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George W. Bush set into motion the auto bailout and temporary nationalization of GM a year and a half ago.

GM has recovered faster than its critics would have liked. The 2011 Chevy Volt is perhaps the ideal symbol of the revitalized company that just posted its first profit in years.  (Source: Earth 2 Tech)
The bailout appears to have worked

"Government Motors", "socialism in the U.S." -- the insults and criticisms hurled at General Motors and the U.S. government, which spent billions to bail it out of bankruptcy have hardly been subtle.  However, a year after GM bled $6B USD in a single quarter, the nation's largest industrial bankruptcy is slowly becoming a success story, as GM has posted its first profit in three years.

For the Obama and Bush administrations who crafted the first and second bailouts of the automaker its not vindication of their policy of temporary government intervention in the private sector, but its a start.

GM reports that it made $865M USD in the first quarter of the year and saw net revenue rise from $22.4B USD to $31.5B USD.  In April the company sold 183,997 cars and trucks, up 6.4 percent from the 173,007 it sold a year ago.

Chris Liddell, vice chairman and chief financial officer, comments, "In North America we are adding production to keep up with strong demand for new products in our four brands.  We're also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet."

The profit may pale in comparison to Ford Motor Company's $2B USD profit it posted last month, but it's perhaps a bigger deal given just how bad shape GM was in last year.  The turnaround did not come easy.  The Obama administration hand-picked CEO, Fritz Henderson was forced into a messy resignation amid failed deals.  And GM only barely managed to offload some of its laggard brands such as Saab and Hummer.

Still, a year later a leaner GM has emerged.  

The company has already paid back all its government loans years ahead of schedule, using some of the bailout money it had from the government's purchase of a 61 percent stock stake.  A public offering of that GM stock should soon come, and with it the possibility that taxpayers could recoup most of the governments investment.  In fact, some analysts believed the government could even make a 
profit on its temporary buyout of GM stock.

With models like the 2011 Chevy Volt electric vehicle coming down the pipe later this year, GM seems exciting again.  And it's profitable.

So while it would be grossly inaccurate to bill the newfound success as a 
complete vindication of President Obama and President George W. Bush's tough decision to bail out the auto industry and prevent the largest industrial corporate collapse in our nation's history, the government's careful guidance of GM and the company's newfound success certainly offer the first conclusive indication that the bailouts might not have been the catastrophic failure that their opponents claimed they would be.



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Anyone explain to me...
By Amiga500 on 5/17/2010 2:10:20 PM , Rating: 2
Why the US govt should be looking to offload those shares at the earliest possible opportunity?

Is it not better to wait a year or two and maybe get 50% more for them?




RE: Anyone explain to me...
By lightfoot on 5/17/2010 2:17:44 PM , Rating: 5
Because the United States Government isn't (and shouldn't be) in the business of owning private enterprise. It creates a conflict of interest in the government and should be avoided at any cost.


RE: Anyone explain to me...
By kfonda on 5/17/2010 2:35:37 PM , Rating: 3
A conflict of interest like senate hearings into Toyota driving Toyota sales down and GM sales up. It's probably just a coincidence...right. Our government wouldn't try to pull anything underhanded, would they?


RE: Anyone explain to me...
By room200 on 5/17/2010 9:42:43 PM , Rating: 2
No worse than Toyota covering up manufacturing defects which put American lives in jeopardy, is it?

http://www.foxnews.com/leisure/2010/02/23/japan-tr...


RE: Anyone explain to me...
By EasyC on 5/19/2010 1:11:59 PM , Rating: 3
Defects which our government STILL hasn't been able to find thru months of testing right? Please. It's almost summer, that wool over your eyes is gonna be hot.


RE: Anyone explain to me...
By lightfoot on 5/19/2010 2:12:42 PM , Rating: 2
Our government still hasn't been able to find Osama bin Laden either, does that mean that he never existed too?


RE: Anyone explain to me...
By EasyC on 5/20/2010 9:55:39 AM , Rating: 2
The world is a bigger place than a Camry.


RE: Anyone explain to me...
By Finnkc on 5/20/2010 10:22:40 AM , Rating: 2
anyone who posts a fox news link for validation should lick my ass.


RE: Anyone explain to me...
By ussfletcher on 5/18/2010 9:12:51 AM , Rating: 2
You do realize that the part of the Government looking at automotive safety and brought up the case against Toyota has absolutely nothing, zip, zilch, to do with the part of the Government that owns a share in GM. The Government is not a singular entity, it is an amalgamation of offices and jurisdictions controlled by a small group of people.


RE: Anyone explain to me...
By lightfoot on 5/18/2010 12:03:45 PM , Rating: 2
However even the slightest appearance of bias or conflict of interest undermines the credibility of the federal government in such hearings. And as you correctly point out such hearings are clearly the responsibility of the government.

It is not the hearings on automotive safety that must cease, it is the inherent conflict of interest created by the government owning a majority stake in one of the competitors.

It would be like Pepsi being in charge of health and safety inspections at a Coca-cola bottling plant. Even if it is perfectly fair and legitimate, there is still the appearance of bias.


RE: Anyone explain to me...
By karielash on 5/17/10, Rating: 0
RE: Anyone explain to me...
By porkpie on 5/17/2010 3:05:46 PM , Rating: 4
quote:
"... because some retarded ideological bullshit says they shouldn't be in business."
Sigh, do they not teach history or economics any longer? State ownership of companies doesn't work well in practice. It's not just bad for the company itself-- it's even worse for the company's competition and, by extension, the consumer itself.

Take a look at the booming economy of Cuba if you doubt this, or the slow-motion track wreck in progress that is currently Venezuela.


RE: Anyone explain to me...
By sviola on 5/17/2010 3:46:53 PM , Rating: 1
Well, they sure did not teach you about other countries. Brazil's oil company Petrobras is state owned (51% belongs to the federal government) and the company has been faring very well in the last 15 years. It's been profiting every quarter, even during the crisis and is today the 3rd most valuable company in the world, losing only to Exxon and Microsoft (according to Economatica - data is from end of 2009).

I'm not in favour of government owned companies, as there can be a big loss of produtivity there, but one thing is for sure, at least here, they do follow all laws (security, environment, labour, etc)


RE: Anyone explain to me...
By theapparition on 5/17/2010 4:07:07 PM , Rating: 2
Maybe not a good example with fuel prices the way they've been.

