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GM We all fall down So thanks for helping us getUP
- Thread starter oilboy123
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We should not be bailing companies out. What they did to existing debt holders is a sham and the payback is a major joke.
That said your post is(was) messed up.
I just saw the commercial during the Detroit-NE game. The choice of Belushi is apropos.
That said your post is(was) messed up.
I just saw the commercial during the Detroit-NE game. The choice of Belushi is apropos.
Good for them-I guess-but ask me 10 years from now if it was bad for us or not. I would consider it a national security risk if they folded and no one replaced them-but a bad precedent nevertheless.
Actually I wish GM the best. We need them to get it together. I was touched by their thanking me.
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Although it is sad to see GM do badly, the core cause is the failure of the lending program GMAC.
After many years @ BITOG, I have decided to finally use this one.
I am undecided about whether this ad is wise from a PR point of view. It might just remind people of bailouts that they resent.
On the other hand, those people should get over it. Being opposed to bailouts is fine in principle, but reality is not anywhere close to a market utopia. People who continue to oppose the manufacturer bailouts don't understand the complexity of the situation.
At the time, there were no institutions anywhere in the world to provide DIP financing, so bankruptcies would have been liquidations. The liquidations would have recovered less than a penny on the dollar, because no buyers would show up, again because of lack of financing. There would have been an overnight increase of 0.5 percentage points in our unemployment rate.
The ensuing collapse "contagion" would have been very bad, but that's left to speculation.
To put numbers on this issue, let's conservatively figure 1.5M jobs lost. Now figure the cost per job saved. I'll figure the worst-case scenario. Including everything, we spent roughly $100B on the bailout, and we'll get back (conservatively) $71B of it from loan repayments and equity sales. That leads to a net cost of $29B to save 1.5M jobs, or a cost of $19.3K per job.
Now figure the cost of not doing the bailout. These jobs would have each cost us at least $9K in unemployment benefits alone, or $13.5B total.
So, in the most conservative calculation, US taxpayers would be out $15.5B. We'll probably be a lot closer to breaking even--if not coming out ahead--since I severely underestimated the cost of supporting those unemployed workers.
This was a good deal. Standing on principle is good, but we needed to get real. I am thankful that we did.
On the other hand, those people should get over it. Being opposed to bailouts is fine in principle, but reality is not anywhere close to a market utopia. People who continue to oppose the manufacturer bailouts don't understand the complexity of the situation.
At the time, there were no institutions anywhere in the world to provide DIP financing, so bankruptcies would have been liquidations. The liquidations would have recovered less than a penny on the dollar, because no buyers would show up, again because of lack of financing. There would have been an overnight increase of 0.5 percentage points in our unemployment rate.
The ensuing collapse "contagion" would have been very bad, but that's left to speculation.
To put numbers on this issue, let's conservatively figure 1.5M jobs lost. Now figure the cost per job saved. I'll figure the worst-case scenario. Including everything, we spent roughly $100B on the bailout, and we'll get back (conservatively) $71B of it from loan repayments and equity sales. That leads to a net cost of $29B to save 1.5M jobs, or a cost of $19.3K per job.
Now figure the cost of not doing the bailout. These jobs would have each cost us at least $9K in unemployment benefits alone, or $13.5B total.
So, in the most conservative calculation, US taxpayers would be out $15.5B. We'll probably be a lot closer to breaking even--if not coming out ahead--since I severely underestimated the cost of supporting those unemployed workers.
This was a good deal. Standing on principle is good, but we needed to get real. I am thankful that we did.
What really saved GM's bacon was the stock sale - not the earlier so called repayments. Only came up $10B short or so with the ~$34 share price. I guess it's all funny money from the Gov. - deficit spending doesn't matter.
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
Originally Posted By: Pablo
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
They are turning an actual profit.
As far as the union/pensioners are concerned, they were given/stole/earned a stake of nearly twenty percent of the newly issued stock. The UAW and VEBA stand to make billions off the sale of those shares they already hold. In addition to those shares, the UAW/VEBA also holds warrant rights to purchase 100's of millions of further shares at $7.XX/share.
As far as the next labor agreement, it's Ford that has a huge target on their back at this point. They will be picked as the next target for contract negotiations. And remember GM gained a no strike agreement from the UAW that runs through 2015 iirc. The UAW is foaming at the mouth to take/get back some of the cash/concessions Ford has been earning, even at the expense of slowing the repayment of Fords outstanding debts...sad, but true.
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
They are turning an actual profit.
As far as the union/pensioners are concerned, they were given/stole/earned a stake of nearly twenty percent of the newly issued stock. The UAW and VEBA stand to make billions off the sale of those shares they already hold. In addition to those shares, the UAW/VEBA also holds warrant rights to purchase 100's of millions of further shares at $7.XX/share.
As far as the next labor agreement, it's Ford that has a huge target on their back at this point. They will be picked as the next target for contract negotiations. And remember GM gained a no strike agreement from the UAW that runs through 2015 iirc. The UAW is foaming at the mouth to take/get back some of the cash/concessions Ford has been earning, even at the expense of slowing the repayment of Fords outstanding debts...sad, but true.
I can see the points of having unions and not having them. With that said I hope the Unions back way off when the time comes for negotiations.
why would they back off?
The whole purpose of this entire bailout was to secure their position!
The whole purpose of this entire bailout was to secure their position!
Originally Posted By: SteveSRT8
why would they back off?
The whole purpose of this entire bailout was to secure their position!
They probably won't. But that does not mean they shouldn't.
why would they back off?
