GM Stock- Not For You/Not For Me

[BLAZER PROPHET]

http://articles.moneycentral.msn.co...500ba&_p=84011ea1-f66d-4aa6-88e0-b21398ec4e38

There's an embedded video. Although I might not buy the IPO for GM stock, I do think it should be made available to anyone.

 

[hasoos]

Well to be honest I am pretty pissed about how this works out. Lets see. They go bankrupt, fuck a whole bunch of people out of their money, and then get bailed out by the government, and now were still in business and get to give an IPO? WTF is up with that? Why aren't the old stock holders the owners of the company? If anything, they should give away all their shares to the people that paid for the comapany in the first place, for free.

 

[BLAZER PROPHET]

Well to be honest I am pretty pissed about how this works out. Lets see. They go bankrupt, fuck a whole bunch of people out of their money, and then get bailed out by the government, and now were still in business and get to give an IPO? WTF is up with that? Why aren't the old stock holders the owners of the company? If anything, they should give away all their shares to the people that paid for the comapany in the first place, for free.

The bond holders lost hundreds of millions and the UAW made hundreds of millions. Now, they stand to gain again. I'll say one thing for Obama- he takes care of those who take care of him.

 

[andalusian]

That's pretty effed up. For all the yelling about how much the government got into things they should not - the way they fucked up the bailout is by not getting as involved as they should have - and exercise better controls of how the bailout money was handled and managed (see the golden parachutes in the financial institutions that got tons of money).

 

[mook]

On the plus side, it's my understanding that:

1. GM is actually profitable again. http://www.csmonitor.com/Business/2...tcy-General-Motors-predicts-a-profitable-2010

2. American taxpayers may actually make a profit on this bailout. http://money.cnn.com/2010/09/27/news/companies/gm_ipo_bailout_profit/index.htm

If you could say those two things were likely back when the bailout was first proposed, I would've been all for it.

So yeah, it sucks that the IPO isn't open to everyone. But remember, the IPO is part of the process of paying back everyone. It's a good thing that people want access to this. It's still got a pretty piss poor ranking by S&P (BB minus) but jeez, at least it's got some value. That's a hell of a lot better than I would've guessed a year ago.

This was always about preserving jobs in the face of a possible great depression. It was messy and pissed me off, but at the end of the day you kind of have to scratch your chin and admit it actually sort of worked.

 

[mook]

Note: I'm not conflating this with the mortgage crisis bailouts. I'm much less happy with how that's worked out. I was glum when it happened, and I'm more frustrated now.

I think people tend to conflate the GM bailout with the housing bailout because it was really expensive and happened around the same time. But they really are different animals.

The GM bailout was all about saving jobs and giving GM the room to restructure so it could become productive again. Which it basically has. The mortgage bailout was all about....fuck, I still don't know. I guess saving our economy by artificially propping up housing prices so people wouldn't realize how incredibly fucked they were. Whatever.

 

[Denny Crane]

On the plus side, it's my understanding that:

1. GM is actually profitable again. http://www.csmonitor.com/Business/2...tcy-General-Motors-predicts-a-profitable-2010

2. American taxpayers may actually make a profit on this bailout. http://money.cnn.com/2010/09/27/news/companies/gm_ipo_bailout_profit/index.htm

If you could say those two things were likely back when the bailout was first proposed, I would've been all for it.

So yeah, it sucks that the IPO isn't open to everyone. But remember, the IPO is part of the process of paying back everyone. It's a good thing that people want access to this. It's still got a pretty piss poor ranking by S&P (BB minus) but jeez, at least it's got some value. That's a hell of a lot better than I would've guessed a year ago.

This was always about preserving jobs in the face of a possible great depression. It was messy and pissed me off, but at the end of the day you kind of have to scratch your chin and admit it actually sort of worked.

So is Ford, and they didn't take any govt. "assistance."

 

[Denny Crane]

Note: I'm not conflating this with the mortgage crisis bailouts. I'm much less happy with how that's worked out. I was glum when it happened, and I'm more frustrated now.

I think people tend to conflate the GM bailout with the housing bailout because it was really expensive and happened around the same time. But they really are different animals.

The GM bailout was all about saving jobs and giving GM the room to restructure so it could become productive again. Which it basically has. The mortgage bailout was all about....fuck, I still don't know. I guess saving our economy by artificially propping up housing prices so people wouldn't realize how incredibly fucked they were. Whatever.

The bailouts destroyed housing prices, which are still falling. All it did was allow big banks to buy slightly smaller banks.

