The Tulsa Forum by TulsaNow

Well color me shocked:

http://www.businessinsider.com/gm-defaults-2009-4

Chapter 11, here you come.  UAW contracts, there they go. 

I don't think anyone can argue with a straight face that they are a viable company.  But if I were to place a bet I'd venture to guess they get the extra $5,000,000,000 from the government to cling on for another month or two.  The net result of the ~$15 billion the government gives them will be nothing.

IMHO.

They are still advertising heavily.  I would imagine they are on COD basis with their ad agency and media outlets. 

I heard on the radio last night they were going to shutter some plants for nine weeks to get rid of inventory and save operating costs.  Has it dawned on anyone this company is incredibly slow to react???  GM is a T-Rex.

Anyone wanna bet that we hear an announcement within the next week or so that it is imperative "for the sake of the country" that we inject 20 billion into GM and appoint a "Car Tsar" to run the company under the federal government. 

They will use the term "Temporary Nationalization" which is about as honest as a "Temporary Tax".

The BS hobgoblin will be "If GM fails to be a viable company on its own, we face a total collapse of the US economy".  This is an excellent opportunity for the UAW to achieve a concrete voice in government.  After all, never let a crisis go to waste.

In other news Gold Man Sacks upgraded Ford the other day.  They aren't perfect, but there's a model of a far better run company.

Are you referring to Tulsa's outsized mascot near Expo Square?

Funniest unintentional misspelling of the day.

Back on topic: Yes, Ford is a very good car company these days. Even Consumer Reports, who has batted American-made vehicles for decades, says that Ford now rivals the Japanese companies for overall quality.

Conan has consistently referred to it as Gold Man Sacks, I don't think it was in error.  But agree, it is funny. 

FORD made the needed cuts about 5 years ago, or at least started the process.  They were punished for it by the market and creditors too.  People accused them of selling the company down the river and assuming a weak position.  Proud to say I saw the writing on the wall and invested in Ford (and lost money, but not as much as if I had bought GM...).   I honestly think FORD is a viable company and will surpass GM in size in the near future.  Their products are being more highly rated, they have a better reputation, they sold off non-core elements, spent money updating facilities.  They give me hope for the US Auto Industry (US owned and run).

I would not be too surprised if GM went into Federal Receivership, but I don't think there will be a nationalization without a declaration of bankruptcy.  Too much political capital would have to be spent and it represents an impossible black hole.  If the Feds took it over, where would the losses stop?  We all know they couldn't destroy labor, sell of pieces, or liquidate units to foreign auto makers because of politics.   It would just continue to operate.

The notion that GM has or will become a going concern by May 1st to get the extra $5bil is a joke.  May as well just give $2.5bil to Michigan to help with unemployment insurance and the other $2.5bil in something that will matter.  At this point I honestly think it's just pissing in the ocean.

Oddly, this isn't mentioned frontpage on Yahoofinance today, and people are still trading GM's stock.

I can't imagine why anyone would buy that stock right now (even daytraders), but then again, nothing that happens in the stock market makes any sense anyway.

--

There's your answer- day traders.  People who have time to sit around and pay attention to what's happening with it and who are good at shorting have been making money on it.  I've stayed clear of GM. 

Meanwhile, I'm averaged in on Ford at $2.21 a share.  I'm happy with the direction it's going.  I wish I'd bought a bigger chunk at $1.60.  I keep an eye on what my stocks are doing just about every day, but I definitely wouldn't consider myself a day trader.

Nope. The bondholders will have to take action. Obama is willing to let GM go through bankruptcy to restructure rather than throw more money into a failing welfare company. Stockholders in GM will get screwed....not that they haven't already.

I guess we will find out soon enough.  The gov't has been so fearful of letting large companies reorganize up to now.  I'm going to be pretty furious if they dump any more money into this T-Rex of a company.

I think it was worth giving GM a chance. Now that they've squandered their chance, throwing more money at them would just be throwing good money after bad, unless it's done in the form of DIP financing so the company can restructure in BK or operate in BK until the pieces are sold off. And then only if the banks refuse.

I think an "orderly" failure is the order of the day.

DETROIT — The Treasury Department is preparing a Chapter 11 bankruptcy filing for Chrysler that could come as soon as next week, people with direct knowledge of the action said Thursday.