The whole purpose of this entire bailout was to secure their position!
They probably won't. But that does not mean they shouldn't.
Originally Posted By: GMBoy
Well, getting back to the point, which was the video. I think it was good. Haven't seen any BANKS do this...and they were BAILED OUT not given a loan.
Are you talking about TARP money? You need to look a little harder.
http://s.wsj.net/public/resources/documents/st_TARP_20100930.html
Well, getting back to the point, which was the video. I think it was good. Haven't seen any BANKS do this...and they were BAILED OUT not given a loan.
Are you talking about TARP money? You need to look a little harder.
http://s.wsj.net/public/resources/documents/st_TARP_20100930.html
Originally Posted By: Pablo
What really saved GM's bacon was the stock sale - not the earlier so called repayments. Only came up $10B short or so with the ~$34 share price. I guess it's all funny money from the Gov. - deficit spending doesn't matter.
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
The stock sold for roughly $10 less per share than the taxpayers 'invested' in it. If the rest our stake sells for $53+- per share we might break even. Provided you ignore the potential $45 Billion in taxes GM won't have to pay in the future since they were somehow allowed to carry their old losses forward.
What really saved GM's bacon was the stock sale - not the earlier so called repayments. Only came up $10B short or so with the ~$34 share price. I guess it's all funny money from the Gov. - deficit spending doesn't matter.
I do hope they succeed and can turn into a real car company. But what happens when they actually turn a profit and the unions and the pensions come calling?
The stock sold for roughly $10 less per share than the taxpayers 'invested' in it. If the rest our stake sells for $53+- per share we might break even. Provided you ignore the potential $45 Billion in taxes GM won't have to pay in the future since they were somehow allowed to carry their old losses forward.
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I haven't seen the ad, but I can imagine it.
I remember an ad by GM belittling Honda for making lawnmowers. That one irked me. I imagined an ad by Honda that had a Japanese fellow explaining how Honda made many things, and made them well, lawnmowers, motorcycles, cars, even "wobots" (sorry I couldn't resist that one). Then the ad would end with a polite suggestion that maybe GM should try making lawnmowers. I think the ad would have gone over well.
Eating a little crow never hurt anybody. I sincerely hope GM does well in the future, I've always been a fan of US made cars. This isn't the first government bailout, there was Harley-Davidson, Chrysler, etc. I was at the PA Harley-Davidson plant during Desert Storm and saw them working overtime on military equipment, so the bailouts can be a matter of national security, and therefore necessary.
Wishing GM good luck.
I remember an ad by GM belittling Honda for making lawnmowers. That one irked me. I imagined an ad by Honda that had a Japanese fellow explaining how Honda made many things, and made them well, lawnmowers, motorcycles, cars, even "wobots" (sorry I couldn't resist that one). Then the ad would end with a polite suggestion that maybe GM should try making lawnmowers. I think the ad would have gone over well.
Eating a little crow never hurt anybody. I sincerely hope GM does well in the future, I've always been a fan of US made cars. This isn't the first government bailout, there was Harley-Davidson, Chrysler, etc. I was at the PA Harley-Davidson plant during Desert Storm and saw them working overtime on military equipment, so the bailouts can be a matter of national security, and therefore necessary.
Wishing GM good luck.
Originally Posted By: jsharp
Originally Posted By: GMBoy
Well, getting back to the point, which was the video. I think it was good. Haven't seen any BANKS do this...and they were BAILED OUT not given a loan.
Are you talking about TARP money? You need to look a little harder.
http://s.wsj.net/public/resources/documents/st_TARP_20100930.html
It is all a matter of perspective, but whether the money is a "gift" or a "loan" -- when you're about to go under if not for the funds -- it is all considered "bailing out" to me.
Keep in mind that the majority, if not the vast majority, of financial institutions were not surely going to go belly up if they didn't get funds from the CPP program. The government made the funds available, if they met the necessary requirements set forth, and from there on it was a business transaction to many, if not most.
When you cannot get a loan period, you'd be surprised how many will take out one where available for a premium -- as a hedge against future unknown circumstances.
That being said, this is, in my opinion, where the Bush administration got it right. They intertwined a nice rate of return for the taxpayers -- although the government has NO reason to be partaking in business transactions -- but this stopped it from being a "give away". And in fact, it was designed to likely turn into the opposite.
Doesn't make it easier to swallow, but it is a deep subject when you get all the way into it.
Originally Posted By: GMBoy
Well, getting back to the point, which was the video. I think it was good. Haven't seen any BANKS do this...and they were BAILED OUT not given a loan.
Are you talking about TARP money? You need to look a little harder.
http://s.wsj.net/public/resources/documents/st_TARP_20100930.html
It is all a matter of perspective, but whether the money is a "gift" or a "loan" -- when you're about to go under if not for the funds -- it is all considered "bailing out" to me.
Keep in mind that the majority, if not the vast majority, of financial institutions were not surely going to go belly up if they didn't get funds from the CPP program. The government made the funds available, if they met the necessary requirements set forth, and from there on it was a business transaction to many, if not most.
When you cannot get a loan period, you'd be surprised how many will take out one where available for a premium -- as a hedge against future unknown circumstances.
That being said, this is, in my opinion, where the Bush administration got it right. They intertwined a nice rate of return for the taxpayers -- although the government has NO reason to be partaking in business transactions -- but this stopped it from being a "give away". And in fact, it was designed to likely turn into the opposite.
Doesn't make it easier to swallow, but it is a deep subject when you get all the way into it.
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