Apparently both Barack Obama and Rahm Emmanuel subscribe to the same “Curly Howard Business Model” – “If at first ya don’t succeed, just keep on sucking til ya do succeed!”
General Motors recently announced that it lost $4.3 billion in the last half of 2009 as it struggled to emerge from bankruptcy protection, repay government loans and cope with a severe downturn in the overall U.S.
The bailed out Auto maker still does according to the AP, “see a chance of being profitable in 2010.”
So there’s a CHANCE!?
Wow! That’s comforting news.
The U.S. U.S.
GM’s problems are much deeper than Ford’s, which is reflected in their respective stock prices – Ford’s trading at $12.58/share to GM’s 75 CENTS, that’s right, SEVENTY-FICE CENTS per share!
Of course, Ford took NONE of the government bailout money that5 Chrysler and GM did.
The Coming Pension Tsunami?
According to a report by the Government Accountability Office (GAO), GM will need to add $12.3 billion into its pension fund by 2014. If GM and Chrysler (which is in the hole $2.6 billion) terminate their pensions, the taxpayer funded Pension Benefit Guaranty Corporation would then be on the hook for as much as $14.5 billion in unfunded liabilities (a/k/a those aforementioned pension funds). The GAO is quick to point out, “However, if GM starts making money the company will be able to pay into the pension fund,” the GAO reports.
If NOT, then it’s more than likely that GM and Chrysler will join a huge number of similarly positioned private and public sector entities that will be abandoning their “unfunded liabilities” onto the Pension Benefit Guaranty Corporation, which could trigger a massive federal default, which could potentially trigger that “Greek-lke” implosion that many economists are currently warning about.
12 comments:
A co-worker of mine recently bought a new Chevy hybrid pickup. I asked him which part of the truck was mine. I reminded him that my tax dollars went to bail out GM, therefore my portion should be worth at least a couple of lugnuts, or a cup holder.
He wasn't amused.
GM (and us taxpayers) are paying for that bailout BIG TIME!
When GM, the former world titan of Car Makers is now valued at a whopping 75 CENTS/share compared to Ford's $12.58/share....well, THAT pretty much says it all about the failed Corporatist (government/business partnership) we've had in this country for nearly a century!
In truth, neither of us really owns a piece of your bud's car, but we DO own a piece of GM.....worthless as that is, at this time.
I've been a Saturn owner since 2000; yup, the same line that OM cashiered and drove off the mountain in '09, just like their whole company.
I will never purchase another product from this company while the foul stench of Barry is upon it, and it owes ME -- a taxpayer -- for billions it's pissing away.
Maybe my next car will be a Toyota with a sticky throttle ;)
I know what you mean SF. I've bought three Saturns in a row going back to 1993.
But it's GM that ruined that experiment by re-merging that independent brand with its UAW-led generic "GM" brands.....in recent years, Saturn's become "just another GMC vehicle."
It IS very telling (in their respective stock prices) how that "bailout" has helped GM & Chrysler. They've made "a pact with the devil," selling out their investors, by putting both government ownership and the UAW ahead of investors in priority should they still go belly-up.
That almost assures the need for more bailouts down the road, as investors will be VERY skittish about investing in a company in which government already forced them to the back of the bus, so to speak.
These bailouts were a VERY bad deal, in effect, making Chrysler and GM permanent wards of the state. Even if/when they pay back the government, they'll still be beholden to the UAW and won't be able to make any purely "business decisions," going forward.
As for Toyota's troubles, it now seems that ALL car-makers have had some "unexpected acceleration" issues and that most of those are clustered around specific parts of our national electric grid.
Some cynics believe that the government was more than happy to bash Toyota, as it now, for better or worse, sees Toyota, Ford, Nissan, BMW, etc. as "competitors."
That's not all that far fetched...in that I wouldn't put much past this Kleptocracy now-a-days.
Yet another reason why government shouldn't be in the car business...or ANY business!
Hey JMK! Thanks for the birthday shout out. And your brother has the same birthday as me? So, you have two March babies in your life, then. Lucky you! :)
That is a GREAT BirthDAY - 3/31 is on the cusp of Spring....mine's in February.
One week to the day after your birthday we had record setting temps in NYC! It hit 92 in Central Park, this past Wednesday!
My hope ios that you get the BEST birthday present this coming November - Conservative victory!
So...what is the administration's take on GM's $0.75/share stock?
I did the same thing to a friend of mine that Roadhouse did to his co worker. And my friend was NOT amused either. Instead he wanted to know if I had to get a new car what kind would I get. I told him I got a Ford Focus.....and it is all mine....not the governments' or my friends. He was equally not amused.
Yet another reason why government shouldn't be in the car business...or ANY business!..exactly but Hussein will continue to be the tyrant he is until this nightmarish term is over my friend!
"So...what is the administration's take on GM's $0.75/share stock?" (Joe)
I haven't seen one Joe.
Although, I'm always amused at the propensity for politicians to ignore and even encourage economic fallacies when they benefit them, while quickly correcting them when they don't.
That's why I wouldn't be surprised to see someone there say, "A company's stock price is based on a wide array of variables and is not always indicative of its overall health."
While that's true, the demand for Ford stock, for instance, relative to GM stock says a LOT about how investors feel about both companies.
Of course, Apple's $240/share price says a lot more about where the demand and confidence level of the American investor is relative to the various American business sectors.
Personally (and I may be wrong) I think the investor confidence in Ford (which took no government bailout funds) relative to Chrysler and GM (which both did) is warranted and based on the correct presumption that there seems to be far more up-potential for Ford, going forward, then for either of the other two.
I think that's a very sound presumption, but that is conjecture on my part.
"I did the same thing to a friend of mine that Roadhouse did to his co worker. And my friend was NOT amused either. Instead he wanted to know if I had to get a new car what kind would I get. I told him I got a Ford Focus.....and it is all mine....not the governments' or my friends. He was equally not amused." (Bob)
I am amused, but then again, it's a lot easier being amused when not directly involved.
I think both friends were buying based on value ("bang for the book") AND possibly out of wanting to see a troubled American company come out of this.
I too would be more inclined to buy a Ford OR more importantly invest in Ford going forward and I'm a long-time Saturn owner - I've owned nothing else over nearly two decades.
The re-merging and ultimate jettisoning of Saturn has turned me off GM for good.
ONLY in America (so it seems) can an experiment like Saturn (divesting production from the Union's control) succeed in the market and still fail in the boardroom.
There's a corollary there with what's been happening to America over the past Century.
We were founded upon documents and ideals that were at least a "5,000 year leap" in human advancement and over the last Century we've regressed back to the tar pit that is the centralized state.
I'd short GM and Chrysler right now, just as I would short "Keynesian America," as well.
America won't be set back on the right path until economic Liberty is fully restored.
"...Hussein will continue to be the tyrant he is until this nightmarish term is over my friend!." (Angel)
Well, this November COULD bring all that to a screeching halt....at least if the GOP can keep Mike Steele from splurging on strip clubs and the like.
There are a LOT of indicators that "politics rules BOTH sides today." Sarah Palin campaigning for McLame after the (hopefully) soon to be ex-Senator from Arizona stands for EVERYTHING she claims to oppose.
How Palin could support a guy whose team savaged her and threw her under the bus to deflect blame for the 2008 debacle from themselves is appalling.
I hope this shows Conservatives that even politicians they like are still all too often POLITICIANS.
At any rate, I'm still hoping for a huge Conservative tide this November.
That would severely crimp the Obama administration's plans.
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