GM Selling at Loss Should Tell You Something

[red states rule]

Another "accomplishment" of the man child President. The tab this guy is running up that we, and our great great grandkids are going to have to paf off is amazing





If the federal government wanted to recoup its investment in GM, then the GM stock price should be much higher than the $33 initial price. In order to break even, as the Deal Journal reports, the stock price would have to rise to around $50 per share. So why is the Treasury Department selling off the company at a loss?

First, the government is what is known as a “motivated seller.” By offering such a low stock price, the administration is essentially admitting that it has no place in running an auto company. While GM’s financial position is much better than it was when it should have gone bankrupt, the company’s finances are not great. A quick crunch of any of the numbers in the GM prospectus shows the company is not the healthy organization the politicos would have you believe. They have done a poor job running the company, even if they did save it from going under by ignoring the law and throwing billions of dollars at it. The sale prospectus even admits “our (that is, the government’s) disclosure controls and procedures and our internal control over financial reporting are currently not effective.” Hardly a ringing endorsement!

Second, they’re not the only ones in the game. The unusual bankruptcy settlement for GM granted a significant portion of the company to the United Auto Workers. The union is in this game too, even though it has no investment to recoup. The UAW is selling around 18 million shares, so it stands to gain about $500 million for its pension fund — at taxpayers’ expense.

Finally, just as with RailTrack, there is considerable political risk involved. If the feds could nationalize GM once, they can do it again. The company admits in its prospectus that “The UST [U.S. Treasury] (or its designee) will continue to own a substantial interest in us following this offering, and its interests may differ from those of our other stockholders.” It suggests that government might interfere in “The selection, tenure and compensation of our management; our business strategy and product offerings; our relationship with our employees, unions and other constituencies; and our financing activities, including the issuance of debt and equity securities.” Furthermore, the government has asserted sovereign immunity, meaning that the IPO is not subject to anti-fraud laws.

Read more: http://dailycaller.com/2010/11/18/gm-selling-at-a-loss-should-tell-you-something/#ixzz15v8kcY9p

[OldMercsRule]

GM and Chrysler were purchased for only one reason: to keep taxpayers on the hook for those massive UNION retirement benefit packages as quid pro quo repayment of the $450 million outlay and massive ground work for a Chicago thug's election in 2008.

The growth of UNION jobs in nanny Gubment is more of the same. The federal money spent and gonna be spent to upside down states like California is also more of the same thing.

Fortunately the idiots who voted for this Chicago thug fruit fly luved by the soon to be bankrupt "main stream" media are starting to wake up and 2012 is gonna be a reckoning.

GM will never work out, (nor will Chrysler). The stock offering is a fraction of the federal cash outlay, (the tip of the ol' ice berg) and the pension guarantees have moved the federal Gubment closer to bankruptcy.

The partisan "main stream" media is hailing this stock offering a success and vindication of Chicago style break knee politics, in an attempt to save their chosen "One". Not gonna work, IMHO.

My overpriced $.02. JR

[red states rule]

GM and Chrysler were purchased for only one reason: to keep taxpayers on the hook for those massive UNION retirement benefit packages as quid pro quo repayment of the $450 million outlay and massive ground work for a Chicago thug's election in 2008.

The growth of UNION jobs in nanny Gubment is more of the same. The federal money spent and gonna be spent to upside down states like California is also more of the same thing.

Fortunately the idiots who voted for this Chicago thug fruit fly luved by the soon to be bankrupt "main stream" media are starting to wake up and 2012 is gonna be a reckoning.

GM will never work out, (nor will Chrysler). The stock offering is a fraction of the federal cash outlay, (the tip of the ol' ice berg) and the pension guarantees have moved the federal gubment closer to bankruptcy.

The partisan "main stream" media is hailing this stock offering a success and vindication of Chicago style break knee politics, in an attempt to save their chosen "One". Not gonna work, IMHO.

My overpriced $.02. JR

And the unions are spending tens of millions to try and get Dems elected while their pensions are running out of money

So, unions get taxpayer money

Unions donate money to the Dem party

Dems push for more money to the unions and keep union employees on someones payroll

[chloe]

I'm forming a Union against the Unions:laugh2:

[red states rule]

I'm forming a Union against the Unions:laugh2:

http://images3.cpcache.com/product/387556493v1_480x480_Front.jpg

[red states rule]

and the liberal media once again spins how the people are to damn stupid to appreciate the "accomplishments" of Obama. In this case it is the GM bailout





ABC’s Christiane Amanpour on Sunday again gave national U.S. television exposure to a liberal reporter with the London-based Financial Times as she brought Ed Luce, the newspaper’s Washington Bureau Chief and former Clinton administration operative, aboard her This Week roundtable. Luce declared the world would react “with deep horror, I think, but also some amusement,” to a presidential bid by Sarah Palin and charged Republican opposition to START shows “there's a greater hatred of Obama than there is a love of American national security.”

