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General Motors; Barry's New Toy.

Discussion in 'Off Topic Threads' started by JBrooks, Mar 30, 2009.

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  1. JBrooks

    JBrooks TS Member

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    General Motors; Barry

    Here is the real deal on what is about to happen to General Motors. I hope all you taxpayers who voted for Democrats enjoy paying for this little misadventure:

    "Posted by Francis Cianfrocca on Redstate.com

    Monday, March 30th at 6:48AM EDT


    The big headline yesterday was that GM CEO Rick Wagoner is being dismissed in favor of Fritz Henderson. This isn’t remarkable in itself, because no one expected him to last, despite having the oft-expressed (in public, anyway) full confidence of GM’s board .

    Today, the President of the United States is expected to make significant announcements about GM’s warranty policy. No, that’s not a typo, and yes, it’s remarkable. I didn’t say the President of General Motors, I said of the United States.

    Since when does an urban agitator and small-time legislator with a law degree think he can run an enterprise with 100,000 employees, thousands of vendors, millions of customers, and operations in every part of the world? Well, that’s one of those questions you’ll just have to ask the people who voted for him last November. I can shed some light on the rest of this.

    And there’s another really remarkable aspect here, which speaks either to tremendous political skill or luck among the Democrats: they kept the whole thing out of the news for the last three months.

    All signs are now pointing to a significant bankruptcy event at GM, and the departure of Wagoner is the first sign of that. Why? Because for months now, he’s been the one guy saying consistently that GM can not file any kind of a bankruptcy.

    There are two reasons why not. First, the public ones. Wagoner has always insisted that GM’s customers would abandon a bankrupt automaker for fear of not getting their warranties honored.

    How interesting and convenient it is then, that the new CEO of General Motors, a certain Barack Obama acting ex officio, will announce today in public the formation of a government-sponsored entity, independent of GM and non-defeasible in a bankruptcy, to guarantee performance on GM’s warranties! That’s your other sign that a bankruptcy filing is imminent.

    But there is another really important reason why GM has resisted bankruptcy tooth and nail. No one will lend them the money to operate in bankruptcy.

    Last summer, the first warnings on GM were sounding as they started running low on cash. They haven’t turned a profit in several years, and the burn rate as of last summer was about a billion dollars a month. That would have had them out of cash by sometime in late 2009.

    But then, the bottom fell out of the auto market, beginning in October. Since then, every automaker in the world has felt the pinch of sharply-reduced demand for new cars and trucks. In some months, GM’s sales dropped by no less than half. This is the top line, mind you, not the bottom line! It’s quite incredible, and would be an enormous challenge to even a healthy business.

    But GM wasn’t healthy. The out-of-cash event that was originally projected for next fall, instead came at the end of last December. You can go back and read the long series of posts I wrote at RedState for the blow-by-blow.

    If a company can possibly operate in a Chapter 11 bankruptcy, they’ll arrange bank financing and work out their issues under court protection from their creditors. But there are two problems: first, you may have noticed we’re in a credit crunch. You couldn’t get a banker to lend you money even to buy Treasury bonds these days. And second, everyone knows GM can’t survive, and has known that for years, so even under normal credit conditions, no one would lend to GM.

    So a bankruptcy filing would quickly degenerate from Chapter 11 (restructuring) to Chapter 7 (total liquidation, and the immediate loss of hundreds of thousands of jobs, and a cascade of bankruptcies among GM’s dealers and suppliers).

    That might indeed have been the picture last January, had the Treasury not stepped in with a wad of cash from the TARP, which was then supplemented several weeks later.

    We all knew the moment of reckoning would come right about now. It matches the amount of bailout cash that GM has received, at their current burn rate of about $5 billion a month.

    The wonder is that it’s been kept out of the news so effectively. The rolling flaps over the banking crisis and AIG have provided useful cover for the Democrats, as they’ve beavered away at a plan for nationalizing GM.

    But the TARP and all the banking assistance programs (except for AIG) have been about providing support for the capital positions of banks. The public dollars committed in support of those entities have been going onto bank balance sheets. The public has been buying stock in those banks, and you expect to get your money back out when you buy stock.

