-31-2009, 05:56 PM   #44
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I could see an even more speculative mid term play if you assume that the 80% cut in stock value is already priced in, and that the deal with bondholders will go through AND the economy will recover such that GM starts making a profit.
Except shareholders are likely to get completely wiped out. The only way unsecured bondholders are going to agree to take a 70%+ haircut is if equity gets nothing. I can't believe GM shares trade above $0.01.
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Old 03-31-2009, 05:59 PM   #45
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It stinks, pure and simple. It stinks like the worst Chicago-style politics, there's no nice way to say it. If the executive branch doesn't want to be accused of politicizing this very important issue, then they should get their hands out of it.
They can't because the prior administration put them in charge of GM and Chrysler.
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Old 03-31-2009, 06:52 PM   #46
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They can't because the prior administration put them in charge of GM and Chrysler.
The money is as good as spent, and was intended to get the automakers through the election so that the new administration would have options. President-Elect Obama supported the bailout. They can now back away immediately from any more direct involvement in picking GM employees and picking favorites in the upcoming Chapter 11 negotiations (where we should have been months ago). I don't think George Bush fired Rick Wagoner.

Is there some cutoff point at which the administration's supporters stop blaming President Bush?
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Old 03-31-2009, 07:15 PM   #47
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Is there some cutoff point at which the administration's supports stop blaming President Bush?
Reagan supporters blamed Carter. Clinton supporters blamed Reagan. Bush supporters blamed Clinton. Obama supporters blame Bush...

I think I see a pattern emerging...
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Old 03-31-2009, 07:25 PM   #48
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Reagan supporters blamed Carter. Clinton supporters blamed Reagan. Bush supporters blamed Clinton. Obama supporters blame Bush...

I think I see a pattern emerging...
You think it goes back to old GW. George Washington that is.
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Old 03-31-2009, 07:54 PM   #49
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You think it goes back to old GW. George Washington that is.
There was definitely some animosity between ol' George's Federalists and Madison's/Jefferson's Democratic-Republicans.
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Old 03-31-2009, 08:14 PM   #50
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Is there some cutoff point at which the administration's supports stop blaming President Bush?
I'm not blaming Bush for anything.

But if we are going to blame someone for bailing out the auto makers, maybe it should be the people who actually did that.

If you're saying that the current administration is botching the bailout that was started by the prior administration, fine. But arguing, as some here have, that "the Dems bailed out the Auto's to support the unions" does severe violence to recent historical facts (something that seems to happen fairly often here).
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Old 03-31-2009, 10:36 PM   #51
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I could see an even more speculative mid term play if you assume that the 80% cut in stock value is already priced in, and that the deal with bondholders will go through AND the economy will recover such that GM starts making a profit.
Then you have the bet the stock will increase in value enough to cover your risk, quickly sell it before gas goes up north of $3/gallon or GM's internal weaknesses rear their ugly heads and the company goes to chapter 11 anyways.

Far too speculative for me, I'd rather put it all on 00 on a roulette wheel.

But I thought I might have missed something?
And this is an excellent point! What investor in their right mind would invest in GM or ANY auto manufaturer at this time? As an investor I would want to know facts and figures of the company, see trend data, consider what consumers might do, etc. But when the govt starts getting involved, it becomes a game of which company has the most push/pull with the govt. And that is something that there is no way to know, and can change daily.

In my opinion, this is preciesly why the act of the govt "touching" a private business will automatically "taint" it. I just do not see a way around that one...
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Old 04-01-2009, 11:10 AM   #52
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But when the govt starts getting involved, it becomes a game of which company has the most push/pull with the govt. And that is something that there is no way to know, and can change daily.
Yep. It becomes a game of Calvinball on a very large scale.

Markets hate uncertainty, but when you have a government that can seemingly change the usual outcomes of capitalism (i.e. bad businesses fail to the benefit of their competition) and distort free enterprise almost at will, you inject massive amounts of it into investor psyche.
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Old 04-01-2009, 11:35 AM   #53
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Yep. It becomes a game of Calvinball on a very large scale.

Markets hate uncertainty, but when you have a government that can seemingly change the usual outcomes of capitalism (i.e. bad businesses fail to the benefit of their competition) and distort free enterprise almost at will, you inject massive amounts of it into investor psyche.
The distortions extend to the retail end, too. Right now I could use a new small car, and I'm considering several. But, the Administration has suggested that there may be new incentives coming for buyers of small cars. I'd be a fool to buy a car today until I learn more about that. All those dealers spending all that money on advertisements, but there's no way I'm buying now.

Then, when the incentives are announced, the affected cars will likely be priced higher as we've seen many times--e.g. the hybrid tax credit. Prices went up to nearly match the rebate, and went down when the rebate ended. This is to be expected: In an efficient marketplace, such a car s worth XX bet dollars to a buyer, and the prices adjust to that. It was a government (taxpayer) gift car companies, very little benefit to buyers.

