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"Government Motors" returns to top of world's auto sales

Discussion in 'Sports and News' started by TigerVols, Jan 20, 2012.

  1. TigerVols

    TigerVols Well-Known Member

    Not to mention the Volt was in the pipeline for a decade before Obama became President.
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    I posted this earlier on the thread, but that is incorrect, Mike.

    GM was NOT in bankruptcy. It should have been, but our government stepped into a private property situation, threw tens of billions of taxpayer dollars into the situation (which we can kiss goodbye, because the company has underperformed what they said it would), and in the process trampled on creditors' rights.

    The first thing to note is that when companies declare bankruptcy, they don't just shut their doors. It usually means they renegotiate their debts under court order. If GM had gone bankrupt, in order, secured debt holders would have been paid back first (the banks), followed by unsecured debt holders (bond holders), followed by stockholders if there was anything left.

    The biggest screw job in recent history was done to GM's bondholders. When the Treasury stepped in they created a debt for equity swap. GM had more than $27 billion in unsecured bonds owned by the public. What those debt holders (mutual funds, pensions, hedge funds, individual investors) got in return for their $27 billion in bonds was 10 percent of the stock of a restructured GM. That amounted to less than five cents on the dollar, at the stock price GM has traded at.

    The Treasury received 50 percent of the stock and $8.1 billion in debt (on only about $16 billion in debt), which was worth as much as 80 to 90 cents on the dollar.

    The union's retiree health-care benefit trust received half of the $20 billion it was owed in stock, giving it 40 percent ownership in GM, plus another $10 billion to be paid out over time. That was worth about 75 cents on the dollar.

    Now take a step back. In an actual Chapter 11 bankruptcy, those three groups of creditors would have been about equal, because all three were unsecured creditors. And yet, those with the largest claim -- the bondholders (owed $27 billion in debt) -- got the smallest piece of the restructured company by a huge margin.

    What you just posted is essentially the lie that the administration used to sell its trampling on the property rights of those debt holders, who had their wealth stolen by their own government. GM being bankrupt (never got the chance). Bankruptcy meaning no more GM (companies don't just shut their doors when they file Chapter 11. Profitable pieces are kept running, because they have value, and creditors are paid in an order).

    The whole thing was sold as a stabilizing event, but it was the exact opposite. Take out the debt taxpayers are on the hook for from the equation. It made corporate investment in this country even riskier, because it created an uncertain and unlevel playing field. Now anyone willing to take on unsecured debt in a private enterprise, has to worry that the government might arbitrarily step in, change the rules on them, and screw them out of their rights to what they are owed.
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    I never mentioned President Obama. But since you did. ... No, it wasn't in any pipeline. It was a concept car, and they first debuted it as a concept in 2006, not a decade ago.

    There is no way that thing would have ever come to market without all of the government subsidies (at taxpayer expense) that led to its development, and even with that, there is not a car company trying to compete profitably that would ever have brought that thing to market. It took a "Presidential Task Force on the Auto Industry" and its hands in a car company for it to happen.

    It really is a car for idiots. It competes with the Toyota Corolla (MSRP around $18K to $20K) and sells for $40,000 (but effectively costs you $32.5K after taxpayers subsidize you -- more debt for the U.S.). It's not exactly shocking they haven't sold too many.
  4. Starman

    Starman Well-Known Member

    Complete bullshit, professor. The Mackinac Center for Public Policy is a hyena-screeching right-wing propaganda factory in the mold of all the other KochCo blather-spewers (they've got one going in just about every state).

    Ironically, disingenuously and cynically, it steals its name from the Mackinac Bridge, a $100 million project in the 1950s financed by publicly-guaranteed bonds, a project which was furiously sandbagged by proto-teabagger Republicans for 30 years (then as now, they didn't want to spend no goddamn tax money on nothin'). If it was up to those motherfuckers you'd still have to wait three days to cross the Straits of Mackinac by ferry.

    Last edited by a moderator: Dec 15, 2014
  5. Michael_ Gee

    Michael_ Gee Well-Known Member

    The fact is, GM is up and a going concern. It has employees. And it wouldn't have if it weren't for the government action. The rest is just ideology, the idea that money comes before people. Truth is, Obama should have done the same with the banks. What did that blogger Calculated Risk call it? Oh yeah, pre-privatization.
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    Starman, Impress me. "Professor" doesn't cut it. And the ad hoc attack (attack the messenger, while not addressing the message) is noted.

    Now demonstrate how this: http://www.mackinac.org/16192 analysis is either incorrect, skewed or otherwise flawed.

    It may be. I don't know enough to say. I do know the GM spokesman at the end didn't rebut the analysis. Maybe you can.
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    Bondholders getting screwed out of their wealth by their own government is "ideology"?

    You're not talking about money coming before people. The mutual fund owners, people with pensions and individual investors who had their wealth stolen from them by their government are not "people"?
  8. Uncle.Ruckus

    Uncle.Ruckus Guest

  9. Stitch

    Stitch Active Member

    Mitt Romney doesn't see the problem with screwing other investors.
  10. Magic In The Night

    Magic In The Night Active Member

    That's fantastic. Sometimes, I just love your retorts!
    Last edited by a moderator: Dec 15, 2014
  11. YGBFKM

    YGBFKM Guest

    How Starman's head has not exploded is a mystery of modern science.
  12. Uncle.Ruckus

    Uncle.Ruckus Guest

    Why? It's like saying you're surprised no one has beaten oop to death with a tire iron.

    Some people play parts on the Interwebs.
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