    But the public money given to GM and Chrysler LLC has simply been poured down a rat hole. These companies are bleeding cash, and in a just world they would have failed months ago. Instead, public money is getting fed into them, just like pint after pint of precious blood dumped into a guy who’s hemorrhaging from a dozen bullet holes.

    That’s the situation that GM’s new CEO, Barack Obama, is going to perpetuate, as I told you many times last December.

    GM are facing bankruptcy because they’re insolvent. They’re built for a high cash-flow world, not a world in which sales contract by anywhere between a third and a half (year-on-year) month after month. GM, like Obama himself, have been pinning their hopes on the kind of economic recovery that will see total annual sales volume in North America shoot back up toward its high-water mark of around 17 million units.

    Reality is a lot closer to 9 or 10 million. That’s enough to sustain the number of world-class automakers we have, but GM simply can’t be one of them with its current capital and cost structure.

    GM needs a total restructuring of its operations. By rights, every stakeholder in the room should take a lot of pain, and then the company should figure out how to move forward in a world in which the competition is a lot hungrier, the markets are a lot smaller, and access to capital is far more constrained. But that’s a great challenge for American business people, who are still by far the best in the world.

    But that’s not going to happen, because some stakeholders are more equal than others.

    The common shareholders of GM are going to get wiped out. That’s good, they should. The bondholders are going to get converted to equity at 30 cents on the dollar. That’s good, they should.

    Many of GM’s dealers will receive lavish buyouts as an inducement to close their doors, for a total cost in the billions of dollars. That’s disgusting, but it’s required both by GM’s contracts with them and by the welter of state laws that protect the dealers. (If you want to know who the political power brokers are in any given city or town, look for the car dealers.)

    This is going to be kept scrupulously out of the news, because car dealers contribute huge sums to every last man and woman in Congress and the Senate. The public was ready to torch the private residences of AIG executives, but they won’t make a peep about paying billions of their own hard-earned dollars to provide a cushy retirement for thousands of already-rich auto dealers.

    And then there’s the UAW. They are in fact the beginning and the end of the government’s interest in General Motors. They will come out of this as the big winners. Never mind that the average automaker earns half again as much in wages and benefits as the average American. UAW boss Ron Gettelfinger, with CEO Obama at his side, will announce “deep, painful concessions” to be suffered by the union membership.

    But don’t believe a word of it. The union will come out of this nearly untouched, with their exorbitant compensation packages basically intact, and minor changes in work and seniority rules. And you the taxpayers will be paying for every penny of this, because they won’t be earning all that pay in the market. GM in bankruptcy will force every one of its stakeholders to take major pain except the UAW membership.

    And their ex officio CEO, Barack Obama, will start forcing them to focus on non-economic electric cars. You see how conveniently that worked out? A more circumspect President would have recognized that it’s not good for government to be in the auto business. We’re going to replay a lot of bad history lessons that other countries learned long ago.

    Oh yes, I almost forgot about Chrysler LLC. I can summarize their situation in two words: shark bait."
     
  2. bigdogtx

    bigdogtx Well-Known Member

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    Just wait for them to ONLY produce "green" cars!!!!!
     
  3. over the hill

    over the hill Active Member

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    JB. Thanks. I always like your commentary. Precise and professional.



    Bigdog. Make that light Green. Dark colors retain to much heat



    Regards....Gerald
     
  4. JBrooks

    JBrooks TS Member

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    So now the Goverment is going to stand behind your GM warranty? LOL.

    Just think, if your car breaks down you can call someone at "Government Motors Warranty Service" that probably got fired for bad customer service from the DMV.
     
  5. Recoil Sissy

    Recoil Sissy Well-Known Member

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    I think federally backed car warranty repairs is great news cause my old toaster shot craps last week. I was going to pitch it in a dumpster but now that Obambi has the feds into car repairs, I'm sure its only a matter of time before appliance service becomes another change I need and can trust.

    I'll just keep that old toaster a while : )

    sissy
     
  6. Pony Keg

    Pony Keg TS Member

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    Like any one didn't see this coming. Here is what I believe they will do. The government will nationalize GM and maybe Chrysler. Then, the president will use taxpayer money to retool the factories to produce green cars, "Cars for the People" or “The Peoples Car”. When the buying public looks at these pieces of crap they will stop purchasing them all together except for the Earth Huggers and the Party faithful. Sales will drop off drastically. Since Congress cannot let this happen. They will pass a law as to what type of vehicle can be sold or purchased.