I could own a tar slick and make money as an oil company the last few years.

However, for most all other endevours, government ownership has been bad for the market.


RE: Anyone explain to me...
By karielash on 5/17/10, Rating: -1
RE: Anyone explain to me...
By PARANOID365 on 5/19/10, Rating: 0
RE: Anyone explain to me...
By danobrega on 5/17/2010 8:05:24 PM , Rating: 1
Indeed.


RE: Anyone explain to me...
By danobrega on 5/17/2010 8:03:12 PM , Rating: 1
And who's interests are in conflit? You know several US companies have a large % of capital owned by China's government?

It's not that they want to own the companies, they just want to invest its people money and make... more money! Go figure.


RE: Anyone explain to me...
By cruisin3style on 5/19/2010 4:32:15 PM , Rating: 2
I completely agree we shouldn't be involved in GM ownership, but since Bush and Obama both ensured we were involved in multiple bailouts that we shouldn't have been involved in either, I say we do the smart thing and recoup as much $$$ as possible.

Whether that is selling now or in the future I can't and won't speculate.


Spinmeister's at it again
By bissimo on 5/17/2010 2:58:45 PM , Rating: 1
Anyone else notice that when everyone was sure these bailouts were going to ruin the economy and bankrupt the government, they all Obama's idea, and now that they seem like they might actually be working, we all remember that Bush got the whole ball rolling during his presidency?

Nice work spinning that information to boost views, Mick.




RE: Spinmeister's at it again
By Chaser on 5/17/2010 3:11:25 PM , Rating: 2
Bush did not OK or authorize the GM bailout. Obama did. TARP was strictly for the financial markets.


RE: Spinmeister's at it again
By Gungel on 5/17/2010 4:56:49 PM , Rating: 2
Bush started the negotiations with GM and Chrysler. Obama continued the talks and approved it.


RE: Spinmeister's at it again
By Reclaimer77 on 5/17/2010 7:47:24 PM , Rating: 2
Something tells me that Bush's approach would not have been outright government ownership of a private corporation. Mick claiming that Bush "set up" the bailout is laughable. In fact, the whole article is laughable. And he talks about Fox news !!?? I can barely articulate the bias, outright lies, and overarching false premise permeated through the entire article. This is a BLOG post, not a front page story.



RE: Spinmeister's at it again
By AEvangel on 5/19/2010 12:18:37 PM , Rating: 2
Whether Bush or Obama, both the bailouts will fail...keep in mind that really nothing has changed since Obama took office, he has almost continued every single one of Bush's policies. The only thing that has really changed since Obama took over is the tone of the press coverage.


RE: Spinmeister's at it again
By Hiawa23 on 5/18/2010 11:25:00 AM , Rating: 2
Anyone else notice that when everyone was sure these bailouts were going to ruin the economy and bankrupt the government, they all Obama's idea, and now that they seem like they might actually be working, we all remember that Bush got the whole ball rolling during his presidency?

Nice work spinning that information to boost views, Mick.


I agree to a point. I could care less who gets the credit, I voted for Obama, really have nothing against Bush other than the country went totally off the rails on his watch.

The whole political process to me is poison, as many on either side just goes with whatever their side says, instead pitting dems vs Repubs Vs everyone else, everyone trying to score points, it should be American coming together trying to find solutions to these issues.

Supposed to be the greatest country, atleast this is what they keep telling us yet we can't come together in the name of all American citizens & fix all these problems we have, like immigration . Want to blame someone blame both sides as they have had decades to put some sort of energy plan in place, we should produce more of our own oil by now & the myriad of issues we have, do we even make anything anymore, but we look down on other countries like China who almost own us if they wanted to.

I am glad to see GM headed in the right direction, how they got there is not really important to me, I hop eit continues, & it's sad to me that for many Americans, everything comes back to politics, & how to make someone else look bad who has a different opinion than you, or who can score more points. I just want the country that works for all of it citizens, poor or rich, but that just doesn't seem possible in this climate.


Face --> Palm
By therealnickdanger on 5/17/2010 2:19:14 PM , Rating: 2
quote:
The company has already paid back all its government loans years ahead of schedule, using some of the bailout money it had from the government's purchase of a 61 percent stock stake.

Granted, while GM will probably save some interest over time by paying off the "loan" with the "bailout" money, I'm more concerned by the fact that GM has yet to post ANY profit with which to buy back the stock. All Obama has done is delayed the bankruptcy that should have been allowed to happen in the first place. Until GM is forced (via private interests) to shake up the management and union contracts, I doubt we'll see GM in the black any time soon.

... unless GM's clever little ad campaign tricks people into buying again.

Meh.




RE: Face --> Palm
By XZerg on 5/17/2010 2:33:22 PM , Rating: 1
I feel the delay was to ensure that we didn't have collapse in more sectors than the financial which as you can see has been not been a smooth ride at all. Now the Eurozone is getting their a$$e$ screwed by a similar financial crisis.

Agreed the union concept is totally unnecessary in this day and age where the government has setup so many services (including the ability open a case against the company if needs be) to ensure safety and fair world. Sure it is not perfect but it isn't as bad as it used to be. Also with the standards created by HRs in many corporations, the unjustifiable workloads and pay have too been made more reasonable.

So why is a union required in this country? I would suggest these companies come to a deal with the union that they cannot accept anymore workers in the union - the new generation of employees are non-unionized in a fashion to slowly obsolete the union concept.


RE: Face --> Palm
By hr824 on 5/17/2010 4:41:16 PM , Rating: 2
Gee I don't know maybe because without oversight companies will not abide by the rules and the government is to broke (in many ways) to enforce them. I have to tell over 35 years of working I'm getting real tired of working harder for less so a few can live like kings.


RE: Face --> Palm
By Hiawa23 on 5/18/2010 1:59:19 PM , Rating: 2
Gee I don't know maybe because without oversight companies will not abide by the rules and the government is to broke (in many ways) to enforce them. I have to tell over 35 years of working I'm getting real tired of working harder for less so a few can live like kings.

I agree, it seems that the majority of the hard working Americans who go to work everyday, pay their bills, their mortgages are just getting further behind paying higher energy costs to just the cost to live constantly increasing & most families income has been reduced thanks to the recession. I guess it's just the way the system is setup, what can do. It's just the way it is setup. I guess we can vote em out but a politician is a politician, pick your poison.


