Posted on 04/07/2010 5:12:49 PM PDT by Kaslin
The times truly are out of joint when the most important initial public offering (IPO) of 2010 could come from what was American capitalism's iconic corporation for most of its 102 years.
Andrew Bary, writing in Barron's, says General Motors "may go public in the second half of this year, and its stock market value could top $50 billion, more than Ford's $40 billion."
This is justice under today's state capitalism: Ford took on $23.6 billion in debt to avoid becoming dependent on Washington, whereas GM shed much of its debt by becoming dependent. Washington, Bary explains, turned most of its $50 billion loan to GM into 60.8% ownership, the United Auto Workers got 17.5% for forgoing a $20 billion health care claim against the company, and Canada's government got an 11.7% stake for $9 billion.
Detroit's long drive down the crumbling road to disaster is chronicled in "Crash Course" by Paul Ingrassia. It is a story of the hubris of a corporate oligopoly and the myopia of a union monopoly.
When Henry Ford said people could have his cars in any color they wanted as long as it was black, the actual name of the color was, portentously, "Japan black enamel." But in 1927, GM hired Harley Earl, whose father designed custom cars for Hollywood stars, to head its Art and Color Section, a harbinger of Detroit's emphasis on cars as "visual entertainment" — Earl's phrase — rather than on the technological improvements Japanese automakers would come to emphasize
(Excerpt) Read more at investors.com ...
BTTT
This is outright theft.
Any money that is raised from GM's IPO should first be used to refund the secured bondholder's that they stiffed while giving away the store to the governments and the unions.
And lest you think those bondholders could afford the loss: most of them were civil service and teacher's pension funds.
Probably need to brush up on the history of the Auto in the Soviet Union.
So true. And they will be the last to realize. Sheep to the slaughter.
I can't wait to invest in a money-losing, union-controlled stock with future fully dependent on Obama give-aways to his homeys!!!
Where do I sign up?
Right! If they don’t make a profit, their IPO might not be worth the hot air that made this article.
"According to a report by the Government Accountability Office, GM will need to add $12.3 billion into its pension fund by 2014. To make matters worse, if GM terminates their pensions, the Pension Benefit Guaranty Corporation – funded by taxpayers - would then become responsible for as much as $14.5 billion in unfunded liabilities.
Where as what Ford did on 12/31/2009.
They paid off their VEBA debt (i.e. the Retiree Health Care) by giving them, Cash, Long term notes and "Warrants" for Ford Stock of which the UAW exercised the other day. They took a variable Liability and turned it into a fixed one IMHO.
Where as GM hasn't even tackled their VEBA liability, it is their ownership stake, they are betting on if I am not mistaken.
IF so what do you get with the GM IPO? VEBA and the Pension Liability, which would have be expunged in a normal bankruptcy.
FR-er Legal Eagle Bankruptcy Attorney's/GM-er's tell me where I am wrong.
With that as a backdrop, would you buy the GM IPO?
Exactly!
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