^^^ who said anything about shareholders? They are already wiped out.

You're a pretty knowledgeable poster here, I hope you would know the difference between stocks and bonds.

Again I ask, what makes UAW and government debt more valuable than bondholder debt?

5/28/2009 10:35:59 AM

TKE was talking about shareholders.
and they have lost most of their money, but the stock is still worth something.

or maybe TKE meant to refer to bond holders, not shareholders

5/28/2009 11:01:30 AM

Yeah, I think TKE got confused.

I don't like how 1 political class is seemingly favored over the other. Sure, it's easy for Obama to shit on hedge funds, but he'll have a much tougher time demonizing the thousands of GM bondholders, many of them middle-class retirees, if they bring their fight to court. And as Lonesnark showed, this kind of favoritism is already having unintended consequences in the credit markets.

5/28/2009 11:16:59 AM

Quote :

"There was a time, not very long ago, when getting a job on the production line at a big automaker meant an instant ticket to the American dream, even for someone with little formal education. Not anymore. "The minute you signed the paper, you were instantly vaulted into the middle class "

http://money.cnn.com/2009/05/29/autos/uaw_changes/index.htm?postversion=2009052905

I'd argue that being a blue-collar factory worker does not qualify one as "middle class".

5/29/2009 8:48:41 AM

I agree. A six figure salary is not middle class, especially in a city where a nice house can be had for $5k.

5/29/2009 10:19:56 AM

^hahaha, I love it. Totally agree with you too.

Quote :

"Yeah, I think TKE got confused. "

forgive me, i was confused and used the wrong word.

[Edited on May 29, 2009 at 11:41 AM. Reason : k]

5/29/2009 11:40:40 AM

i can't ever read the salaries that some of the union workers get without getting pissed off.

not even mentioning health benefits and retirement.

5/29/2009 12:20:29 PM

o just because a fork lift operator with a ged and a 5th grade reading level gets a higher total comp (salary + benefits) then most people with a college degree...

5/29/2009 2:04:14 PM

What did you just say about the union?

5/29/2009 2:24:58 PM

Quote :

"The US is Committing National Suicide By Alan Caruba Growing up as a teenager in the 1950s, I could not wait to get my license to drive and I liked the sporty look of the British MG. These days I drive a Volkswagen. In that short tale can be found the seeds of the end of the American auto industry. Here’s some history. In 1952, the merger of several British auto companies resulted in the British Motor Corporation. It was the largest of its day with 39% of British output. Despite established dealerships for the various models, a series of poor management decisions resulted in the loss of market share. By 1968, British Leyland was formed out of British Motor Corporation and became British Leyland Motor Corporation Ltd. In 1975, it was partially nationalized and the government became a holding company. UK market share barely changed and despite brands such as Jaguar, Rover and Land Rover, the government motor company continued its decline. By 2005, the MG Rover Group went bankrupt, bringing to an end the production by British owned companies. The MG became part of Chinese Nanjing Automobile. The 1970s were difficult economic times for the United Kingdom and its Labor government (1974-1979), as noted above, created a holding company with the government as the major shareholder. At that point British Leyland employed 159,000 people in its many divisions that included a bus and truck operation. In 1984, Jaguar Cars became independent once more through a public sale of its shares, but the Leyland truck and bus operation was sold to Volvo in 1988. The Rover Group was sold by the government to British Aerospace that in turn sold it to BMW. Suffice it to say, the British auto industry is now largely owned by companies in other nations or operating as a mere shadow of its former self. Anyone who thinks that General Motors will revive is wrong. As Larry Kudlow, the radio-TV business maven, recently wrote, “Taxpayers won’t get their money back” and that figure now stands at $50 billion. Both GM and Chrysler should have been allowed to choose bankruptcy months ago, but the U.S. government in its infinite wisdom has thrown our money down a rat hole created by bad management and excessive labor union demands over the past four decades. Meanwhile, as was the case in the UK, Chrysler is now owned by an Italian auto manufacturer. The U.S. government now owns GM, AIG an insurance company, and billions in housing mortgages through the government entities of Freddie Mac and Fanny Mae. Kudlow said, “We’re talking about hundreds of billions of taxpayer dollars that will never be repaid.”...That news is bad enough, but consider now that the U.S. government has just increased the standards of how much mileage must be achieved from a gallon of gasoline at the very same time it demands that more of that gasoline be mixed with ethanol. Ethanol reduces mileage. President Obama has already made clear that he wants GM to manufacture “green” automobiles. No one will buy them...."