RE: Face --> Palm
By theapparition on 5/17/2010 4:29:23 PM , Rating: 3
Huh?

quote:
I'm more concerned by the fact that GM has yet to post ANY profit

They just did.

quote:
with which to buy back the stock.

I mean, Seriously. Why would GM want to buy back it's stock? It already sold it the the US govenment, Canadian govt and the UAW. It's now those shareholders business to sell the stock when they feel can get the most return (aka public offering).

Apparently you don't know anything about the stock market.

quote:
... unless GM's clever little ad campaign tricks people into buying again.

Yet no mention of the fact that many of thier car models are quite appealing. Nice misdirection.


Offload Hummer?
By lightfoot on 5/17/2010 2:15:43 PM , Rating: 2
quote:
And GM only barely managed to offload some of its laggard brands such as Saab and Hummer.

If by "offload" you mean send to the scrap heap, then you're right. But I don't see how that was "barely managed," other than the obvious lack of management that it required.

Hummer is dead, it was never sold, and at this point it is unlikely to ever be.




RE: Offload Hummer?
By callmeroy on 5/17/2010 4:54:26 PM , Rating: 2
Hummer never made huge profits for GM...like EVER...

Even before the crap hit the fan on our economy.

To this day there's only two reasons I could see buying a hummer:

1) If my self esteem about my manhood was very low (its not)

-or-

2) If I actually had a NEED (as in work related) for highly durable vehicle with off-road capabilities and very high ground clearance.

Other than that...no thanks.


RE: Offload Hummer?
By lightfoot on 5/18/2010 12:12:23 PM , Rating: 2
Nothing in your post addresses the fact that GM was not able to get any value from the asset known as "Hummer."
quote:
The Obama administration hand-picked CEO, Fritz Henderson was forced into a messy resignation amid failed deals. And GM only barely managed to offload some of its laggard brands such as Saab and Hummer.

Hummer was NOT offloaded. It should be included in the "failed deals." Any suggestion otherwise is factually incorrect.

Your opinion of the brand only reinforces the fact that it is (and likely will remain) a failed deal.


Toyota
By pjwr2004 on 5/17/2010 3:50:35 PM , Rating: 2
Faulty accelerator pedals or not, I'm sticking with Toyota.




RE: Toyota
By Looey on 5/17/10, Rating: 0
RE: Toyota
By ussfletcher on 5/18/2010 9:18:18 AM , Rating: 2
Well good for you for purchasing what you like.


By AEvangel on 5/19/2010 12:25:52 PM , Rating: 2
quote:
The company has already paid back all its government loans years ahead of schedule, using some of the bailout money it had from the government's purchase of a 61 percent stock stake.


LIE...As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money—government money—to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development—although hardly one worth hyping in ads and columns—if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5 percent) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new—and bigger—DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2 percent lower interest rate at that. This is a nifty scheme to refinance GM's government debt—not pay it back!

http://reason.com/archives/2010/04/27/gms-phony-ba...




By Rhaido on 5/19/2010 2:05:10 PM , Rating: 2
I question the integrity/agenda/competence of a "journalist"/"blogger" who merely parrots talking points from the propagandist media when my 2 minutes of google research turned up:

...

Mr. Grassley heard back from the Treasury last Tuesday. Herbert M. Allison Jr., assistant secretary for financial stability, confirmed that the money G.M. used to repay its bailout loan had come from a taxpayer-financed escrow account held for the automaker at the Treasury.

...

“The public would know nothing about the TARP escrow money being the source of the supposed repayment from simply watching G.M.’s TV commercials or reading Treasury’s press release,” Mr. Grassley said in a speech on the Senate floor last Wednesday, saying that “many billions” of federal dollars remained invested in G.M.

“Much of it will never be repaid,” Mr. Grassley added. “The Congressional Budget Office estimates that taxpayers will lose around $30 billion on G.M.”

(Taxpayers still own $2.1 billion in preferred stock of G.M. and almost 61 percent of its common equity.)

http://www.nytimes.com/2010/05/02/business/02gret....


Profit?
By DigitalFreak on 5/17/2010 2:56:49 PM , Rating: 2
It's not that hard to turn a profit right after you've dumped your liabilities via bankruptcy.




Still Shouldn't Have Been Done
By Flahrydog on 5/17/2010 3:45:23 PM , Rating: 2
Just because GM is no longer bleeding from every limb does not mean we should have bailed them out.
Obama may believe that the ends justify the means, but I do not.




Ahhmmm....yeah!
By MeesterNid on 5/17/2010 4:06:36 PM , Rating: 2
So how did it work out for the GM bond holders when the government took over GM?

Riiiight, let me buy some of that awesome GM stock so they can change the rules down the road and give me the shaft!

I'll pass.




UAW
By tng on 5/17/2010 6:08:18 PM , Rating: 2
It is only a matter of time until the UAW starts to go back to it's old ways at GM. Once there are several quaters of profits they will want concessions and then the whole process will start over again.

GM will go down again because despite just being taught the largest lesson in automotive history, they probably have not learned a thing........ Lets hope that next time they are allowed to just fail or fight their own way back, no more bailouts.




Deception
By viperfl on 5/18/2010 8:47:11 AM , Rating: 2
I don't know how you can post and say the bailout worked. GM (Government Motors) paid back taxpayer loans with taxpayer loans. The money GM used was money that was put in escrow by the Treasury Department. GM earned no money on there own to pay back the loans. Chrysler on the other hand only paid off a fraction of what they owed in bailout money and the Treasury Department says they are now off the hook for the rest.

When you get home equity loan to pay off other debt, it don't mean your debt free. The only thing used in GM's case was accounting gimmicks and people fell for it. However you look at it, the taxpayers are still out there money.




Bias reporting again
By cmdrdredd on 5/18/2010 4:36:59 PM , Rating: 2
title says it all. When you STILL blame the former president 2 years after he's out, you fail at life.




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Keep those profits coming
By Chaser on 5/17/2010 2:12:29 PM , Rating: 2
Outside of the voodoo math the CEO tried spin over recent TV commercials, if GM repays the taxpayers for funding their union's lavish healthcare benefits and retirement pensions I might consider buying GM again.




RE: Keep those profits coming
By iFX on 5/17/10, Rating: -1
more on the story
By mattclary on 5/17/2010 3:14:02 PM , Rating: 1
http://www.americanthinker.com/blog/2010/04/more_t...

