By on April 21, 2010

Taxpayers, your partial refund is in. Now quick, make with the pension bailout and EV subsidies. Oh, and be sure to pick up a new Chevy, Cadillac, Buick or GMC as a “thank you” present for this act of patriotic largess.

In a speech at GM’s Fairfax, KS plant [via Automotive News [sub]], Big Ed claimed that:

Our ability to pay back these loans less than a year after emerging from bankruptcy is a sign that our plan for building a new GM is working

And yet The General didn’t wait until its Q1 financials were ready to make the announcement. Having already bragged that Q1 2010 results would represent a “milestone,” wouldn’t it have been better if he could have waved an operating profit or EBITDA concoction, anything other than losses around as proof of his claimed success?

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46 Comments on “Quote Of The Day: Mission Accomplished Edition...”


  • avatar
    jberger

    They didn’t really repay the loan, they just paid off one credit facility with another.

    Jaime Dupree has a nice quick description of what really occured:
    http://wsbradio.com/blogs/jamie_dupree/2010/04/gm-money-game.html

    • 0 avatar
      porschespeed

      Most people won’t let the facts get in the way of a good story.

      So the spin machine will shift into the next gear…

    • 0 avatar
      rocketrodeo

      Actually, they did. Dupree is misrepresenting (or, to be charitable, misunderstanding) the nature of the TARP funds in question. All TARP money is not equal; the equity capital facility cited is NOT another AIFP loan or “credit facility.” It amounts to a debt-for-equity swap, a very traditional Wall Street tool for reducing debt. If the equity capital facility is anything like AIG’s (I haven’t read the GM contract), they may indeed be REQUIRED to do this at the term of the loan if they haven’t paid it through earnings. I don’t know whether the GM equity in question was encumbered at the time the facility was created; since the TARP watchdog is equating it to an escrow account, it’s possible. At any rate, it’s wholly inaccurate to say that GM is merely swapping debt for debt.

      But let’s not let the facts get in the way of a good GM bashing.

    • 0 avatar
      geozinger

      @rocketrodeo: Not that high finance is my ‘thing’, but I find myself learning something new about that world every day it seems. Thanks for the clarification of how this works.

  • avatar
    OldandSlow

    My younger brother has been “kiting” credit cards to stay afloat for a couple of years now.

    It makes you wonder what the end game will be now that Corporate America and our own government are playing the same game.

  • avatar

    It will be very interesting to see how gullible the American public is following this news.

    Whitless has taken a huge gamble here: using bailout money Gov’t Motors still desperately needs, in order to buy some positive press (which our ignorant media has largely fallen for hook, line and sinker) and consumer goodwill to shake the highly damaging stigma of being a company that, in the eyes of many, should have been allowed to die rather than receive taxpayer funds.

    If customers respond, then good on Ed. It wouldn’t be the first time GM has profited from stupidity (hello, Hummer.)

    However, if customers don’t suddenly start blindly purchasing Government Motors vehicles — and I think that’s at least a 50/50 bet — things may get very interesting for Whitless and Co. come November.

    • 0 avatar
      psarhjinian

      It’s not the public, it’s the media.

      Coverage of this outside of the business sections of certain is very thin, and in TV/Radio it’s shamefully shallow: no mention of how they’re not, well, actually paying back anything meaningful.

      Mind you, coverage of just about everything is thin, so this is par for the course.

    • 0 avatar

      The American public follows where the media leads them, simple as that. The media is smart enough to realize this, and the public is ignorant/docile/stupid enough to allow this to happen.

      Like you allude to, the coverage I’ve seen has been positively fawning over GM… with details about the actual circumstances (loans were used to repay loans) buried at the plump base of the inverted pyramid. Hopefully this “news” runs a very short cycle.

    • 0 avatar
      Syke

      So, what’s wrong with positive press? Ford’s getting nothing but positive press anymore (helped along greatly by a nice line of vehicles) and the public perception is that they’re returned to being one of the great lines of cars to consider when buying.

      GM’s turning out the cars (the newer stuff, of course, not the Cobalt and Aveo) but they have yet to get a public perception that they’re turning things around. And the general perception doesn’t have them anywhere near Ford. Which means they lose sales and the failure of GM remains a self-fulfilling prophecy.

