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.
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.
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.
Because the government will own a majority of the restructured company?I like to deal in realities, not soundbites.
Why specifically to some people refer to it as becomming Government Motors.
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.
And nothing of value was lost.
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).
Goodbye General Motors, hello Government Motors.
I like to deal in realities, not soundbites.
Why specifically to some people refer to it as becomming Government Motors.
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 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.
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.
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...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.
bsmup said:Secured lenders were screwed in these bankruptcies. They were told by O's administration to accept the government's plan or else.
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.
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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?
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.