"The bottom line seems to be that the TARP loans were 'repaid' with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials"




So essentially...
By JonnyDough on 5/18/2010 2:00:58 AM , Rating: 1
they used taxpayer money to ensure that CEOs and CFOs could take a large amounts of cash out of a failing company and get away with it. I'm sorry, but someone ought to be in JAIL for this. None of it seems right. I won't be buying GM. Ever. This is crap. It's the monopolization of America and if the freaking government was doing its job the FTC would be shutting down mega corporations like Wal-mart as well. There's a politician somewhere who had his wallet padded for this crap and everyone knows it. This is total bull.




So...
By icanhascpu on 5/17/10, Rating: 0
Bottom line
By p05esto on 5/17/10, Rating: -1
RE: Bottom line
By bissimo on 5/17/2010 5:11:28 PM , Rating: 2
What percentage of an American car's cost do you think actually stays in America? Have you looked at any individual part of an American car? Does it say made in USA? Most don't.

So what makes a car "American"? The fact that it was assembled in the USA? Well, I drive a Toyota that was built in the USA and my brother drives a Ford that was built in Mexico.

So then are you saying that I should buy American so some douchbag executive can buy another house on the lake?


RE: Bottom line
By Gungel on 5/17/2010 5:20:07 PM , Rating: 2
Those "douchbag executives" are paying a lot of federal, state and local taxes. They also pump a lot of money into local economies. And the same douchbag executives over in Japan will do just that with your money.


RE: Bottom line
By Masospaghetti on 5/19/2010 12:02:36 PM , Rating: 2
quote:
Does it say made in USA? Most don't.


Before spouting typical media misinformation... most GM/Ford vehicles have a higher domestic parts content than Asian vehicles do. Likewise, GM and Ford have a lot more plant production here in the States than the asians do.

Second off - GM and Ford vehicles are engineered, designed, and tested here in the States (RenCen, Warren Tech Center, Milford Proving Grounds, Dearborn HQ, etc etc) that bring in a LOT of good, highly skilled jobs and keep them in the country. These are engineers and designers that pay taxes and keep our own economy rolling. When you buy a Camry, even if it was built in Alabama, all of the engineering cost and talent is back in Japan -- and the amount of money that flows out of the country because of your "american" Toyota follows.


RE: Bottom line
By Gungel on 5/17/2010 5:14:31 PM , Rating: 2
Maybe once we get some quality products from our US companies. I know new Ford and GM cars are built much better but they screwed themselves in the past with poorly made cars. Bringing back clients from the imports will take a long time. Just compare the latest sales results, clients that Toyota lost because of rust and accelerator problems switched mostly over to Honda's and in some smaller numbers to Ford. Honda now holds the highest brand loyalty with 68% and Ford is second with 61%. Toyota dropped to 57% down from 70%. GM is at 52% and Chrysler at a low 24%.


RE: Bottom line
By Penti on 5/17/2010 5:42:44 PM , Rating: 2
Lol, Go and buy your American car built in Mexico.

Where a company has it's headquarters doesn't matter, the Ford's i Europe is European cars, goes to european workers and the money goes into the european businesses. While american companies for the US market has shifted many of their models to be built in Mexico. Essentially meaning the cars are imports. And a US headquartered company doesn't have to have it's profit staying in the US, the owners can still be largely or wholly be foreign.

Just spend according to your wallet instead of your blown up currency and subsidized loans and your fine to shop whatever car you like from wherever. Export stuff instead of importing stuff you don't afford. All the foreign makes are made in the US mostly, where's the domestic ones maybe aren't. Subaru Tribeca, Legacy, Outback is built in US, Toyota Camry, Camry Hybrid, Camry Solara, Venza, Avalon, Yaris, Corolla, Sequoia, Sienna, Highlander, Thundra, Tacoma, Honda Accord Coupe/Sedan, Acura TL, Acura RDX, Accord Crosstour, Civic, Element, CR-V, Pilot, Ridgeline, Odyssey is all built in the US, with a Prius plant being built by Toyota. While many of the north american cars by US brands are built in Canada or sometimes Mexico. It's your own companies that can't invest (properly) in the US not the other countries in the world.


RE: Bottom line
By ussfletcher on 5/18/2010 9:23:30 AM , Rating: 2
Not to mention that when you purchase an American car you get the Corporate taxes and Engineering salaries along with it. It isn't all about where the parts are produced or where it is assembled.


RE: Bottom line
By Penti on 5/20/2010 10:40:44 PM , Rating: 2
Exactly which is why I say a european Ford is from a European company, it's designed by European engineers and they design stuff that doesn't really work in the US. But exceedingly any way it's the sub-suppliers that designs the stuff.

But you might want to ask yourself why building american brands is so much better to do in Canada then in the US, when the foreign brands do fine assembling stuff in the US.

It has to do with management, investment, retarded legacy costs and the benefits you occur trying to patch up your broken system. And so on.

It's still american designed cars thats built in Canada and Mexico. You might want to ask yourself why your own companies invest abroad when Toyota doesn't seem interested in doing it, in building the cars in Mexico. Toyota even manage to run a UAW plant jointly with GM. Efficiently. Closed now though, but GM was the one who pulled out first. Remember companies such as Toyota or Honda doesn't just build cars they build the components largely there too. Any way it's says a lot about your own capabilities and perceptions.


"The bailout appears to have worked"
By iFX on 5/17/10, Rating: -1
RE: "The bailout appears to have worked"
By smackababy on 5/17/10, Rating: -1
RE: "The bailout appears to have worked"
By mcnabney on 5/17/2010 6:54:40 PM , Rating: 5
These first two posts, both with a 5, have no idea what actually happened to GM.

First, GM did declare bankruptcy.
Second, no bank (especially at that time) was capable of underwriting the bankruptcy. Without a bank financing in the near term it would have been a complete collapse resulting in all factories closing, all employees terminated, all accounts payable getting nothing, and the bondholders receiving a fraction of their value. That is why the US government, the bank of last resort, had to underwrite it. They received most of the equity in exchange. That equity can now be sold and the government can get out of the auto industry.


