The Daily Caller:GM-selling-at-a-loss-should-tell-you-something

[twa]

As an aside, there is a segment of the population (and on this board) that thought that the GM bailout was creeping socialism and the government never intended to put GM back into private hands, ever. Strangely enough, those will be the same people who will complain that not every dollar of the bailout is recouped from the bailout, as though the bailout was just a stock investment rather than a hail mary effort to stave off the loss of a million jobs. If most of the bailout money is recouped, that is a huge win in the big picture.

I'm not a fan of hail mary's...the stock is immaterial in the larger picture.

It's just money right?

let's not forget that success is predicated on this president's strong-arming bondholders and essentially wiping out shareholders of a private company -- tearing up legal contracts rather than allowing a traditional bankruptcy. Success means shielding benefits of United Auto Workers as a reward for helping make cars that are less efficient and more expensive.

At the time, George Mason University law professor Todd Zywicki wrote that by "stepping over the bright line between the rule of law and the arbitrary behavior of men," the president "may have created a thousand new failing businesses."

Confiscating the property of investors for the common good isn't generally conducive to a healthy business environment.

http://www.realclearpolitics.com/articles/2010/11/19/the_cadillac_of_bad_ideas_108008.html

[The 12th Commandment]

Wouldn't those investors have lost everything anyway if GM tanked? So we have a situation where the gamblers lost (which they inevitably would have anyway) and the country won. I'll take it bad precedent and all.

[Madison Redskin]

let's not forget that success is predicated on this president's strong-arming bondholders and essentially wiping out shareholders of a private company -- tearing up legal contracts rather than allowing a traditional bankruptcy. Success means shielding benefits of United Auto Workers as a reward for helping make cars that are less efficient and more expensive.

Bondholders get strong armed in bankruptcy proceedings. Shareholders, as people at the bottom of the creditor totem pole, almost always get wiped out as a result of a bankruptcy. Also, apparently the author doesn't know that a "traditional bankruptcy" results in "tearing up legal contracts." The debtor picks and chooses which contracts it wants to keep and which ones it wants to break.

[Madison Redskin]

Wouldn't those investors have lost everything anyway if GM tanked? So we have a situation where the gamblers lost (which they inevitably would have anyway) and the country won. I'll take it bad precedent and all.

Me too, and I thought they were a bad idea because GM would never turn things around. This crow tastes delicious.

[twa]

Wouldn't those investors have lost everything anyway if GM tanked? So we have a situation where the gamblers lost (which they inevitably would have anyway) and the country won. I'll take it bad precedent and all.

Not if it was handled in a traditional fashion

http://seekingalpha.com/instablog/153397-michael-terry/5406-gm-some-get-it-no-one-cares

http://www.reuters.com/article/idUSN2236567220090522

[Burgold]

I think what we're seeing here is the incredible investment many put into the auto bailouts being a bad idea. They can't admit that it saved jobs, the American auto industry and has turned out well so far because they took such an anti position. That GM is on its feet already is pretty amazing. What Ford did was even better (without the bailout, I believe).

I don't remember this much misery when Chrysler got back on its feet after Reagan bailed it out. I don't think when Chrysler was able to stand on its own feet again that it was immediately valuated at the same levels as before its big fall. This is a really nice step and better it's a great economic step for the American Recovery. Stop being so steeped in ideology that you can't celebrate an American win!

[chipwhich]

I think what we're seeing here is the incredible investment many put into the auto bailouts being a bad idea. They can't admit that it saved jobs, the American auto industry and has turned out well so far because they took such an anti position. That GM is on its feet already is pretty amazing. What Ford did was even better (without the bailout, I believe).

I think some people in here fail to realize that a non bailed out GM would not have just closed it's doors, and disappeared into the night. Bailout or not what would have arisen was a new GM. I think the number of jobs affected in either situation is being overstated.

[Burgold]

Are you 100% sure about that? The big three were all in imminent collapse and the banks and financial industries were broke or hiding and not really releasing any money, but regardless... it worked. The American Auto industry has survived and in fact seems to be doing better than it has in many years.

That's a thing worth raising your glass to not sneering at in contempt (not saying that you specifically are doing that, but that's a lot of what I'm hearing)

We have all but lost our preeminence in so many industries, in fact, we've allowed so many industries where we were king to go extinct, but at least for now, this was one has come back from the grave. That is a good thing regardless of the letter you wear on your jacket

When Bush caught Sadam or they eliminated a whole bunch of high ranking Al Qaeda rats... that too, was a good day for America. We need to get back to celebrating us versus finding reasons to be angry and miserable and disagreeable.

[twa]

That GM is on its feet already is pretty amazing. .

Stop being so steeped in ideology that you can't celebrate an American win!

Why is it amazing to you?...is it perhaps because you overlook the positions and moves made?

I do not see the moves made as a win for America, though I do love my GM vehicles...you can thank me for my purchases though;)

[Burgold]

Thank you, twa.

Frankly, it's amazing because of where they were, were their records said they were, and the fact that there was no financial institution willing or able to help them because of the 2008 collapse. We lost a lot of giants that year. Most deserved to die. Many said that GM deserved to die as well. I for one am glad to see it up on its feet again.

[chipwhich]

Are you 100% sure about that?

I am not sneering in contempt.

I simply stated a point. There was too much value, inventory, intellectual capital in the company known as GM. It's not like your shutting down a warehouse with nothing left in it.

