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GM pays off govt loan!
#1
... with more govt loan money ...

Quote:... it is unclear how GM and the Administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way. In reality, it looks like GM merely used one source of TARP funds to repay another.

Don't confuse people with the facts!
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#2
I question whether they really needed the money and just used the recession and threat of bankruptcy to demand concessions from the union.
The true purpose of democracy is not to select the best leaders — a clearly debatable obligation — but to facilitate the prompt and peaceful removal of obviously bad ones. 
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#3
WarBicycle Wrote:I question whether they really needed the money and just used the recession and threat of bankruptcy to demand concessions from the union.

Really? My take is that the Obama Admin, with the AFL-CIO, were the gainers here, not the company. GMC is a hollow shell, and is still standing because it is propped up financially. Take away Obama, and the "too big to fail" thinking, and GMC will fold.

Yak is right, this is nothing more than "Symbolism" over "Substance".
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#4
It's amazing that they can lie so enormousely in an add. Realy it'sn't funny.

It's even a moral offense that GM has made a profit before depreciation and interrest and should have paid the paxpayers with this profit. Not recieving anew what they give back.
But the company must not be in such good shape if they do so.
They hope to make a public offering in a few years but with a debt of $100B (pension fund + Tarp + other aids + Private debts), who in their right mind will ever invest in such a company?

GM will be a symbol: that of Obama's biggest failure.
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#5
WarBicycle Wrote:I question whether they really needed the money and just used the recession and threat of bankruptcy to demand concessions from the union.

Are you kidding me?? There was no threat of bankruptcy ... there WAS SUPPOSED TO BE a 'normal' bankruptcy ... the government circumvented the legal process. Debt holders are legally supposed to be first in line when a company defaults. Obama shoved them to the back. The union and the government liked the company so much they stole it. The GM bond holders are still bleeding out the a**.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#6
I agree with Yak:
I rarely criticize Obama, but IMO he was coward enough not to dare backrupt GM.
Obama didn't want to disapoint is communist friends and GM was and still is managed as it would under a communist regime yet surrounded by a capitalist world and its realities.

GM had to be bankrupt way before the crisis started because it had little to do with the subprime meltdown. How the Unions suceeded in making the healthcare benefits senior to bond holders is beyond me. And have a debt to their own workers and former workers several times bigger than their normal debt (which was already huge). Not because of social justice but a company shouldn't be liable for healthcare benefits of has-been workers.
A sheet-to-sheet comparison between GM and Greece would not be preposterous, save for the fact that a state has the duty of offering healthcare and retirement, not a private company.

I don't know if the gummint stole it, but they certainly paid way too much for it with the tax payer money.
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#7
Yeah, and now all these goofs are buying new GM stocks like crazy.

GM'sIPO. What a joke:
AP Wrote:The federal treasury made $11.8 billion in the IPO by selling 358 million shares. It stands to make $13.6 billion -- and lower its stake to 33 percent -- if bankers exercise options for 54 million more shares. If the options are taken, the government will have 500 million shares left, and they must sell them for $53 each in order to recoup all the bailout money.

The gummint will get only $10.5 billion out of a debt of $50B. The stocks were priced at $33. But that's only the first part of the IPO, more IPO will come to pay more of the gummint's debt and with the number of stocks they plan to sell, these stocks should be priced at $57 for the gov' to make whole.
This company is not worth the debt it owes, even after bankrupcy restructuring. This is the next grand theft by the IRA fund managers.
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#8
You're probably right Fred. I wouldn't buy any of GM's stock. If for no other reason, just out of general principles.
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#9
Wish I would have bought Ford. But I did alright with Ruger at the time.
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#10
I did buy some Ford stock right at the time of the bail outs. It's done rather well, I think i bought at 8 something, and it is 16 something now. I wish i had more, but I don't really have tons to play the market with.

I wouldn't buy GM because it goes against one of my investing rules. If I wouldn't buy the companies product, I won't buy the companies stock either.
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#11
I remember in mid 08 or late 08, it was just under 2 dollars a share. Dammit, and I had some major capital then to play with.
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#12
Biker,

One factor to consider is the the lowered risk factor for Chrysler and GM now that they cannot go bankrupt. With the state as a backstop,that is an important investment factor.

I share your idea on investing,if we wouldn't buy something,why invest. Just saying,the risk is way lower with GM and Chrysler due to the US state's majority ownership.

Course this fact probably will cause the management to make further poor business decisions as well.
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#13
Buying GM stocks is crazy because:
1/ The gummint still have 500 million share for sale and nobody knows when they will sell them.
That's called future dillution.

