GM has its price

GM has its price http://www.chicagotribune.com/news/opinion/ct-edit-gm-20101118,0,3443340.story
11:36 AM CST, November 19, 2010 Advertisement
Anyone inclined to live for today without a care for tomorrow should go
ahead and celebrate the resurrection of General Motors.
Its successful public offering Thursday stands as "a major milestone," as President Barack Obama put it, all the more impressive since it came so soon after the U.S. automaker faced a potential liquidation.
In the short run, the government bailout of GM worked. It saved many jobs that would have been lost, saved an icon of U.S. manufacturing and saved a lot of political fallout too.
Now comes the bill.
It's not enough merely to point out that Uncle Sam sold roughly half of its 61 percent stake at a loss Thursday. Barring a drastic and unexpected increase in GM profits, the nearly $50 billion that U.S. taxpayers poured into the company never will be recouped from selling off the remaining equity. True, the hit will be less than many analysts thought possible: To hear some tell it, a billion here and a billion there for good ol' GM amounts to peanuts in the context of $700 billion in TARP and $787 billion in stimulus spending.
The other costs, however, will be much greater, and more difficult to quantify.
Failure is supposed to be a fact of life in business. And although it gets scant appreciation these days, failure has its virtues. Like ecosystems, industries undergo cycles of loss and renewal that make them stronger in the long run, promoting efficient practices that meet the challenges of the future. We have a robust mechanism for dealing with failed companies and moving that cycle along: bankruptcy.
Instead of following the law that applies to less-favored companies, the government intervened in GM's bankruptcy and went on to pick winners and losers: GM bondholders, for instance, probably would have gotten a better deal if the Feds had let bankruptcy run its course. United Auto Workers have every reason to join hands with Wall Street traders and whoop it up: They were awarded a 17.5 percent stake that looks particularly sweet in the wake of Thursday's richly priced IPO.
The bill for taxpayers stands to keep growing. Because of special tax treatment connected to its bailout, GM can deduct its accumulated losses against future profits avoiding at least some obligations it otherwise would have owed had it emerged from a typical bankruptcy. That tax break reportedly could be worth as much as $45 billion over time.
It's a sweet deal for GM. Not so sweet for Ford, Volkswagen, Toyota and other rivals that stood to gain market share at GM's expense had the government let the chips fall. Normally, competitors benefit when a rival crashes. To a limited extent, the marketplace is providing a reward of its own.
In the aftermath of GM's bailout, consumer surveys show that Americans have favored Ford vehicles in part because of that company's perceived corporate self-reliance. It's a phenomenon that has not escaped the notice of manufacturing executives such as Daniel Ustian, the chief executive of Navistar International in Warrenville, which like Ford survived the downturn without a direct government bailout.
At a Tribune panel discussion Wednesday, Ustian said that car-shopper sentiment has helped level the playing field: "This has actually been a positive for Ford," he noted.
It's a small consolation from us simple taxpayers who keep getting stuck with the tab.
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friends respect me. The others can do whatever they please."
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On 11/20/10 4:25 PM, Jim_Higgins wrote:

back the 50 bil nbr is now down to 30 bil, as far as the 45 billion write off on losses i need to see something official not just some hack, Even if they can write it off it will be the same as the other foreign manf. the don't pay federal taxes at all. as ford not filing for bankruptcy it was very close if they wouldn't have been owned by the ford family who would have lost everything i think it would have a different story. Also Ford benefited from all the things that came out of the GM Chrysler deals with unions and govt.
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Tom wrote:

Understandable to want to see proof. I would give the greatest credence to the Online Wall Street Journal.
Daily Finance AOL http://tinyurl.com/2flppys
Online Wall Street Journal http://online.wsj.com/article/SB10001424052748704462704575590642149103202.html
Chicago Breaking Business http://tinyurl.com/2c38wv5
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On 20/11/2010 2:44 PM, Tom wrote:

And that excludes losses on GMAC, cleanup costs, unpaid suppliers etc. Total GM bailout was huge to the taxpayers, over $100 billion as GMAC is on its 4th bailout to cover the now delinquent GM loans made.
GM is doing it again with AmeriCredit. Making loans to questionable clients to buy a GM. Keeps the repo men busy for sure.
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It was strange to not allow GM to be liquidated as it should have been and possibly will be later.
It is also strange to sell it to the public for half price.
If the stock rises a little bit in the short run some people may have made some money if they sell quickly but most people will just have lost this investment.
There is no major change.
The former workers have been robbed their pensions and some sharholders lost money.
Some top managers been ousted but most bad management is still there.
All the incompetent systems are still there.
Hardly anyone knows what is going on.
The computersystems are still not working properly so what is keeping the new GM zombie alive?
The FEDs have printed some money to give it artificial lease on life.
The sale of imaginary numbers of Volts to companies like GE over 10 years is interesting and hard to understand what/who it is supposed to be good for.
Living a lie can possibly be fun for awhile.
I am keeping my personal finances away from this ghost.
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On 11/21/10 10:04 AM, Bjorn wrote:

Stop making up things that you know nothing about, How many bad managers are still at GM make a list
no former workers have been robbed of their pensions
what systems are still there
what computer systems are still not operating
living a lie can possibly be fun for awhile (look in a mirror)
Please don't buy stock.
Let us know what your solution would have been if GM would have liquidated, what do you do with 5000 dealerships, hundreds of smaller suppliers, lost taxes to the communities that hosted plants, and all the businesses that would have been affected.
additional unemployment ins. for estimated 1.4 million people
more jobs would have been lost to overseas suppliers
additional debt on the PBGC
All of this would have far exceeded the money that was (loaned) to Gm with debtor in possession financing
The families that would have been displaced in the mid of a bad economic times
Have you checked the unemployment nbrs lately its not getting any better
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It is not getting markedly better. And the administration is pretty good at lying with numbers.
Bailouts suck.
Ireland is in the poop today because it overspent and cant fund its folly. Greece, Portugal, and Spain are in the same boat. It is really freaking fine if you can spend your head off and then have someone else (in this case the member states of the European Union) bail you out.
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On 20/11/2010 2:25 PM, Jim_Higgins wrote:

Which is why I will never buy GM/Chrylser/UAW/CAW/Carlyle/Cerberus again. Their criminal use of debt and taxpayers money should not be born to the taxpayers without some hangings for corruption.
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