    Welcome to the USSSA

    Jeff
     
  7. Barry C. Roach

    Barry C. Roach Well-Known Member

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    BO's through. Too bad we have to wait for the next election. I don't think our country has the guts to impeach this sudo black man.
     
  8. shooter99

    shooter99 Well-Known Member

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    Obama Motors------------Trust Me!!!

    I wouldn't buy a car from Barry. I"ll go to Ford they didn't take and money.
     
  9. grunt

    grunt TS Supporters TS Supporters

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    Supreme court has a case to review about obamas citizenship. Hes never shown his birth certificate yet.
     
  10. shooter99

    shooter99 Well-Known Member

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    grunt, I hope they hear this one. The others they refused.
     
  11. crusha

    crusha TS Member

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    I'd respect GM's choice right now if they would file bankruptcy in a "normal" court filing. But they can't.

    As the post points out, there is no private financing available for such a proceeding.

    So it's the Gubmint who will underwrite it. GM has thrown Wagoner under the bus, at the behest of its new bankruptcy-financier: Uncle Sam.

    Obama is shrewdly protecting his political legacy on this one. His team has given him their advice...and he realizes, this ship is going down regardless. So - he can either sit there like a dumbass, watching the GM ship go down on his watch while appearing to do nothing except play his golden fiddle...or he can step in, and "guarantee" worker pensions as part of the deal, "salvaging something for the little guy" out of this mess.

    It's just his way of extracting a little bit of political benefit out of a bad situation. "Hey, Mr. and Mrs. America, I can't prevent this from happening - but I can promise you, I'll make sure the 'little guy' at least gets something out of it. We'll train them to do 'green jobs'...we'll take what's left of their ruined past, and help them create a future out of it."
     
  12. Brian in Oregon

    Brian in Oregon Well-Known Member

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    Wonderful. The only thing less reliable than a General Mediocre's warranty is a government promise.
     
  13. gramulin

    gramulin TS Member

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    Let me get this straight. Wel-fare check's to fix my car !! I want to grow up and be a GM dealer. You thought 400.00 dollar hammer's where expensive for the military. Wait till you see the bogus warranty claims that no one can possibly watch. Gee I wonder how GM was going to get back in front of Toyota. Is Chrysler a German company or American??? I do know they tripled their parts prices 300% 2 week's ago and they do not survey their customers for CSI anymore . Gee I wonder why.. It must be the goverment cheese..
     
  14. JBrooks

    JBrooks TS Member

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    General Motor is dead as a car company. It will just be a black hole for Obama to funnel your tax dollars to his supporters.

    BTW, where are his supporters on this site? Why didn't you listen when you were told you were voting for a communist?
     
  15. BT-100dc

    BT-100dc Active Member

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    Now this guy has only run a campaign. Imagine putting that on your resume and applying to run any company, yet alone General Motors. That's a joke on America and certainly a receipe for failure of General Motors. The government can only run something down. We're screwed because he wants to run (or is it ruin) America. I believe the people who voted for him deserves what they get; however, it's a shame we're all affected. BT-100dc
     
  16. shooter99

    shooter99 Well-Known Member

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    He wasn't smart enough to run his own campaign. David Plouffe ran his campaign.
     
  17. JBrooks

    JBrooks TS Member

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    DETROIT, April 1 (Reuters) - U.S. auto sales fell 37 percent in March, a smaller-than-expected drop that encouraged hope the world's largest car market is nearing a bottom after a freefall that has pulled the industry into a deepening crisis.

    General Motors Corp (GM.N), which has until June to complete a new restructuring under federal oversight that could push it into bankruptcy, said its sales fell 45 percent, the largest decline of any of the major automakers.

    Industry-wide sales dropped for the 17th consecutive month but were up from February with the help of record discounts and higher sales to fleet operators such as government agencies.

    Auto sales typically account for as much as a fifth of overall U.S. retail sales and industry executives held out hope that the market would hit bottom over the next quarter or so.
     
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