These two ideas are in conflict--if I'm sure the price of the car will simply go up to match the rebate, then it would make sense to buy the car right now. But, maybe the market will be soft and the rebate will end up in my pocket after all. Uncertainty== a reason for the customer to put off buying==the ultimate enemy of the salesman=no sale for now. Overall, the car dealers would be more likely to get my money this month if the government were not involved. I suspect my case is not unique.
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Old 04-01-2009, 02:45 PM   #54
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So doesn't it come down to: one never knows what's going to happen or what the government is going to do. Which makes for uncertainty, which makes investors wary and depresses stock prices, which makes for buying opportunities. Which is why we bought the hated GM and BofA. And we aren't looking good now, but down the road? Might pan out. Roulette odds can be calculated and aren't too good, odds on companies that can be affected by governmental action (aren't they all at risk) are unknown, but i bet on being fed misinformation or misdirection.
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Old 04-01-2009, 03:04 PM   #55
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In many cases, yes. But in terms of GM the equation really comes down to:
If GM goes bankrupt, common stock holders loose the most.
If GM cuts a deal with bondholders that will allow them to avoid bankruptcy the current common stock holders loose.
The only trading in GM stock now is, in my estimation, people hoping to make a quick trade in and out as the volitility is HUGE so you can make a ton of money if you want to run the risks (It has fluctuated almost 100% in just the last two weeks).
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Old 04-01-2009, 06:50 PM   #56
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I hardly see how a bankruptcy and possible corporate liquidation results in less uncertainty for potential customers than what's happening now.
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Old 04-01-2009, 09:55 PM   #57
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I hardly see how a bankruptcy and possible corporate liquidation results in less uncertainty for potential customers than what's happening now.
Well, I'm not a lawyer, but my impression is that bankruptcy has some history and some defined procedures. So there is *some* certainty about how things could proceed.

OTOH, my impression of what is going on with bailouts and Congress making the rules on the fly is like the Calvinball game that ziggy mentioned.

So I think a case can be made that bankruptcy *would* provide more certainty that the current Ad Hoc process.

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Old 04-02-2009, 08:14 PM   #58
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So I think a case can be made that bankruptcy *would* provide more certainty that the current Ad Hoc process.

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From the customer's perspective?

The chief risk faced by today's customer is that there won't be a company to replace worn out parts a couple years down the road. That's a very distinct possibility had GM been allowed to file for bankruptcy with zero government intervention. That doesn't seem to be too much of a risk now.

On the other hand, the "big" uncertainty highlighted above about whether a new tax credit will be rolled out is akin to the risk any consumer takes that they'll miss an impending promotion or sale. Kind of run-of-the-mill uncertainty.

So I still don't understand how the customer is faced with greater uncertainty.
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Old 04-02-2009, 08:32 PM   #59
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From the customer's perspective?

The chief risk faced by today's customer is that there won't be a company to replace worn out parts a couple years down the road. That's a very distinct possibility had GM been allowed to file for bankruptcy with zero government intervention. That doesn't seem to be too much of a risk now.

On the other hand, the "big" uncertainty highlighted above about whether a new tax credit will be rolled out is akin to the risk any consumer takes that they'll miss an impending promotion or sale. Kind of run-of-the-mill uncertainty.

So I still don't understand how the customer is faced with greater uncertainty.
?

Bankruptcy *is* government intervention, isn't it? But it is the courts, not Congress.

What I'm saying is, we have a history with court ryun bankruptcies - so some amount of certainty comes with that. We have very little history of Congress jumping in and trying to run companies, so much more uncertainty.

Neither removes uncertainty, I just think a case can be made that COngress is more uncertain than a court.

As far as warranty issues - that is still a concern, because the govt actions may fail, and GM won't be around to service the cars anyway. It is one concern I have over a GM purchase at this time.

Also, there is no reason that a BK court could not deal with the issue. They would need to have GM set aside some money to cover warranty costs that would be performed by certified shops. Probably cost much less than the $ they have thrown at them so far. How much do the bond holders still have?

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Old 04-03-2009, 12:45 AM   #60
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From the customer's perspective?

The chief risk faced by today's customer is that there won't be a company to replace worn out parts a couple years down the road. That's a very distinct possibility had GM been allowed to file for bankruptcy with zero government intervention. That doesn't seem to be too much of a risk now.

On the other hand, the "big" uncertainty highlighted above about whether a new tax credit will be rolled out is akin to the risk any consumer takes that they'll miss an impending promotion or sale. Kind of run-of-the-mill uncertainty.

So I still don't understand how the customer is faced with greater uncertainty.
Actually you ask a very good question. If they go bankrupt then no more parts will be made right? Well... I am not so sure about that. Free markets (if any survive after this) follow a fairly simple set of rules. And those rules are if there is a high enough demand for a product, then chances are, a business will be created to feel that need. And not the other way around.

If there is a huge market for car parts, do you really think that no company will come forward to fill it? As of today there are thousands if not millions of aftermarket replacement parts for Ford, GM, Chrysler, etc. And not one of them is made by the OEM. If the big three were to go bankrupt, I would imagine it would be a great time to start a relpacement parts business. And I would wager you that is EXACTLY what would happen in such an eventuality.

Oh... and by the way, all of those folks that get laid off when the big three go under... well now... there is a new thriving industry just waiting to employ folks with knowlege of those car parts.

I think a lot of this "the sky is going to fall mentality" is being fabricated to some extend by the govt. Why? Because only when the populous is frightened enough, can the govt start taking more control, something they have been steadily doing for years.
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