History repeating itself? For the full article go here: http://factsnotfantasy.blogspot.com/2009/06/how-britain-destroyed-its-auto-industry.html

6/3/2009 8:39:35 AM

^ Oh man, I LOVE the picture he chose for that article, hahaha.

A decent read. I agree that if we have had to have pumped this many billions of dollars into the US auto industry in one year we're probably never going to get it back.

Quote :

"Only if control of Congress by the Democrats is ended can measures be taken that will permit the nation to turn away from the destruction being inflicted upon it. Vote in October 2010 as if your life, your children’s lives, and your grandchildren’s lives depend upon it, because it does. "

Of course, this is just an unnecessary political jab at the end of the article. This problem was caused by both parties. If the GOP hadn't acted like a bunch of retards that suck at PR and damage control the Democrats wouldn't have been able to get such a hold on power that they could implement every pet project and desire that's been sitting on the shelf for the past eight years.

[Edited on June 3, 2009 at 9:01 AM. Reason : ]

6/3/2009 8:53:58 AM

I agree with you, about the political jab at the end. Wish it wasn't there, kinda removes some credibility from the article. I do however, agree with most of what he said in there.

6/3/2009 12:10:51 PM

again, why does dumping dealers that cost GM nothing help GM?

6/4/2009 7:56:55 PM

the only benefit I could possibly see is that dropping the dealerships forces the remaining cars on the lot to be sold without a warranty. It would also make warranty work harder to receive on cars that have already been sold.

6/4/2009 9:07:49 PM

Of course the dealers cost GM money. Try using google.

Quote :

"GM chief executive Fritz Henderson said that it costs GM about $1,000 in distribution charges for each new car it makes. By closing the dealers, GM can lower than amount to $900 per car. That may not seem like a lot, but multiplied by the millions of vehicles it manufactures, "that's a lot of money for us," Henderson said. Chrysler president Jim Press said that by closing its Chrysler/Dodge/Jeep dealerships, the company will save at least $200 million per year in marketing and advertising and $41,000 per dealer in costs of simply dealing with that dealer, in addition to other savings."

http://voices.washingtonpost.com/economy-watch/2009/06/gm_chrysler_heads_face_senate.html?hpid=topnews

6/4/2009 11:17:42 PM

What are distribution charges?

6/4/2009 11:39:20 PM

^ Yeah, I'm gonna call "bullshit" on that, too. There's no way in hell that GM loses 1000 bucks every time they sell a car. Otherwise, why the hell would they still be in business?

As for Chrysler's advertising, I don't see how that affects them, either. Chrysler will be advertising on network TV no matter how many dealerships they have. And most of the commercials are paid for by the DEALER anyway. Likewise, the "$42,000 per year in dealing with the dealer" also sounds suspect, given that the dealer is, you know, SELLING CARS for them.

6/5/2009 12:20:33 PM

Looks like Penske is going to buy GM's Saturn Division.

I'm really happy to see the new ownership staying within the US.

http://www.foxnews.com/story/0,2933,525191,00.html

6/5/2009 1:27:12 PM

The administration is determined to prop up GM as a jobs program for the UAW and Midwestern states rich in electoral votes. This frenzy will intensify as the administration's decisions deepen the debacle.
http://www.washingtonpost.com/wp-dyn/content/article/2009/06/05/AR2009060502835.html

6/7/2009 1:53:50 PM

^ I really can't see this as anything other than that. It isn't like we won't be left with American automobiles after they throw out the trash. Ford will still be here. And I am sure there are some super smart capitalist that were just itching to jump on the best pieces that would be left of GM and Chyrsler to carry on with something completely different that could actually compete against the Japs.

Btw, you need to at least put in quotes that comment since you took it straight from the piece. Not everyone will read it and some will assume those are your words.

[Edited on June 7, 2009 at 2:09 PM. Reason : .]

6/7/2009 2:08:22 PM

http://www.scotusblog.com/wp/court-clears-chrysler-sale/#more-9838

fuck

6/9/2009 10:39:53 PM

I was almost in shock to learn that some absurd chunk of Chrysler is going to the fucking UAW whose ridiculous demands from the auto industry is what led to the huge debt and collapse in the first place.

