GM's Profits are Still a Huge Net Loss For Taxpayers

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    May 13, 2011 9:53 PM GMT
    http://www.theatlantic.com/business/archive/2011/05/gms-bailout-has-been-a-huge-net-loss/238795/

    Government officials are willing to take the loss because the Obama administration would like to sever its last ties to the auto maker, the people familiar with the matter said. A summer sale makes it more likely Treasury could sell all of its stake in GM by year's end, avoiding a potentially controversial sale in the 2012 presidential election year.
    . . . At the time of the IPO, Treasury officials and banks underwriting the deal believed the price would climb through the winter, enabling the government to sell most or all of its remaining stake within weeks of the lifting of the sales restriction at a narrower loss to taxpayers, the people familiar said.

    Shares have fallen by recent events that have undermined investor confidence in GM. Those include the rise in gas prices, which hurt sales of big, highly profitable trucks. Wall Street also is fretting over recent management moves such as the unexpected departure of Chief Financial Officer Chris Liddell.

    Investors also were spooked by GM's sales-incentive blitz in January and February, which could temper the auto maker's first-quarter earnings. GM is expected to report next month that it made money in the first quarter and generated cash from operations, people familiar with the matter said.
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    May 13, 2011 10:27 PM GMT
    You know Riddler your being rediculous with this !! Are you really trying to tell us that had we let the big three fail, which would have been followed by millions more losing their jobs, that we would be better off now ? Ford was the best off of the three but was all for the Government stepping in, because they were convinced that had the other two gone down, they would have followed.

    Losses to the economy would have been much deeper had the Governement not stepped in, so if we do lose some, the way chosen was by far the lesser of the evils.
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    May 13, 2011 10:27 PM GMT
    realifedad said You know Riddler your being rediculous with this !! Are you really trying to tell us that had we let the big three fail, which would have been followed by millions more losing their jobs, that we would be better off now ? Ford was the best off of the three but was all for the Government stepping in, because they were convinced that had the other two gone down, they would have followed.

    Losses to the economy would have been much deeper had the Governement not stepped in, so if we do lose some, the way chosen was by far the lesser of the evils.


    Oh to long for a world of buggy whip makers, Enron, telephone switchboard operators...
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    May 13, 2011 10:38 PM GMT
    LOL !!! You mind explainig your last statemen?
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    May 13, 2011 10:49 PM GMT
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.
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    May 13, 2011 10:56 PM GMT
    As right wing as I am, and arguably the most right wing of anyone on RJ by far, I fully supported the effort of the Bush Omama administrations to pull this off and it worked.
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    May 13, 2011 10:57 PM GMT
    realifedad said You know Riddler your being rediculous with this !! Are you really trying to tell us that had we let the big three fail, which would have been followed by millions more losing their jobs, that we would be better off now ? Ford was the best off of the three but was all for the Government stepping in, because they were convinced that had the other two gone down, they would have followed.

    Losses to the economy would have been much deeper had the Governement not stepped in, so if we do lose some, the way chosen was by far the lesser of the evils.


    Don't be ridiculous. Someone or a corporation would have simply bought GM and it would have had the same name with different ownership and they most likely would have kept the same employees. When a widely known brand name goes out of business it usually just means it's going to transfer ownership.



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    May 13, 2011 11:01 PM GMT
    OneGeezer saidAs right wing as I am, and arguably the most right wing of anyone on RJ by far, I fully supported the effort of the Bush Omama administrations to pull this off and it worked.


    I think it was a bailout of favored institutions and merely forestalled the inevitable. It's unclear whether or not GM can still survive (I suspect it won't), the banks too big to fail have gotten even bigger after the crisis. The real estate market hasn't been allowed to find the bottom and as a result it's only be slowly drifting downwards and the recovery has taken far longer than anyone would like. With spending being what it is, future options to manage any further crises have been limited.

    Not sure I define the financial crisis in right or left terms, governments tend to want to spend money until they can't. The US is approaching this point.
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    May 13, 2011 11:04 PM GMT
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.




    No Riddler, Lets go back to the first time Chrysler was kept from failing, look at all the cars sold, profits made and millions of employee hourly pay which kept 100 thousand or so family's going for all those years, The same is happening now with GM and Chrysler, and Ford. they are creating value, and can again lead the world in innovative alternatively powered vehicles.

    You will remember that the Bushies promoted making all those great big gas drinking behemoths, by their policies, they fought tooth and nail against enforcing higher mileage cars, which would have saved the Auto Makers, but no the mantra of the conservatives was, MORE OIL !! MORE OIL !!! DRILL BABY DRILL, "GOD HAS MADE INFINITE RESOURCES" !!! SO USE THAT GAS !!!! LOL !!!
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    May 13, 2011 11:10 PM GMT
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.