 

[BLAZER PROPHET]

The bailouts destroyed housing prices, which are still falling. All it did was allow big banks to buy slightly smaller banks.

And small bank are closing and damaging their communities.

 

[mook]

So is Ford, and they didn't take any govt. "assistance."

So is General Electric, Microsoft and Walmart, and they didn't take any govt "assistance" either. So what? Does that mean I should be depressed that the government bailout of GM appears to have worked?

 

[Denny Crane]

So is General Electric, Microsoft and Walmart, and they didn't take any govt "assistance" either. So what? Does that mean I should be depressed that the government bailout of GM appears to have worked?

It wasn't necessary, and it would have "worked" anyhow. The government bailout of GM was a gift of a large automaker to the Union.

 

[julius]

It wasn't necessary, and it would have "worked" anyhow. The government bailout of GM was a gift of a large automaker to the Union.

Ford was not in the same situation as GM, so to compare the two is pointless. Ford didn't have the insane debt that Chevy did, nor spread itself as thin as GM did (with GM owning parts of, or completely 15 or so car companies).

 

[Denny Crane]

Ford was not in the same situation as GM, so to compare the two is pointless. Ford didn't have the insane debt that Chevy did, nor spread itself as thin as GM did (with GM owning parts of, or completely 15 or so car companies).

Ford was in serious trouble as well, but didn't want to tolerate the govt. interference. In fact, the government giving $billions to a competitor isn't exactly a level playing field, is it?

Ford was among the big 3 automakers requesting assistance from the government in 2008. Ford requested a $9B line of credit and a $5B loan from the energy department.

GM wasn't too big to fail. If it did, some investors would have swooped in and bought up their assets to keep building some sort of cars. Or some electric car maker would have sprung up in its place.

 

[barfo]

GM wasn't too big to fail. If it did, some investors would have swooped in and bought up their assets to keep building some sort of cars. Or some electric car maker would have sprung up in its place.

Interesting theory. Who are these investors who would have swooped in? Because my recollection is that nobody was investing in much of anything back then.

barfo

 

[Denny Crane]

Interesting theory. Who are these investors who would have swooped in? Because my recollection is that nobody was investing in much of anything back then.

barfo

Except the banks, right? Didn't BofA buy Merrill Lynch, among several other similar sized deals?

The Chinese are going to buy GM at their IPO, haven't you heard! They're investors, unless you want to make the case they're not.

There's what, $3T sitting on the sidelines wanting no part of gambling the govt. won't take that money once invested and give the company to a union.

That $3T would buy GM several times over. And there's no necessity that there be a surviving GM that's monolithic. Maybe 10 smaller auto makers, more regionalized, would have came out of it.

 

[barfo]

Except the banks, right? Didn't BofA buy Merrill Lynch, among several other similar sized deals?

Pretty sure GM is not a bank, nor would a bank want to buy GM.

The Chinese are going to buy GM at their IPO, haven't you heard! They're investors, unless you want to make the case they're not.

There's what, $3T sitting on the sidelines wanting no part of gambling the govt. won't take that money once invested and give the company to a union.

Can't really figure out what you are trying to say here, but if you really think there was non-government money that GM could have gotten - well, why didn't they?

That $3T would buy GM several times over. And there's no necessity that there be a surviving GM that's monolithic. Maybe 10 smaller auto makers, more regionalized, would have came out of it.

And maybe nothing would have come out of it, because, in the short term, all those unemployed people would have made the economy even worse off than it was, so investment would have been depressed even more.

barfo

 

[Denny Crane]

GMAC isn't a bank?

Why didn't GM get private money? Because the government offered money and restrictions that scared off investors.

Buy low, sell high. Low would be economy depressed.

 

[barfo]

Why didn't GM get private money? Because the government offered money and restrictions that scared off investors.

Sure... that's complete fantasy. Reality is that no one wanted to buy GM in the state it was in.

Buy low, sell high. Low would be economy depressed.

Yeah, strange how investors didn't buy up everything in sight a couple of years back. It's like the real world is bent on disproving your theories.

barfo

 

[Denny Crane]

Sure... that's complete fantasy. Reality is that no one wanted to buy GM in the state it was in.



Yeah, strange how investors didn't buy up everything in sight a couple of years back. It's like the real world is bent on disproving your theories.

barfo

You talk like if GM went into bankruptcy, the factories and equipment and office buildings would have vanished into thin air. Or something.