RE: "The bailout appears to have worked"
By JonnyDough on 5/18/2010 2:06:32 AM , Rating: 2
A few problems with your justification:

The U.S. government is not a bank. The federal reserve is not to be used for corporate funding. It's taxpayer money, to be used for public programs, education, and military. It's debatable if the U.S. should even be funding NASA and medical research. Some might argue that this is education, but I don't believe that college education is the same as research grants to private corporations. I think how that money is spent should be kept public info, up to the cent. Unfortunately much of it ends up lost.

Secondly, had GM closed its doors then other companies like Ford and Toyota would have gained market share and expanded. That's free trade 101.


RE: "The bailout appears to have worked"
By Laitainion on 5/18/2010 7:15:46 AM , Rating: 3
Had GM folded, do you really think it would have been as simple as the other car companies expanding to fill the niche? Unlikely, and when I say unlikely I not going to happen.

The proglem with any Free Trade 101 (tm) is that they're lies-to-children, on a basic level they're right but once you get into the real world everything is too interconnected to be that simple. GM fold, all their staff are out of work, default on their loans etc. and you basically remove ~100'000 (from wiki) consumers/tax payers reducing spending power in the US *and* givernment revenue.

At this point, using government funds becomes necessary for the well-being of the state. Precisely what they're meant for. It's also no different from Roosevelt funding the New Deal during the Great Depression, and more specifically building Hoover Dam. It may not be ideal, but it's usually better than the alternative.


RE: "The bailout appears to have worked"
By gamerk2 on 5/18/2010 8:20:35 AM , Rating: 1
Agree with above. People forget, DARPA was on the verge of bankrupcy for years prior to this happening. If GM went under, DARPA would have lost one of its prime customers, and likely would have folded. This would have caused a part shortage, jacking up prices [Supply & Demand 101], which probably would have dragged down Chrystler in the process [which simply would be unable to compete].

So no, its not as simple as "other companies would move in". Nevermind the long-term effect of a hundred thousand extra unemployed...

The bailout did its job: Stop the bleeding. Basic Kenysian economics: Spend like mad to stop any recession, allow the economy [and as a product: Tax Revenue] to recover, then once the economy is stable, you can begin to pay down the debt. Its no coincidence that every president that followed this formula [Truman to Nixon + Carter] succeeded in reducing the deficit as a % of GDP, and the minute Regan/Bush got in office, the debt started to explode. ["Supply Side Economics" produces good numbers for coorporations, but as wages/benifits fall when you factor in inflation, any economic growth is unsustainable, leading to Savings& Loans, the Great Recession, etc]


By gamerk2 on 5/18/2010 8:22:12 AM , Rating: 2
Menat "NAPA", not "DARPA". Brain froze on that one :P


RE: "The bailout appears to have worked"
By AEvangel on 5/18/2010 7:36:11 PM , Rating: 2
quote:
Basic Kenysian economics:


The scariest term I have heard today....I like how no one mentions the billions in wiped out bond holders, nor the shredding of bankruptcy laws by the Federal Govt. The bailout is nothing more then a temporary band-aid on a severed artery it work it only exasperates the problem with each bust cycle being larger then the last till the entire system caves in.

Also the basic fundamental flaws with Keynesian Economics is that it doesn't work. Especially, when you have a Govt and a Central Bank that create money out thin air. If you want the a real economic theory that works I recommend Hayek.

For more info and an interesting rap song go to youtube and search Hayek Vrs Keynes



By Nfarce on 5/18/2010 9:40:33 PM , Rating: 2
Don't waste your time trying to edumacate people like the person above who breathe Jimmy Carter and great policies the same sentence.


RE: "The bailout appears to have worked"
By whiskerwill on 5/18/2010 8:42:31 AM , Rating: 3
quote:
Had GM folded, do you really think it would have been as simple as the other car companies expanding to fill the niche?
Since people would still need the same number of cars, yes other car companies would have expanded to fill the gap.

Also you forget that GM wouldn't simply vanish in a puff of smoke. Its factories would have been sold off to other carmakers, who would use them to help fill their extra demand.


RE: "The bailout appears to have worked"
By Quadrillity on 5/18/2010 9:10:33 AM , Rating: 3
You are exactly right. When all is said and done, it all comes down to this simple fact:

The American tax payers were forced by law to rescue a dying company; and that is not a democratic free market economy.


RE: "The bailout appears to have worked"
By mcnabney on 5/18/2010 10:28:17 AM , Rating: 5
Since when have we been a true free market?


RE: "The bailout appears to have worked"
By Quadrillity on 5/18/2010 11:09:44 AM , Rating: 1
Nothing is perfect, you know that. It's the closest thing we can get; so what's your point of posting that?


By adiposity on 5/18/2010 4:49:34 PM , Rating: 3
I'm confused, first you assault the status quo as not being democratic (fair enough), then when someone points out we've never had a truly free market, you say, "well, nothing's perfect."

We didn't have a free market before, and we don't have one now. That was his point, I'm guessing. You may think it was closer before, but that's a different argument. You can't get angry at someone taking away something you never had.


By Seemonkeyscanfly on 5/19/2010 10:49:36 AM , Rating: 2
Wow... you really do not have a firm grasp on Economics do you... You do understand under Roosevelt funding the New deal kept the US in the Great Depression... No it did not help, it hurt us. If it was not for World War II we would have not come out of the Great Depression. EVERYTHING he was doing was driving us deeper into the Depression.

Yes, letting the free market flow (letting GM close), would have cause a lot of financial hard times for many people. However, stronger more efficient companies would have taking GM's place and a newer American car manufacture would most likely have formed. This would have let wages become more under control and let the business world return to normal. GM still has the same major problem... They can not afford to run at their current expenses. The bailout gave a temporary relief, cash for clunkers increase sales (creating false market). Now, there are a lot of new cars on the road and sales will drop somewhere in the next year or two because, most people have a new car already... Do not need to replace it. Once that time comes along, GM will not be able to handle the pinch (they did not learn how to cut back enough under difficult times). The problem will be bigger then before. Just wait... When every the Government spends money it is a bad thing... Except on Education, Police, Military, firefighter and other very basic things to give a better life to the people.


RE: "The bailout appears to have worked"
By Targon on 5/18/2010 10:22:56 AM , Rating: 2
There is a fine line between government just wasting money, and government investing in the future of this company. Yes, corporations should not be able to use the federal reserve, and in reality, they did not.