This is like NC saying screw the ABC stores lets make it private than letting recovering alcoholics take ownership.

6/9/2009 11:02:26 PM

I don't know why any company in their right mind would take control of any other company with retarded labor unions like those Chrysler/GM have.

6/9/2009 11:17:14 PM

[Edited on June 9, 2009 at 11:44 PM. Reason : l]

6/9/2009 11:41:42 PM

^^^ And the best part: under bankruptcy law the UAW possessed unsecured claims and therefore would have received absolutely nothing upon either companies bankruptcy. Of course, the same goes for the Government, which legally speaking also had unsecured claims against the automakers, so when bankruptcy came both the UAW and the government, by law, should have walked away with nothing. And yet, they are walking about with 80+% ownership. So much for the rule of law.

6/10/2009 1:02:59 AM

how surprising... the supreme court again fails to uphold the law

6/10/2009 7:03:48 AM

^^ And that's what could lead to even worse economic troubles. Part of what makes up an investor's decision to invest in a company is the calculated likelihood that they will get a return on their investment or at worst, how much of their investment they will get back. Up until now, the people with secured debt in a company were supposed to get first dibs at the assets of a company if they went under. And now, pretty much by executive fiat (no pun intended), years of bankruptcy law and procedure has been overturned in the interests of politics.

When the government can change the rules of the game at any time after the game has begun, it's going to make it a lot harder for companies to secure credit, even by backing it with assets. So much for helping unfreeze the credit markets.

6/10/2009 7:35:50 AM

One might argue that bond holders are being punished for not buying treasury bonds. Afterall, Obama knows he is going to need to borrow trillions of dollars during his tenure in the white house, and it would certainly go better for him if he could continue that borrowing at reasonable interest rates, something he cannot do if he must share the would's capital stock with non-government entities. Yes, by starving America's productive economy of capital he is killing economic growth, but if he didn't do that then in order to borrow as much as he wants to, the federal reserve would be forced to print even more money to keep treasury markets clearing, driving rampant inflation. And people complain when interest rates are high, or when inflation is high, they don't complain when a GE bond issue fails.

[Edited on June 10, 2009 at 9:59 AM. Reason : .,.]

6/10/2009 9:58:34 AM

As an investor, the taxpayer is utterly and absolutely fucked on GM

http://www.ritholtz.com/blog/2009/06/making-money-on-gm-investment/

Quote :

"For the taxpayer to just break even on their investment , the New GM would have to have to reach a market capitalization of $84 billion — almost 150% of its all time peak."

This will never ever happen.

6/13/2009 2:23:46 PM

Thank you Obama (McCain would have done it too). Fucking assholes.

6/15/2009 12:14:34 PM

One of the commenters has a decent point

Quote :

"I personally don’t think the investment was ever meant to be recouped. Slowing down a car before it crashes, reduces the cost of medical intervention required afterwards. In that sense, the $50 billion + funds provided for the chapter 11 process together should be weighed against the unemployment benefits and other social services that the government would be on the hook for if a couple of 100k former GM employees hit the streets at the same time. Quite a few local govts. would have imploded as well. From the crisis management perspective, it has already slowed down the process enough to allow people to get offboard in an orderly manner before a final liquidation. So, my guess is that it has already paid for itself. I’m not holding my breath for the Chevy Volt to ever make production."

100k employees at 12,500 UI per works out to 1.25 billion. Then you have the ripple effects up just the auto supply chain as well as all the other effects on local economies, etc. Still, it would be better to see this type of calculation and consideration done before the knee jerk reaction because it is probably still better to let GM disappear and just give that $50 billion directly to those that are laid off (along with everyone else in the ripple). Seems like if the Democrats wanted to ensure their voter base, getting the money directly would worked just as well.

6/15/2009 1:32:24 PM

so, why couldn't we have done the orderly bankruptcy without going through the dog-and-pony show of giving GM some money?

oh, right. Because then the gubment wouldn't have a controlling stake in the company so as to give the UAW all of the perks in the bankruptcy. thx, Obama!

6/15/2009 5:44:52 PM

The government didn't need a controlling stake to sidestep the law, in case you were wondering.