Echoing the standard liberal spin about how President Barack Obama just failed to effectively communicate his great achievements, Luce argued that “if GM had gone bankrupt and large portions of it had been closed down, we could have lost several hundred thousand jobs.” He then despaired: “The administration's communications effort on this has been absolutely abysmal. It's quite extraordinary to me how they haven't put this forward more forcefully and how the public still doesn't see just how different a kind of bailout this was than the Wall Street bailouts which remain deservedly unpopular.”

Read more: http://www.newsbusters.org/blogs/brent-baker/2010/11/21/amanpour-panelist-regrets-abysmal-white-house-pr-means-lack-appreciatio#ixzz15xSNfCFj

[fj1200]

Even now they need to continue with the shutting down argument as the alternative to the bailout. I don't recall anyone going down that road.

[fj1200]

Another "accomplishment" of the man child President. The tab this guy is running up that we, and our great great grandkids are going to have to paf off is amazing

At this point I applaud the decision to IPO GM and begin the process of winding down the government's position. I don't agree with the takeover in the first place but to take a dim view of the IPO because they're selling at a "loss" is piling on for no reason IMO. If the price of $50 isn't there then they need to sell at the market obviously. In fact I would love for them to dump the whole thing regardless of P&L just to be out of the business.

[OldMercsRule]

Even now they need to continue with the shutting down argument as the alternative to the bailout. I don't recall anyone going down that road.

Then ya didn't pay attention.

There is far to much auto building capacity on the particular planet, (and it has been that way for four decades).

Had GM been forced through a non Gubment bail out bankruptcy, the union pensions would have blown up and someone with capital would have cherry picked the GM names to manufacture and sell. That is how it works in capitalism, (not cronie capitalism), where Chicago thug pols pick winners and losers based upon quid pro quo cornsiderations.

JR

[OldMercsRule]

A perspective ta ponder:

Examiner Editorial: Obama's GM 'success story' is still a losing deal Examiner Editorial 11/21/10 9:05 PM
.
General Motors' stock rose the second day it traded as it rebounded from an early swoon. The automaker's stock closed at $34.26, up 7 cents, or 0.2 percent, on Friday.

Big Government advocates crowed last week when the General Motors initial public offering was launched at a share price of $33 and ended its first day at just under $35. President Obama said the GM IPO signified that "one of the toughest tales of the recession took another big step towards becoming a success story," and predicted that "American taxpayers are now positioned to recover more than my administration invested in GM." But, as usual with Obama, there is much more to the story than the dreamy claims of his political fairy tale.

First, as the Wall Street Journal reported, at the opening share price, taxpayers still lost at least $10 billion. That's because the government paid $40 billion for its 61 percent share in GM last year, and the initial IPO sale generated only about $30 billion. Taxpayers were left with a 37 percent share of GM, meaning that to break even, the share price must climb to around $51 for the government to recoup its investment. To be sure, GM's product line was being dramatically improved even before the bailout and has since made further progress. In the absence of a Reaganesque economic expansion, however, only a wildly unrealistic optimist can envision GM shares selling at $51. So the taxpayers are still likely to end up losing money on this deal.

But whether the bottom line on the GM bailout ultimately is red or black, the far more serious consequence is that it will be cited in the future by advocates of a politically planned U.S. economy as evidence that their way "works" when the reality is nothing of the sort. Call it "industrial policy," a "command economy" or whatever; the truth is, Obama and his allies want Washington politicians and bureaucrats to decide what goods and services are to be produced and sold, and at what price, rather than leaving these decisions in the wise hands of a free market. Economic decline always follows from substituting the whims and prejudices of the political class for the free market's natural impulse to provide consumers with products and services they want or need at a price they can afford.

Obama & Company will also claim theirs was the "only way to save GM," but, as the Heritage Foundation's Conn Carroll points out, that is simply not true. Recall that federal officials imposed the bailout over the objections of GM creditors. Those creditors had previously agreed to a settlement in which they, not the government, would have a controlling interest in the restructured company and their claims would have been settled in a lawful bankruptcy process, thus preserving the sanctity of contract law. With bailouts, "law" becomes whatever the politicians and bureaucrats say it is. So much for a government of laws, not men



Read more at the Washington Examiner: http://washingtonexaminer.com/opinion/editorials/2010/11/examiner-editorial-obamas-gm-success-story-still-losing-deal#ixzz164vRx0JX

[fj1200]

Then ya didn't pay attention.

There is far to much auto building capacity on the particular planet, (and it has been that way for four decades).

Had GM been forced through a non Gubment bail out bankruptcy, the union pensions would have blown up and someone with capital would have cherry picked the GM names to manufacture and sell. That is how it works in capitalism, (not cronie capitalism), where Chicago thug pols pick winners and losers based upon quid pro quo cornsiderations.

JR

I didn't phrase my post very well. The "gubment" had to say the alternative was a complete shutdown where 200,000+ jobs would just disappear where in reality someone, read a capitalist, would have bought the GM assets, created value, and brought GM out of BR as a restructured company. Regardless of the over capacity GM had/has value and would not have been liquidated.

Yes, the take-over was quite thuggish.