Looks like this will get ugly.  Purportedly, the government will offer 22 cents on the dollar to creditors and a 5% equity stake - forcing them to take a $5 Billion bath.  However, most of those creditors are secured - by plant, inventory, and other assets.  As secured creditors, they take above and beyond all others (including the government).    They are demanding 65 cents on the dollar and a 40% equity stake.

People usually don't walk away from $4,000,000,000 without a fight, particularly if you are secured.  Do you have any idea how many hours of attorney work you can get for $4,000,000,000.00?  Like 9,500 years worth of attorneys.

Also, as part of the deal the Fiat 20% stake would move forward.  Which triggers $6,000,000,000 in US government money, bringing the total to $10 Billion.  Which is above the mean estimated value of the entire company.  Which is nice.

http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=1

Appears the FED and Treasury combined are the new mega bank/workout department for the benefit of retaining jobs throughout America. In the automobile industry as in the financial industry, Mergers and Acquisitions and bankruptcy can be enabled and cleaned up through only the governments supervision, regulation, and oversight on deals of this magnitude.

The obvious point is our government is taking charge of bad management that resulted from many years of lousy regulations and poor oversight but mainly decisions based from greed and "afluenza". Those jobs being saved will rescue the economy. And much of the money forwarded is being paid back over time. The auto industry is being forced to comply with change and that's going to be worth the taxpayers investment in non tangibles.

It's helped to have forward thinkers and "brainiacs" in charge of the USA for a change. Wait and see.

Yes we can.

I can't help but doubt your words.  But, I hope you are right.

My fear is, I agree with him.  But to make that work we have to assume that the bureaucrats that are taking over using tax payer money will have more incentive to or otherwise be able to do better than the managers they are taking over from.

And therein lies my doubt.  What kind of track record do we have with large bureaucracy?  That's the whole problem with GM in the first place, it was being operated like a damn government entity.  "We aren't operating efficiently enough to profit?  Aw hell, just issue more debt, we'll be okay.  When we can't borrow any more money, we will get the government to print more for us."

There's a reason GM is known as "Generous Motors" in Michigan.  They apparently have zero concept of good fiscal stewardship.

Looks like part of GM will be gone soon.....

http://money.cnn.com/2009/04/24/autos/pontiac_obit/index.htm?postversion=2009042414

Good.

GM will be gone when those Wingnutians destroy our country....

Pontiac gone as well as 21000 jobs:

http://www.wxyz.com/news/story/WATCH-LIVE-GM-to-Cut-Pontiac-21-000-Jobs/kYLlxaZ6t0KZbtFj5yAwEw.cspx

Hey UAW, how are those democrat campaign contributions working out for ya?  hahahahaha

I just don't see this ending any way other than massive job losses.  A company can not continue to lose billions of dollars each month and pretend like nothing is wrong.  About a decade of that is all a company can take.

Perhaps the UAW was right to stick to it's guns and defend the wages.  If the ship is sinking, you may as well loot it as much as you can before it hits the bottom.  Assuming you agree with the notion that you can't save the ship.  Oh, and by making that assumption and doing the looting you'll probably drown in the long run.

[edit] buy != by [/edit]

My only problem with your post is that the UAW and management just looted the taxpayers in this country through the bailout, not the company so much.

POTUS just crushed GM bondholders....they own 24 billion in debt and might get 10% of company UAW owns 10 billion indebt and they might get 39% of GM. Negotiating GM debt structure will not be pretty. Looks like a rugged fight with bondholders is emerging.....

"Salt of The Earth"     
M. jagger/k. richards)

Lets drink to the hard working people
Lets drink to the lowly of birth
Raise your glass to the good and the evil
Lets drink to the salt of the earth

Say a prayer for the common foot soldier
Spare a thought for his back breaking work
Say a prayer for his wife and his children

Who burn the fires and who still till the earth

And when I search a faceless crowd
A swirling mass of gray and
Black and white
They dont look real to me
In fact, they look so strange

Raise your glass to the hard working people
Lets drink to the uncounted heads
Lets think of the wavering millions
Who need leaders but get gamblers instead

Spare a thought for the stay-at-home voter
His empty eyes gaze at strange beauty shows
And a parade of the gray suited grafters
A choice of cancer or polio

And when I look in the faceless crowd
A swirling mass of grays and
Black and white
They dont look real to me
Or dont they look so strange

Lets drink to the hard working people
Lets think of the lowly of birth
Spare a thought for the rag taggy people
Lets drink to the salt of the earth

Lets drink to the hard working people
Lets drink to the salt of the earth
Lets drink to the two thousand million
Lets think of the humble of birth

So, what are you saying FOTD?  You picked up the bong and went off into the song lyrics w/o any analysis.  Do you think this is a good thing that UAW just foobared the bond-holders with the help of the President, or are you recognizing that this is a total quid-pro-quo for consistent union support of the DNC?