When GM was in trouble, they were talking about merging/acquiring Chrysler. Fiat was looking at acquiring GM assets, too.

http://english.aljazeera.net/business/2009/05/200954145424711465.html

When there's a fire sale, people get interested. When the government is wiping out investors by the $billions (and unconstitutionally at that!), why would anyone want to take a risk?

 

[barfo]

When GM was in trouble, they were talking about merging/acquiring Chrysler.

So? If two homeless guys decide to sleep under the same blanket, are they no longer homeless?

barfo

 

[Denny Crane]

So? If two homeless guys decide to sleep under the same blanket, are they no longer homeless?

barfo

your logic always fails when you try to use some analogy.

 

[barfo]

your logic always fails when you try to use some analogy.

What didn't you understand about that analogy?

barfo

 

[Denny Crane]

What didn't you understand about that analogy?

barfo

It's a strawman, irrelevant.

Fiat had funding and loans and everything to go forward.

Several $billion. Not taxpayer money, not US money.

 

[barfo]

It's a strawman, irrelevant.

Your comment that GM and Chrysler were talking about a merger was irrelevant to the discussion, my analogy was pointing that out.

Fiat had funding and loans and everything to go forward.

Several $billion. Not taxpayer money, not US money.

To buy Opel, sure. That's a lot different than buying all of GM. Fiat buying Opel would have made the remaining portion of GM weaker. How is that a good thing in your mind?

barfo

 

[barfo]

GMAC isn't a bank?

And speaking of irrelevant... GM sold off its controlling interest in GMAC in 2006.

barfo

 

[Denny Crane]

A merger between buick and gm might make sense.

They don't need two accountants, two web sites, two CEOs ... two of a lot of things. The savings might have made it worthwhile.

Closing car sales lots and many other things GM did during restructuring made it weaker.

And...

http://www.businessweek.com/bwdaily/dnflash/content/oct2008/db20081017_939535.htm

As top executives at General Motors (GM) and Chrysler owner Cerberus Capital Management continue to talk about a merger, the most popular scenario at this point would still have all three companies joined at the hip.

Talks between the two companies continue, and while a deal is far from certain, the two sides are narrowing in on a merger structure that both think could work, BusinessWeek has learned. The basic outcome has GM folding Chrysler's auto business into its own while Cerberus would merge lending arm Chrysler Financial Services and GMAC Financial Services. Cerberus owns 51% of GMAC while GM owns the rest.

If that deal goes through, GM would end up owning a minority piece of the merged finance company and Cerberus would still have a stake in GM. While many analysts have figured that Cerberus would retreat from the car business, the private equity firm would remain deeply in the game. If the deal ends up working this way, every company involved has a vested interest in seeing the other succeed. It would still behoove Cerberus to run the combined lender so that it helps sell more GM and Chrysler cars.

Such a deal would give GM the chunk of revenue from Chrysler's estimated 1.4 million customers and the $11 billion in cash on Chrysler's books. Meanwhile, Cerberus would acquire the merged lending business it has wanted since it acquired Chrysler from Daimler (BusinessWeek.com, 5/14/07) more than a year ago.

A WIN-WIN
Sources close to both companies say that if the two lenders and two automakers are combined, all would have better balance sheets. Then they can weather the storm and get to 2010, when executives on both sides think a new health-care deal with the United Auto Workers will save money, and auto sales will rebound from today's dismal levels.

 

[barfo]

A merger between buick and gm might make sense.

They don't need two accountants, two web sites, two CEOs ... two of a lot of things. The savings might have made it worthwhile.

Sure... but together they'd still have been bankrupt. Getting rid of accountants, websites, and CEOs wasn't going to fix the problems.
The two homeless guys might be warmer, but they'll still be killed overnight by roving gangs angry about message board jokes.

Closing car sales lots and many other things GM did during restructuring made it weaker.

I don't see your point.

And...

And things got a lot worse starting in October 2008.

barfo

 

[Denny Crane]

Together they'd have $11B in cash. And the proceeds of the sale of the combined lending business.

Read the article?

 

[barfo]

Together they'd have $11B in cash. And the proceeds of the sale of the combined lending business.

Read the article?

Did you? Did you read this part?

But with both companies burning cash, they will have to race to get those savings. "The classic merger arguments don't apply because they don't have the time to realize them," says Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. "If the recession is as deep as everyone thinks, GM could run out of cash next year."

Guess what - the recession was deeper than everyone thought.

barfo

 

[Denny Crane]

It's not a classic merger as described. They're spinning off and selling off 49% stake in GMAC and Chrysler's credit company as well.