    I guess you are clueless about the recent abundance of new models GM is putting out which are far more popular and better value and in quality to whatever you prefer.

    Just to name a few and refresh your memory;

    Cadillac CTS, CTS-V, Escalade and SRX.
    Chevrolet Volt., Cruze., Camaro., Tahoe and Suburban.
    GMC Yukon/Yukon XL., The Denali family., Acadia and Terrain.
    Buick Enclave., LaCrosse and Regal.

    And none of these or any vehicle manufactured by GM in the past has ever gone crazy and kill their occupants by crashing them against other vehicles or simply going off the roads.

    Reading statements like that make me wonder what kind of patriotic American you really are that you wish for OUR American Auto Industry to fail in favor of those Useless Japanese or South Korean automakers.
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    May 13, 2011 11:14 PM GMT
    mocktwinkie said
    realifedad said You know Riddler your being rediculous with this !! Are you really trying to tell us that had we let the big three fail, which would have been followed by millions more losing their jobs, that we would be better off now ? Ford was the best off of the three but was all for the Government stepping in, because they were convinced that had the other two gone down, they would have followed.

    Losses to the economy would have been much deeper had the Governement not stepped in, so if we do lose some, the way chosen was by far the lesser of the evils.


    Don't be ridiculous. Someone or a corporation would have simply bought GM and it would have had the same name with different ownership and they most likely would have kept the same employees. When a widely known brand name goes out of business it usually just means it's going to transfer ownership.





    Sorry, but what are you basing this on twinkie???

    I mean, it's great to be revisionist, but given that GM ended up terminating both it's "Saturn" brand and it's "Pontiac" brand when those couldn't be sold off, I have my doubts that it was as sure a thing as you seem to think.

    Let's not forget that no one ten years ago would've EVER expected that Nortel would just up and vanish without being bought up. Well, we know what has happened with Nortel: it is being liquidated, and will at the end of this all, cease to exist. Buyers aren't buying the company...they are buying it's technology patents!

    Who's to say that the same thing wouldn't have happened with GM or Chrysler? Or who's to say that you wouldn't have had buyers from China or India buy it at rock bottom prices, simply to move all GM/Chrysler production off shore to India or China, where they could assemble the vehicles and sell established product names to a North American market none the wiser?

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    May 13, 2011 11:16 PM GMT
    ESCESV said
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.


    I guess you are clueless about the recent abundance of new models GM is putting out which are far more popular and better value and in quality to whatever you prefer.

    Just to name a few and refresh your memory;

    Cadillac CTS, CTS-V, Escalade and SRX.
    Chevrolet Volt., Cruze., Camaro., Tahoe and Suburban.
    GMC Yukon/Yukon XL., The Denali family., Acadia and Terrain.
    Buick Enclave., LaCrosse and Regal.

    And none of these or any vehicle manufactured by GM in the past has ever gone crazy and kill their occupants by crashing them against other vehicles or simply going off the roads.

    Reading statements like that make me wonder what kind of patriotic American you really are that you wish for OUR American Auto Industry to fail in favor of those Useless Japanese or South Korean automakers.


    Not American so I don't have any skin in this fight though the Ontario government contributed an absurd amount to try to keep them in the province. Creating value isn't about patriotism or loving your country. The US does plenty of that without government interventions that invariably destroy far more than it creates.
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    May 14, 2011 1:33 AM GMT
    riddler78 said
    ESCESV said
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.


    I guess you are clueless about the recent abundance of new models GM is putting out which are far more popular and better value and in quality to whatever you prefer.

    Just to name a few and refresh your memory;

    Cadillac CTS, CTS-V, Escalade and SRX.
    Chevrolet Volt., Cruze., Camaro., Tahoe and Suburban.
    GMC Yukon/Yukon XL., The Denali family., Acadia and Terrain.
    Buick Enclave., LaCrosse and Regal.

    And none of these or any vehicle manufactured by GM in the past has ever gone crazy and kill their occupants by crashing them against other vehicles or simply going off the roads.

    Reading statements like that make me wonder what kind of patriotic American you really are that you wish for OUR American Auto Industry to fail in favor of those Useless Japanese or South Korean automakers.


    Not American so I don't have any skin in this fight though the Ontario government contributed an absurd amount to try to keep them in the province. Creating value isn't about patriotism or loving your country. The US does plenty of that without government interventions that invariably destroy far more than it creates.


    Yes. That explains why you want our auto industry to fail. But the Canadian government $7 Billion loan is only to help sustain GM Canada. Not the former Corporation. That's equally to just 12.5% The UAW and the U.S. Treasury owns the majority of it and the majority of that money has been recovered by the sales of IPO to the public and early payback from GM.
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    May 14, 2011 5:15 PM GMT
    We didn't subsidize GM....we only subsidized the failed executives and employees who ran GM into the ground. Crony capitalism anybody?