Government and spending....conservatives complain when government spends money on poorly run social programs, and liberals tend to complain that government does not help the poor people of the world enough. The middle ground is a balance between these two things. So, what things SHOULD the federal government spend money on?

In my opinion, government really should only spend money on INVESTMENTS that will help the economy and well being of the USA. In some cases, some liberal programs that get people out of poverty WOULD make sense, if there was a good chance of success. Other programs that keep people from causing harm to others(crime prevention) are also important. The military, scientific research and development, and other programs also fall into these categories.

So, that ties us into what happened with GM. GM was going to fail, which would have caused more unemployment, loss of jobs here in the USA, and there would have been a ripple effect through the economy that may very well have taken the recession and turned it into a full depression. Like any investment, the government getting involved did have a certain amount of risk. And, it seems like it paid off with GM at least. Only time will tell if the GM recovery lasts though.

The real reason for the bailouts in the first place was the obvious ripple effect through the economy that a full GM failure would have caused. We are not talking about just any company, we are talking about GM, and there is also a huge industry based around repair of vehicles that would also have been hurt if GM went under, and then all those lost jobs would translate to yet more lost jobs.

I have more of a problem with the US Government spending money on disaster relief in countries where the people hate or dislike the USA so much that helping them will not change the attitudes towards our country. The US Government is BROKE, running at a deficit, and needing to get money from enemies like China. Spending money to save the economy of other countries isn't an investment that will ever have any payoffs. Yes, yes, some people want to save the world, but the US government has NO place doing it if the government is running a deficit and there will be no long term benefit.


RE: "The bailout appears to have worked"
By Quadrillity on 5/18/2010 12:55:27 PM , Rating: 3
quote:
GM was going to fail, which would have caused more unemployment, loss of jobs here in the USA, and there would have been a ripple effect through the economy that may very well have taken the recession and turned it into a full depression.


Hold on there. You mixed in some truth with a few speculations. Yes, it's almost fact that GM was going to fail, but what will never been seen is actually how many people would have been permanently out of a job. I have a hard time believing that Ford, Toyota, etc. wouldn’t have bought up the remains. It’s not like they would have fired 100% of GM workforce and torn down the factories lol.

The whole point here is that a failing company was given yet another chance at the taxpayers’ expense. Let’s apply the same concept to a mom and pop store: The owners/manager make really bad decisions long enough that business and clientele start to drop off significantly. The said owners/manager does absolutely nothing to fix the issues. They go out of business. GM on the other hand DID NOT follow market demands for years and years! When it all finally caught up to them, they outstretched their hands and lined their pockets deep with MY tax money.

I have absolutely no sympathy for a union worker who sweeps floors for a living making $38 an hr with benefits. He should have had a plane B and a plan C.

Both unions and political parties are the same in terms of degeneration. GM should have gone under, the competition should have picked up the remains, and the American public should have NOT been held accountable for the trillions spent within the last few years. Period.


RE: "The bailout appears to have worked"
By FITCamaro on 5/18/2010 4:19:35 PM , Rating: 5
Actually GM did follow market demands. People wanted trucks and SUVs until gas prices skyrocketed. And today people still want them. GMs problem was two fold. One was the media induced stigma that their cars sucked. Some of it was valid, much of it was not. So sales suffered as a result.

Second, and more costly, was its insanely high cost of labor and benefits. People with barely a high school education were making more than those designing the cars. And that still continues today. Now a lot of the benefits cost is gone though because the American tax payer bought it out. But GM will eventually end up in the same situation. Probably a lot quicker considerig the union has a huge share of the company.

But GM will never repay the tax payer. The whole high was nothing but a union payoff for the election. The uaw heavily backed Obama and GM goig under would have hurt the union. Not to mention a source of campaign contributions for the Democrat party.


By just4U on 5/19/2010 8:50:16 AM , Rating: 3
I seem to recall hearing that it would have caused a major ripple effect with companies like Ford as well sending them into bankruptcy if GM were to go under.

If they are making money now, and some speculatate that the government will see a return on their investment, isn't that a good thing? Wish the same could be said for the banks..


RE: "The bailout appears to have worked"
By weskurtz0081 on 5/18/2010 8:50:01 AM , Rating: 2
They have no idea?

G.M. did declare bankruptcy, you are correct, but the bailouts were supposed to prevent bankruptcy. If you remember correctly, the talking heads in D.C. kept pounding the drum that no one would buy cars from a bankrupt company therefore bankruptcy cannot be allowed to happen.

Second, you are right, NO BANK would have loaned G.M. the money. What SHOULD have happened is, G.M. should have IMMEDIATELY gone into bankruptcy and had the damn thing overseen by the courts, at which time G.M. WOULD have been able to secure funding from the fed. Rather, what happened is, they just gave G.M. a crap ton of money hoping they could prevent bankruptcy, when instead it ended up there anyway making it VERY likely that the bailout money pre bankruptcy ONLY prolonged the whole process.


RE: "The bailout appears to have worked"
By mcnabney on 5/18/2010 10:39:41 AM , Rating: 3
You have no idea what a liquidation of GM would have entailed. It would have literally deleted a half million jobs in the first month and a similar number before the end of the year. GM was just the tip of the iceberg. All they did was design the vehicles and assemble the parts. They probably dealt with 10,000 vendors over the course of a year. All of those companies would lose a major customer and would never receive payment for prior work. Plus, all of those terminations in concentrated areas would wipe out home values (due to bankruptcy and foreclosure in the following year) and drastically cut consumer spending in those markets. That means the next wave of terminations would be local businesses closing because far fewer people could afford their products. This type of calamity could result in a true downward spiral like we experienced in the early 30's. The government had to write some unpopular checks, but as you will notice we are in recovery now.

If you really want jobs to recover, change the tax code. US companies get the same tax break whether they open a new facility in Dayton, OH or New Delhi, India. However, the profits from New Delhi are paid to India and not the US.


RE: "The bailout appears to have worked"
By whiskerwill on 5/18/2010 11:16:45 AM , Rating: 2
Bullsh**t. Every car GM doesn't sell is another car Ford or Toyota or someone else does sell. You think those companies don't use suppliers just like GM?

The US Govt has spent over $500 billion now bailing out GM, Chrysler, AIG, Citicorp, Fanny Mae. Think how many NEW jobs that money could have created, if it wasn't taken from us taxpayers.


RE: "The bailout appears to have worked"
By jrb531 on 5/18/2010 2:07:59 PM , Rating: 3
Who are going to buy those cars if 1 million + people are out of work???