6/15/2009 5:59:34 PM

This is true, but it sure doesn't hurt. Also makes it so you can fire the CEO if he's being uppity about things, too.

6/15/2009 6:13:01 PM

^^what does it need to disregard the law, out of curiousity?

6/15/2009 10:47:45 PM

bump by request

9/25/2009 1:15:50 AM

I can't say I'm thrilled that the govt just gave a $500 million plus loan to Fisker, but it could be worse. Also, I don't think it really had anything to do with Al Gore having a hard on for the Karma.

9/25/2009 12:49:51 PM

They loaned money to Tesla, too.

There goes your sarcastic silly Al Gore conspiracy.

9/25/2009 1:00:40 PM

Quote :

"Also, I don't think it really had anything to do with Al Gore having a hard on for the Karma."

My conspiracy? I made that comment to preempt idiotic needless comments like yours

And I'm well aware of what Tesla's up to. But thank you anyway.

[Edited on September 25, 2009 at 1:19 PM. Reason : I forgot to mention that it was in the news that Al Gore loved Fisker. Twas main reason for my cmmt]

9/25/2009 1:18:58 PM

Quote :

"As reported two weeks ago in *The Patriot Post* (and practically nowhere else), Indiana Treasurer Richard Mourdock filed an appeal with the U.S. Supreme Court seeking review of the legality of the Obama-forced bankruptcy of Chrysler, LLC. Mourdock is petitioning the Court to rule on Barack Obama's blatant disregard of the U.S. Constitution, Article 1, Section 8, which explicitly authorizes Congress, and *not* the president, to determine bankruptcy laws. In particular, Mourdock is challenging the president's unashamed indifference to more than 220 years of bankruptcy precedent, which puts senior, or secured, creditors ahead of junior, or unsecured, creditors during bankruptcy proceedings. With regard to the latter, BO unilaterally declared a 55 percent ownership stake for the UAW, a junior creditor, and he donated a 20 percent ownership stake to non-creditor and non-investor Italian automobile maker Fiat, which was also given options for an additional 15 percent. (Fiat exchanged not even one penny for its ownership stake or options, and the jury is still out as to the politics behind that unsavory deal.)"

http://64.203.107.114/alexander/edition.asp?id=662


The article is from an admittedly partisan source, but I found it interesting.

9/25/2009 1:33:08 PM

Ford Posts an Unexpected Profit of $997 Million
November 2, 2009

Quote :

"But Ford also took advantage of the unfavorable perception that many consumers had of G.M. and Chrysler, which have needed huge infusions of federal aid to survive. Even Toyota has been losing money and, after significant recalls, been forced to defend its quality."

http://www.nytimes.com/2009/11/03/business/03auto.html

The one car company that didn't take the bail-out money is making a profit? GASP! How can any business succeed without government intervention?!

11/3/2009 5:19:07 AM

^ ummm it might be because they get free publicity on the news because they are an american automaker, start a new ad campaign, and make better cars

[Edited on November 3, 2009 at 7:44 AM. Reason : .]

11/3/2009 7:42:06 AM

^ WTF?

11/3/2009 8:02:20 AM

^^or it could be b/c they had better foresight and liquidated a lot of their capital before the economy crashed last fall. Personally I don't see any big differences in quality of products between GM and Ford.

Ford = Chevy
Cadillac >>> Lincoln

And Mercury? lol, why do they even exist?

11/3/2009 10:34:02 AM

Ford’s the only company of the 3 that has done consistently well in the small to midsize car segment - where it takes real prowess to compete with Asian manufacturers, and where people are going to spend their money with high gas prices. The Mustang has also been a consistent source of revenue. Soon they’ll be bringing the ridiculously successful European Focus here.

I always figured Ford had the strongest chance for survival, long before the bailouts.

11/3/2009 10:53:21 AM

the Focus does pwn the shit out of the Cobalt, no question there. But the Cobalt is being phased out in 2010 so it'll be interesting to see how the Cruze does in its place.

The European Focus is a different car on a different platform that costs more than the American Focus. If they bring it here it won't be quite the bargain.

11/3/2009 10:55:54 AM

Quote :

" The one car company that didn't take the bail-out money is making a profit? GASP! How can any business succeed without government intervention?! "

A good starting point for a business is not having five brands build the same truck.

11/3/2009 3:33:53 PM