It's pretty obvious what the devil's position is at this point....the hard working people come before the wall street gonifs.

How many hard-working non-UAW retirees have pensions that own part of those $24 bln in GM bonds?  It's not just grey suits who own GM debt.

If this deal goes through, there will be huge repercutions. Who in their right mind would ever purchase another bond in troubled sectors of the economy? For now, join me and encourage everyone to never purchase a GM or Chrysler car again. Let the UAW and those moronic executives that BOTH ran those companies into the ground hit the bread line. Teaching moment.

The labor members did not abuse GM.....the management of this company ran it into the ditch building "those" vehicles for the red states' tax payers . In the end, it's about employed getting a hand up and not so much about the stockholders and execs getting a hand out. It's about meeting demand not creating a false demand.  Not about protectionism but innovation.

And here's a way to help pay for it!

The cost of business on Wall Street
To curb Wall Street excess, the US should tax financial transactions as the UK does

http://www.guardian.co.uk/commentisfree/cifamerica/2009/apr/27/wall-street-economy-financial-transactions-tax


Change has come to America.

FOTD,   

When a high school kid putting bolts on a truck rim makes $75,000 a year with a full pension, the company will fail.  When a company sells a $30,000 car for $26,000 with 0% financing, they will fail.   Very easy to figure these things out.   

Do you know why high school graduates don't make $75,000 anywhere else?  Because most aren't worth it.  You can't get $75,000 worth of product out of most low-skill laborers.  The Union did all they could to inflate wages without regard for the vitality of the company.  Eventually they killed the golden goose.   If they really wanted to they could have forced changes, traded short term wages for long term commitments, hell - with 500,000+ members they could easily have bailed out the company themselves.  Union funds could have buttressed debt loads for major changes.   But that would be risking THEIR money into the company they are milking to death.

And you know what else?  The suit making $10,000,000+ a year?  He's apparently wasn't worth it either.    yay Wharton school - another drone to sit at the drivers seat and watch the company fall.  We've had about 4 now who should have done SOMETHING and did nothing.  Just as the Union was milking GM for all the short term benefits they could get out of it, so were the managers.  The very people who were getting paid to take care of the company treated it like a piggy bank.   "Holy crap, we only lost $16,000,000,000.00 this year! Bonuses for everyone!  Lets go to the jet, take my limo!"  Worthless bastards.

So who's to blame?  Managers?  The Unoin?  The Japanese?

Nope.  Lazy owners. Stock holders:  managers, union guys, you with your 401K, super mega bank.  All of 'em.   All the owners sat back and watch members of the club assume the helm and keep the ship steady as she sank.  And they have been doing it with a ton of other firms too.  Contracts with built in multi-million dollar bonuses for not running the company into the ground within a year - YAY!.  Why vote YES on that package?

Look at management packages before you buy stock.   Vote in your proxies.   We own these damn companies and they should be run for US.  Owners first, then labor, managers, and creditors somewhere not-first.  As it stands labor got to milk their cash and will walk away with their pensions, managers bilked millions, and the creditors are secured...   the people who actually own the damn company walk away with nothing.
- - -

And an FTT would have done nothing to precent the auto industry crash or any of the financial transaction issues we faced.  It's a red hearing.  .25% is still .25% no matter the scale.   What would cost Joe Blow  $500 to liquidate his 401K would cost Super Mega Bank $5,000,000,000 to liquidate an entire portfolio.  So what?  It's all in scale.  The really bad news is Joe Blow would pay the $500 AND his share of the $5bil...  unless you think Wallstreet is too stupid to either figure a way around it or pass the buck (closing fees go up, mortgage rates go up .25%, whatever . . .). 

It also inherently discourages investment in capital markets. 

More transparency is needed.  Not more taxation.

How to Fix a Flat
By THOMAS L. FRIEDMAN
Published: November 11, 2008

http://www.nytimes.com/2008/11/12/opinion/12friedman.html