You see you "assume" that if GM went out of business (along with feeder companies) that the effect would be that the US would have the "same" demand for cars and as such the other companies would buy up their assets...

What would likely happen is somewhere in the middle. While "some" other car companies might buy up some of the newer plants and hire "some" of those workers... the truth is that they would be slow to commit until they saw a real demand increase.

Now what happens in those months (years?) with all those people (temporary or not) who are out of work? These were not people making minimum wage... these were true middle class people who bought many of those cars GM produced.

With so many extra people out of work... who in the heck would be buying all those cars?

Oh honey.... I'm out of work and we're going to lose the house... I know... let's go buy a new car!

I'll agree that when smaller companies go under (due to their own issues) other companies take up the slack... GN, however, is not a small company.

Besides... when other countries use their governements to either bale them out or create anti-competative laws to keep their companies afloat... why can't we?

Remember... as long as it does not affect us.... well then most of us do not care. Once "OUR" job is downsized then suddenly we care about the world around us.... until that happens who gives two sh-ts about others!

We all want Wall-Street paychecks but we want to pay Wal-mart prices :)


By whiskerwill on 5/18/2010 6:47:33 PM , Rating: 2
quote:
Who are going to buy those cars if 1 million + people are out of work???
Maybe the 299 million OTHER people in the US?

Anyway the 1 million figure is bullcrap also. That assumes everyone who does any sort of business with GM would wind up instatntly fired. Most of the ppl in the supply chain would keep their jobs (more demand from other car companies) and even some of the real GM employees would find work elsewhere.


By weskurtz0081 on 5/18/2010 12:16:21 PM , Rating: 2
WHO THE HELL SAID ANYTHING ABOUT LIQUIDATION?

The company WENT THROUGH BANKRUPTCY, and DID NOT LIQUIDATE.

If you read a little more thoroughly, you will see, I am suggesting that GM should have gone into bankruptcy IMMEDIATELY rather than take billions of taxpayer money THEN go into bankruptcy anyway.

See the difference here? Rather than delay the inevitable, put the company through bankruptcy FIRST, have the company develop a plan to streamline operations/secure funding, come out of bankruptcy.

Instead, the company got tons of money, wasted 6 months, and then went into bankruptcy anyway.


By wempa on 5/18/2010 5:06:46 PM , Rating: 2
quote:
Plus, all of those terminations in concentrated areas would wipe out home values (due to bankruptcy and foreclosure in the following year) and drastically cut consumer spending in those markets. That means the next wave of terminations would be local businesses closing because far fewer people could afford their products. This type of calamity could result in a true downward spiral like we experienced in the early 30's.


Oh, you mean just like what we went through and still ARE going through now.


RE: "The bailout appears to have worked"
By FITCamaro on 5/18/2010 4:07:10 PM , Rating: 3
As should happen with any company that makes bad decisions. And the preferred shareholders got nothing with what happened.

Laws were broken with the way things happened. But because it was Obama doing it, the media said nothing and the courts didn't dare touch it.

And as another said, the federal government is not a bank. It is our money. And the federal government had absolutely no authority to do what it did. The fact that things similar had happened in the past does not excuse it.


RE: "The bailout appears to have worked"
By jrb531 on 5/19/2010 11:00:55 AM , Rating: 2
But it's ok for other countries to do it?

We play "fair" but everyone else cheats so we should just watch what few "real" jobs we still have left go bye-bye as we watch other countries use protectionism to keep "their" people working while we grow our new up and coming specialty....

Minimum wage Walmart jobs.

Why don't you take a job at Walmart and see what kind of car you can afford?


By lightfoot on 5/19/2010 11:15:24 AM , Rating: 2
Protectionism will never create better results than competition. It's just too bad that Americans aren't taught to compete anymore.


RE: "The bailout appears to have worked"
By lightfoot on 5/17/2010 2:22:35 PM , Rating: 5
But in that case they would have had to obey well established bankrupcy laws.

Now the UAW owns GM and everyone else got screwed.


RE: "The bailout appears to have worked"
By sukidesu on 5/17/2010 4:56:59 PM , Rating: 1
Either way GM paid the government with their own money and just because they claim to have made that kind of profit doesn't mean they actually did.

www.criticalbias.com/2010/04/29/facts-behind-clai m-that-gm-repaid-its-tarp-loan/

and

http://jalopnik.com/5540621/holy-crap-gm-turns-a-p...


By tallcool1 on 5/18/2010 12:41:25 PM , Rating: 1
quote:
Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate--a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan.
...
In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!
...
Mr. Whitacre's bailout payback ploy is a desperate attempt to win back the car-buying public deeply disgusted by the spectacle of GM rattling its tin-cup before Uncle Sam. But the fact of the matter is that the company is still deep in the hole. It might claw its way back – or it might not. But surely it's premature for its media boosters to pop open the champagne bottle without getting their story straight?

This info and more comes from:
http://www.forbes.com/2010/04/23/general-motors-ec...


RE: "The bailout appears to have worked"
By Ammohunt on 5/17/2010 2:32:41 PM , Rating: 1
leave it up to Jason to imply that since the bailout looks to be a success that Socialism can be sucessful as well. What a mess America and Americans have become.


RE: "The bailout appears to have worked"
By danobrega on 5/17/2010 7:53:25 PM , Rating: 2
You guys with the Socialism, it's getting boring. Don't be so fundamentalist.


RE: "The bailout appears to have worked"
By Ammohunt on 5/18/2010 3:10:32 PM , Rating: 3
Sorry I truly envy France,Greece,Portugal and Spain! Bring on the third world living! Viva la Socialism!


RE: "The bailout appears to have worked"
By encia on 5/19/2010 8:18:14 AM , Rating: 2
Let's not forget China.


By lightfoot on 5/19/2010 11:05:46 AM , Rating: 2
Definitely don't forget China - they are the only major economy moving away from socialism. One look at growth rates in Europe, the US and China and one begins to think that they are the only ones that have the right idea.

Decades of socialism have created the China that we see today, but at least they are moving in the right direction. The US is living high on the hog from past success and quickly moving down a path that is not sustainable.


