Posted on 11/06/2012 7:41:23 AM PST by tobyhill
President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.
(Excerpt) Read more at forbes.com ...
I noted in the article that the German CEO was interested in the actual engineering of a quality product.
The American CEO was interested in reorganizing and “integrity.” (As if GM could even think about any claims to integrity after building the poorly engineered trash that they are so justly famous for.
Which is why I will nevah! purchase a gubmit motors car.
And the UAW can shove it up their smelly collective Obamas.
I own an investment company.
The GM name is very toxic, harbors very bad feelings among the public.
The more Obama talked about saving GM, the more it hurt him. Trust me on that...
I notice he backed off that message quite a bit, because it probably polled very poorly with focus groups.
Obama is giving speculators an almost sure thing on shorting GM stock - AGAIN.
Also, If Romney wins clearly tonight, GM will be down 10% tomorrow AM at open.
” Ally financial, GM’s captive finance arm (formerly GMAC) will pretty much finance anyone that will fog a mirror.”
Yep.....even D- paper. The Chinese loaned Ally billions recently. The irony did not escape me : )
” I own an investment company.
The GM name is very toxic....”
A safe “short” IMO.
Bankruptcy is exactly what GM needs!!!
Do it right this time, no bailout and wipe out the unions and their benifits/pensions!!!!
Ford is doing quite well.
GM is on top ... of the dungheap.
GM should have been broken up.
Actually, the big problem for all of the US automakers were the many many decades of entitlement programs that were built into f, gm, and c.
By going bankrupt, and robbing the bond holders of GM from their rightful property, the US Govt has unfairly given GM a huge advantage. By wiping off the long term debt from GM’s books, GM is actually in a fairly good position right now. Meanwhile, F is still burdened by a massive amount of long term debt, and GM has a very strong balance sheet advantage.
On 150 billion of revenue, GM has only 17 billion of debt, compared to F’s 130 billion of sales, with 100 billion of debt. Using an interest rate of 6%, that means that F pays 6 billion in interest expense, to GM’s 1 billion in expense.
F is by that measure, in much worse shape going forward than GM.
There's only so much they can do while carrying the dead weight of the UAW on their shoulders.
I blame unions. They are the root economic problem with the auto industry and will kill it just like they did the steel industry. They are a labor monopoly, and cannot be sustained.
Unions are the barnacles on the ship of prosperity; the sandbags on the balloon of profits.
Bankruptcy or reorganize you only have one option.
It’s obvious that the UAW is a cancer that kills any company it gets involved with. Even the brain-dead auto executives at the “American” companies know this. Ford has been moving production away from the Midwest to Mexico for years. Chrysler is dead, and the Italians are going to shift what little production is left overseas. GM is shifting production to China. It’s all to flee the UAW. None of the foreign transplants here want the UAW in their plants.
But the unemployed UAW workers will still go to the union hall for beers, convinced that the overgrown decaying empty plant next door will someday spring back to life. It’s like a cargo cult.
” By going bankrupt, and robbing the bond holders of GM from their rightful property, the US Govt has unfairly given GM a huge advantage.”
Of course. Tantamount to grand theft.
Ford is well run by Mulally, but he retires at the end next year, and
Fields(age 51) is an unproven commodity.
Toyota, Honda and others fundamentally changed the auto industry about 20 years ago. Build quality and owner satisfaction became more important than ever-changing styling and gadgetry. To some extent cars became transportation appliances. It took Ford 10 years to adapt to the changes, GM and Chrysler have yet to evolve. GM is dead, we are just waiting for the funeral.
And for those of you who aren’t threatened by reality...
In the 3rd quarter of 2012, GM overall earned $1.8 billion. Operating cash flow for the first 9 months of 2012 was $9.8 billion, with capex of around $6 billion, giving free cash flow of about $3.8 billion. GM has $33 billion of cash and near cash on the balance sheet, with automotive debt of $5 billion, and pension debt of $25 billion, which is falling.
The Malibu might suck, but the new full-sized pickup comes out next spring, and that’s a cash cow for GM.
I don’t like Government Motors. I’ll never buy another GM product as long as I live, but to say that GM is going bankrupt within 4 years is laughable.
Unless Obambi wins, and we get the Obimbo Depression. Then GM does go bankrupt, but so does Ford, and many others.
My point would be, that F could be so deep in debt and entitlements, that it is beyond saving. I’m not saying it is a buy, or a sell, but the fact is that they are burdened by entitlements. F, GM, and many other companies today, mirror the policies and strategies of the Federal Govt. Sure as heck, our current govt is headed the way of GM. I’m not so sure it can be saved, without destroying the value of the dollar.
So many folks I’ve talked to about GM over the last several years, tried to point their finger about GM products. That is erroneous. They sold plenty of product, but the overhead of debt and entitlements became a burden that could not survive a downturn in the economy. If the economy had stayed fine, they could have limped along for a good while longer. F is in no better shape really. Product, has nothing to do with it.
hahahahahaha...let me catch my breathe....hahahaha...you guys dont think Romney would bailout gm, sadly mistaken.
You’re mixing Ford’s automotive debt with their financial services debt.
Financial services debt/assets need to be stripped out for a good apples-to-apples comparison. Ford has much higher debt and assets in financial services (car loans and dealer floorplan, primarily) than GM due to GM spinning off GMAC when they were in pre-bankruptcy trouble. What they have now is much smaller than Ford
I bought my first Honda in 1979. I bought my last Honda, ever, in 2002. Seshiru Honda died, and now Honda is going down the tubes. I think it’s amazing how the loss of a founder can kill a company. I can’t even remember the name of Honda’s new crossover. That shows how well they’re selling. Toyota is barely hanging on. My Dad’s friend had the best saying about Volkswagens. “Everybody should own a Volkswagen at least once....but only once.” I’ll never buy another GM product. The UAW can get my tax money, but they won’t get any of my other money. I don’t see any car company doing all that good right now.
I agree with you entirely.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.