2/ The real value (NAV) of the company is still fairly uncertain.

By principle, if you buy GM stocks now, you basicaly take over the bail out of the company. Therefore you must agree that bailing out GM is a good think for the nation and make a volontary contribution.

Citigroup and AIG stocks are in the same case.
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#14
Palladin Wrote:Biker,

One factor to consider is the the lowered risk factor for Chrysler and GM now that they cannot go bankrupt. With the state as a backstop,that is an important investment factor.

I share your idea on investing,if we wouldn't buy something,why invest. Just saying,the risk is way lower with GM and Chrysler due to the US state's majority ownership.

Course this fact probably will cause the management to make further poor business decisions as well.

Same argument can be made for Ford. It is doing quite well and now we know that if it ever gets into trouble, Uncle Sam will be there with a big ol bag of money to bail it out. Why, they could even afford to make some risky investments and still come out on top.
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#15
But the situation at Ford isn't the same as it is at GM. Ford actually saw something on the horizon and took steps. Not only that they were already in the process of re-inventing the company into something that would be more competitive on the world stage. GM has been plagued with bad management for years, poor product decisions, and poor workmanship. Right now GM has an unfair advantage due to GM standing for Gubmint Motors, plus some sweet deal with UAW.

Now to be fair, I think the UAW has plenty of blame for what went down in Detroit, but I also blame GM management. Hell, they were talking about how bad GM management was BEFORE Uncle Sam had to save em!
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#16
Fredledingue Wrote:Buying GM stocks is crazy because:
1/ The gummint still have 500 million share for sale and nobody knows when they will sell them.
That's called future dillution.

2/ The real value (NAV) of the company is still fairly uncertain.

By principle, if you buy GM stocks now, you basicaly take over the bail out of the company. Therefore you must agree that bailing out GM is a good think for the nation and make a volontary contribution.

Citigroup and AIG stocks are in the same case.

Forget the stock. Buying their bonds would be the true act of insanity ... particularly after considering how their last set of creditors were raped (contrary to the rule of law).

Stocks are supposed to have an element of 'risk'. In theory, debt in a company like GM should be close to a sure thing. Unfortunately, they (and our government) have changed the rules. The company defaulted on it's debt and, instead of distributing the assets to rightful owners, it was diverted for political reasons to political beneficiaries. It's called fascism. You might as well bet your money on a roulette wheel as loan them so much as a nickel. You're odds of return are probably better with the roulette wheel.

If it wasn't for Uncle Sam, their borrowing costs would be sky high (provided they could find someone stupid enough to loan them cash). Once you're outed as a dead beat, you get stuck with astronomical interest rates ... true for the folks who have to go to Crazy Joe's Auto Finance for a loan ... and true for this country itself if we don't clean up our act.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#17
Yak, There is no law which states that bondholders must be made whole in case of bankrupcy. They get the proceed of the sale of the company or the company itself or a combination of the two.

GM had a debt of $110B before bankrupcy. The gummint lent GM $50B in two parts. Thos loan turned quickely into an ownership of the company. Because the bail out didn't cover all the debt, bondholders and pension funds got also parts of the company.
There is also a liquidation company to sell all the assets the new owners don't want (Personaly, Obama was only interrested in the electric car segment).
The proceed should also go to the bondholder by order of seniority.

That sucks to be invested in this, but there is no law that forbid poeple to lose money on investments.

Buying New GM bonds would be insane indeed (thought I didn't read about new bonds). It would participating in a pyramyd or ponzy sheme, except that it would be legal which s worse. Because new bonds holders would pay the debt of the old bonds holders. And in 5 years new new bonds will be issued to cover the old new bonds and so on.
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#18
I never said anything about investors being "made whole". My point is that bond holders are supposed to be at the front of the line in the case of a default. In this case they were shoved to the back. They were forced to take a much, much smaller cut than they would have if the government had not injected itself into the car business ... the remaining management and union got a sweetheart deal ... the bondholders got the shaft. I'll stick with fascism in the description of this one. The federal government picked the winners and losers. And those unfortunate to be holding GM debt when the feds waded in are definitely in the latter category.

... for true gamblers, here's an interesting play if you're either crazy or still cursed to be holding GMs smelly old toilet paper ...

Then again ... if you've got the right political connections ... BINGO! ... you're a perpetual winner! Wink1
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#19
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"You know, Paul, Reagan proved that deficits don't matter." Dick Cheney
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#20
Depends on your definition of "bailout worked" Q. As a massive transfer of wealth to political cronies ... it was a grand success! Wink1
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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