RE: "The bailout appears to have worked"
By iFX on 5/17/10, Rating: -1
RE: "The bailout appears to have worked"
By Iaiken on 5/17/10, Rating: -1
RE: "The bailout appears to have worked"
By porkpie on 5/17/2010 3:17:56 PM , Rating: 5
"GM has now repaid most of it's debts (8.1B is no small feat)"

GM received over $50B in aid from the federal government, and what it paid back, it did so by dipping into a separate pot of bailout funds ... paying us back with our own money, in essence.


RE: "The bailout appears to have worked"
By theapparition on 5/17/2010 4:17:47 PM , Rating: 3
quote:
paying us back with our own money, in essence.

I've heard that same old tired argument.

Sorry, but that money is not ours anymore (as much as I disagree). The government bought GM (along with Canada and the UAW). They're not loans. The cash setup in the emergency reserve was there for GM's use, for anything, and they chose to pay off the loans that were outstanding.

They are under no obligation at this time to repay any amount.


RE: "The bailout appears to have worked"
By Iaiken on 5/17/2010 5:41:18 PM , Rating: 2
Bingo!

When the Government converted that debt into equity, they ceased to be a lender for that amount of money and became an investor/owner. The existing debt was converted into investment capital which GM chose to use by paying off many of its key outstanding debts so that it could trim costs in the hopes of turning a profit (which it now has).

It may not have been a popular move and it reeks of financial legerdemain to those who disagree with the government holding an equity stake in the company, but what's done is done and GM is trying to put themselves in a position where they can undo it. GM is also in a good position for a public offering as when the government took equity stake of the company, shares had ceased trading and were locked at $0.75. Even an offer of $1/share would net the government a 33.3% capital return.

The shittiest part of the whole deal is that pre-existing stockholders and pensioners are basically getting the screws as none of the publicly owned stocks or bonds issued by the former General Motors Corporation (now renamed "Motors Liquidation Company"), including its common stock currently traded on the Pink Sheets over-the-counter market under the ticker symbol "MTLQQ", are or will become securities of General Motors Company, which is an independent separate company.

The question that needs to be asked now is, is it right for the government to make a capital profit off the successful resale of GM stock or should they be forced to sell at cost?

Personally, I am still torn on the matter.


By mcnabney on 5/17/2010 7:02:25 PM , Rating: 1
Bondholders received a fraction of face value.

Equity holders, since they controlled the company by appointing a board, got nothing and deservedly so.


RE: "The bailout appears to have worked"
By danobrega on 5/17/10, Rating: 0
By seamonkey79 on 5/18/2010 12:04:26 AM , Rating: 3
/laugh

Naivete knows no bounds.


RE: "The bailout appears to have worked"
By afkrotch on 5/18/2010 1:24:38 AM , Rating: 2
The government is not in the business make profits.


RE: "The bailout appears to have worked"
By Xavi3n on 5/18/2010 8:01:03 AM , Rating: 2
er, yes they are. How else are they going to reduce that very large debt the US country has. The balancing act is to make profits while maintaining standards for the general populace.

I love how all Americans have this warped sense of what a government should do, they are there for the people and bringing down the national debt is in the interests of the people.


By JonnyDough on 5/21/2010 1:50:59 AM , Rating: 2
War.


By porkpie on 5/17/2010 6:46:22 PM , Rating: 2
They paid back a loan with a bailout gift. You can play semantics over who actually "owned" the money at the point in time it was used to repay the loan, but the fact remains the funds came from the American taxpayer, rather than from the same of automobiles.


RE: "The bailout appears to have worked"
By knutjb on 5/17/10, Rating: 0
RE: "The bailout appears to have worked"
By OUits on 5/19/2010 12:21:23 AM , Rating: 2
quote:
I know someone who lost $100,000.00 to the Unions and Obama voters. If GM had done what they were supposed to and go to Bankruptcy Court the SHARE HOLDERS would have been paid first.


This is total ignorance.

Look, it sucks somebody you know had $100k invested in shares of GM, (dumb idea in the first place). But if GM had liquidated they would have done the following things in this order 1) Paid back short/long term debt 2) Paid back bond holders 3) Paid back shareholders/owners. There would be little to nothing left of that $100,000 once it came to the owners. This is all basic college accounting/finance information.


By lightfoot on 5/19/2010 5:35:42 PM , Rating: 2
You are quite correct. The problem is that with the GM bankrupcy, bond holders were not paid back before the share holders.

The federal government gave the Union (a specific group of shareholders) an ownership stake in the new GM, but did not afford the same treatment to the bond holders first (who as you correctly pointed out were entitled to everything before any shareholder.


By glennforum on 5/17/2010 5:45:11 PM , Rating: 2
No doubt...they only show a profit because the US government loaned them even more money!!!

Just like the banks...total scam and Jason you once again prove seriously just how naive and foolish you really are.

You are consistently on the wrong side of history!!!


RE: "The bailout appears to have worked"
By Looey on 5/17/10, Rating: 0
RE: "The bailout appears to have worked"
By glennforum on 5/17/2010 6:08:03 PM , Rating: 3
The major problem with the bailout had to do with the subversion of the core of contract law in this country.

By supplanting the secured bond holders with the union, etc Obama singlehandily set precedent that signed contracts have no meaning in this country anymore.

The secure bond-holders should have been made whole not the union.

The entire thing is a farce and these idiots in DC waste our hard earned money on their croney capitalism very similar to the way the Chinese do.


By whiskerwill on 5/17/2010 11:24:02 PM , Rating: 2
quote:
The major problem with the bailout had to do with the subversion of the core of contract law in this country.

By supplanting the secured bond holders with the union, etc Obama singlehandily set precedent that signed contracts have no meaning in this country anymore.
Hey, what's a little subversion of contract law if you can reward the faithful who voted for you with a massive payout?


By Hiawa23 on 5/17/2010 7:05:56 PM , Rating: 2
As an American this is good to see. If this is infact true then they are surely on the right path, & the US needs a profitable auto industry, not just Ford. I think it's too early to say whether it has worked but if they can stay in the black then money well spent, IMO.


By KCjoker on 5/17/2010 8:43:50 PM , Rating: 2
If I remember correctly Bush's were not bailouts to the Car companies he gave LOANS. However after Obama came into office and it was about time to payback the loans it was cleared and they got MORE money that were bailouts.


By AstroGuardian on 5/19/2010 6:21:54 AM , Rating: 2
What the hell.... They report bankruptcy when they have less than few billions in profits... Mofos!


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