Now the new GM might have been sold off chunks to different companies, or a slimmer, trimmer GM.

My only point was it's not a black and white. No bailout, all jobs lost -vs- bailout all jobs saved. It's so much more complicated than that...and GM wouldn't have just vanished.

[Burgold]

I know you're not which is why I put in the parenthetical comment. You're usually a pretty honest and fair fellow whose ideas fall on an odd side of the dart board. More, I do think you root for America slightly harder than you do for party

As for the inevitability of GM's survival, I think that people were saying the same thing about some of those financial giants who were amongst the biggest in the world and around forever and yet fell.

[Madison Redskin]

Not if it was handled in a traditional fashion

http://seekingalpha.com/instablog/153397-michael-terry/5406-gm-some-get-it-no-one-cares

http://www.reuters.com/article/idUSN2236567220090522

Those articles don't really say anything other than, "GOP representatives complain that the plan of reorganization hurts bondholders." Bondholders typically get hosed in bankruptcy proceedings, along with shareholders, and parties that signed contracts with the debtors.

[Madison Redskin]

It's so much more complicated than that...and GM wouldn't have just vanished.

That's a fair point, but let's not pretend that GM would be in the strong position it's in right now had there been no bailout.

[@DCGoldPants]

This goes back well into and past the Bush years, when the opposition openly roots against something would really is for the good of America. Its amazing how some Americans seem to just hate other Americans so badly. They should be ashamed of themselves Especially those who are the loudest.

[twa]

Those articles don't really say anything other than, "GOP representatives complain that the plan of reorganization hurts bondholders." Bondholders typically get hosed in bankruptcy proceedings, along with shareholders, and parties that signed contracts with the debtors.

If you think that process was done typically:silly: we really have nothing to discuss.

[Madison Redskin]

If you think that process was done typically:silly: we really have nothing to discuss.

I never said the bankruptcy was a typical one. I was just noting that contracts get broken and shareholders and bondholders get hosed when a company files a Chapter 11 petition. That's par for the course.

[twa]

It is par to get hosed,****ed over is another matter.

[Madison Redskin]

It is par to get hosed,****ed over is another matter.

Frankly, I don't know enough about what happened to GM's bondholders to be able to speak intelligently about the matter. Maybe they got ****ed over, maybe they got hosed, or maybe they just got pimp slapped. I don't know.

[mojobo]

That's a fair point, but let's not pretend that GM would be in the strong position it's in right now had there been no bailout.

They aren't in a strong position and they didn't fix the problems that caused them to fail in the beginning. They are trying to turn it into a "green" producer and I guess time will tell if that is the right business decision instead of the politically correct decision but I have very little faith that it was a good decision (from a business standpoint, not making a comment on the environmental effect although I have my doubts there too). In terms of the costs to make it the "strong" company it is today, I believe the government bought it at around $55/share and its selling for $34.17. If the government tried to sell its total share the price would be a lot less than that. I would stay far away from this company.

[The 12th Commandment]

They aren't in a strong position and they didn't fix the problems that caused them to fail in the beginning. They are trying to turn it into a "green" producer and I guess time will tell if that is the right business decision instead of the politically correct decision but I have very little faith that it was a good decision (from a business standpoint, not making a comment on the environmental effect although I have my doubts there too). In terms of the costs to make it the "strong" company it is today, I believe the government bought it at around $55/share and its selling for $34.17. If the government tried to sell its total share the price would be a lot less than that. I would stay far away from this company.

Their problem was they built huge gas guzzlers and now they are a "green" company.

The number of auto industry experts on the board must be pretty small, good thing you found this thread to straighten us all out.

[chipwhich]

As for the inevitability of GM's survival, I think that people were saying the same thing about some of those financial giants who were amongst the biggest in the world and around forever and yet fell.

Yeah but GM actually MAKES something. Financial giants manage failed transactions

GM had real assets that other automakers would want for the right price. They had something someone would want to buy, or something they could reinvent so to speak.

Failed banks had a wing and a prayer.

[JMS]

So JMS, did ya sell off your gold for GM stock?

GM stock wasn't available to private investors. The large money mangeing boys bought up all the available shares and even caused the price to go up over the initial price set.

[JMS]

It's great news JMS if you're a Union worker for GM, not so much if you were a bond holder. And since it's the taxpayer who paid for this when do I find the GM stock share in my mailbox?

This is great news for the United States tax payer because it means we will get all the money we've put into GM back. Which is terific news. It's great news too for the Union workers. It means the substantial sacrifices that the union made with regards to loan and debt forgiveness in order to save jobs worked.

As for the premise of the article. It's idiotic. The IP is worth less than the company is worth? Idiots. The IPO set a record for the largest in history and it was substancially more lucrative for GM than was predicted. It was a great deal for GM and a great deal for investors and that's called business.

Nothing to stop GM from doubling the number of shares a little down the road and raise another few billion. Just because the company is worth 'X' today doesn't mean it can't be worth 10x 'X' tomorrow.

[JMS]

Um... JMS... the shares were sold at a loss.

Link

Um Hubbs the government only sold about a third of their shares. Ford stock is up 65% this year. GM's valuation is also up significantly. If that trend continues the governemnt will get all their money out of GM. If it doesn't they won't. Either way as a first step this IPO was wildly sucessful.