    GM should have been liquidated. Entrepreneurs would have bought the plants and other fixed assets and created some truly competitive world cars. So we seem to favor the truly connected over the truly talented...and we wonder why the US is falling behind.

    GM apologists say they're making better cars than 20 years ago. True, but so is everybody else. GM cars rank lower middle to last place in comparison tests. GM's most recent new car, the Cruze, finished 4th out of 5th in the C&D comparison....behind the Hyundai Elantra, Mazda 3 and Ford Focus...and this test didn't even include the market segment leaders, Honda Civic and Toyota Corolla.

    Buyer demographics show GM buyers are older, less well educated, and lower income when compared to competitors. This is all reflected in their stock price....which has floundered since going public.



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    May 14, 2011 7:30 PM GMT
    riddler78 said
    OneGeezer saidAs right wing as I am, and arguably the most right wing of anyone on RJ by far, I fully supported the effort of the Bush Omama administrations to pull this off and it worked.


    I think it was a bailout of favored institutions and merely forestalled the inevitable. It's unclear whether or not GM can still survive (I suspect it won't),

    You're shittin me, right?

    the banks too big to fail have gotten even bigger after the crisis. The real estate market hasn't been allowed to find the bottom and as a result it's only be slowly drifting downwards and the recovery has taken far longer than anyone would like. With spending being what it is, future options to manage any further crises have been limited.

    Not sure I define the financial crisis in right or left terms, governments tend to want to spend money until they can't. The US is approaching this point.
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    May 14, 2011 7:33 PM GMT
    realifedad said
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.




    No Riddler, Lets go back to the first time Chrysler was kept from failing, look at all the cars sold, profits made and millions of employee hourly pay which kept 100 thousand or so family's going for all those years, The same is happening now with GM and Chrysler, and Ford. they are creating value, and can again lead the world in innovative alternatively powered vehicles.

    You will remember that the Bushies promoted making all those great big gas drinking behemoths, by their policies, they fought tooth and nail against enforcing higher mileage cars, which would have saved the Auto Makers, but no the mantra of the conservatives was, MORE OIL !! MORE OIL !!! DRILL BABY DRILL, "GOD HAS MADE INFINITE RESOURCES" !!! SO USE THAT GAS !!!! LOL !!!


    Isn't obama saying drill baby drill over the last day or so?
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    May 14, 2011 7:35 PM GMT
    ESCESV said
    riddler78 said
    realifedad said LOL !!! You mind explainig your last statemen?


    Companies and industries that fail to create value should be allowed to fail to allow better industries to rise up from their ashes. Sure it causes short term chaos and pain - but it sure beats the alternative - zombies that hurt more viable competitors.


    I guess you are clueless about the recent abundance of new models GM is putting out which are far more popular and better value and in quality to whatever you prefer.

    Just to name a few and refresh your memory;

    Cadillac CTS, CTS-V, Escalade and SRX.
    Chevrolet Volt., Cruze., Camaro., Tahoe and Suburban.
    GMC Yukon/Yukon XL., The Denali family., Acadia and Terrain.
    Buick Enclave., LaCrosse and Regal.

    And none of these or any vehicle manufactured by GM in the past has ever gone crazy and kill their occupants by crashing them against other vehicles or simply going off the roads.

    Reading statements like that make me wonder what kind of patriotic American you really are that you wish for OUR American Auto Industry to fail in favor of those Useless Japanese or South Korean automakers.


    And they sold like what - 25,000+ Cruze's last month and they are still very supply constrained.
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    May 14, 2011 7:44 PM GMT
    White4DarkerFL saidWe didn't subsidize GM....we only subsidized the failed executives and employees who ran GM into the ground. Crony capitalism anybody?

    GM should have been liquidated. Entrepreneurs would have bought the plants and other fixed assets and created some truly competitive world cars. So we seem to favor the truly connected over the truly talented...and we wonder why the US is falling behind.

    GM apologists say they're making better cars than 20 years ago. True, but so is everybody else. GM cars rank lower middle to last place in comparison tests. GM's most recent new car, the Cruze, finished 4th out of 5th in the C&D comparison....behind the Hyundai Elantra, Mazda 3 and Ford Focus...and this test didn't even include the market segment leaders, Honda Civic and Toyota Corolla.

    Too bad they didn't as the Cruze would have been 4th out of 7

    Buyer demographics show GM buyers are older, less well educated, and lower income when compared to competitors. This is all reflected in their stock price....which has floundered since going public.

    Biggest threat to GM is Akerson. The future IMO will be Ford, GM, Hyundai /Kia and VW/Audi. The japs, with the exception of Mazda, have just lost it and this was before the earthquake.