      On yeah, I forgot, this is TTAC. The site founded on the “GM must die” editorial. The site where, if GM comes up with any good news at all, it must be disproven as a lie, or at best some real tricky playing of the books. If any other auto company makes the same kind of claims, using the same figures and logic, it gets something of a pass. Because, in this case, we’re talking Government Motors. Which must die.

      By the way, on an individual level, if you’re juggling credit cards, the best thing you can do for your credit rating is pay one of them off, even if it means your just staying legal on the rest. And continue juggling until you can pay a second one off. You’re getting credit for the payoffs.

    • 0 avatar
      psarhjinian

      So, what’s wrong with positive press?

      There’s something wrong when it’s simplified to the point of inaccuracy. The radio spots about this story were “GM is announcing it is paying back it’s loans to the American and Canadian governments”. Full stop, no follow-up analysis.

      Here’s the relevant quote from the article:
      For starters, $6.7 billion doesn’t begin to scratch the surface of what G.M. actually owes us. Over the past 12 months, the Treasury has given it some $52 billion in the form of cash, loans and the purchase of that 60 percent of the company’s post-bankruptcy equity. And that number fails to take into account the two bailouts of G.M.’s former lending arm, GMAC…

      Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy.

      You have to stretch the term “paying back the loan” well past the point of credibility, and yet that’s precisely what much of the print media (and all of radio/TV) is reporting. That’s not positive press, it’s spin (to be nice) or lying (to be accurate).

    • 0 avatar

      Syke: “The site where, if GM comes up with any good news at all, it must be disproven as a lie, or at best some real tricky playing of the books.”

      If only Government Motors didn’t make it so easy to do precisely that.

      GM would have received at least some credit and positive press for making this payment if it had simply said what it was, with no embellishment. But no, instead we get Whitless harumphing that “all government loans have been repaid,” when it’s clear to anyone with even a basic grasp of math (admittedly, we probably lose 60% of the US population there) that is not the case at all.

      If Ford was in this position, and made the same claim, I’d call for their heads as well. But, ah, Ford didn’t… which is why I’m looking at a new Fusion, and not a Malibu.

    • 0 avatar
      Zasdoogy

      @Skye

      Not sure you know what you’re talking about, but Ford isn’t making money in it’s AUTOMOTIVE divisions…

      In 2009, Ford lost $1.4bil in its auto operation. It’s profit for the year is because of the $1.9bil it earned from Ford Credit, plus $2.6bil in special items (you’d have to pull the Form 10-K to find those). Don’t forget, Ford also issued $2.9bil in convertible notes to “strengthen” the balance sheet – thus increasing their debt by $2.9bil for year-end. Those notes will be worthless if Ford goes under (sans any involvement of the creditors to have legal action in bankruptcy to recover their loss from said notes).

      If you read the preliminary announcement prior to their release of Form 10-K, they were bleeding cash, mostly to operations and the UAW retirement fund. If this keeps up, they may be the next in line for a Federal bailout by the end of 2010.

      See press release here: http://media.ford.com/images/10031/4Qfinancial_release09.pdf

  • avatar

    First rule when you find yourself in a hole: stop digging.

    It appears GM forgot to bring their rule book.

  • avatar
    educatordan

    Maybe I should go buy a new GM vehicle and just consider the fat rebate partial payback of my tax money?

  • avatar

    Styx had a song called “Fooling Yourself” from the Grand Illusion album that described this scenario perfectly.

  • avatar

    Same old song and dance. The company’s goal: sta afloat until after the 2010 elections. Then, more begging. Whimper, not a bang.

  • avatar
    SkiD666

    The fact that their cash flow is ‘improved’ enough that they can return excess ‘loan money’ instead of having it sit around and pay interest on it, must mean that their fiscal situation has improved somewhat.

    This is a good sign considering the current state of the US economy. Whether or not GM can turn into a ‘money making machine’ like Toyota has been in the past – remains to be seen.

    • 0 avatar
      BigFire

      Improved enough? They park the loan from pure case into a different escrow account. They haven’t pay back a cent. It’s like me taking out $50K of Bank of America Mastercard loan to pay off my Bank of America Visa card debt. I still owe Bank of America $50K plus the transaction fee.

  • avatar
    Zasdoogy

    Wooh! USD$1Bil less owed back to us Taxpayers!

    Now, what about the other USD$59Bil still outstanding??? Oh wait, nevermind, that was AIG… ^_^

    What about the other USD$51.2Bil bailout money that’s still owed??

    For starters, $6.7 billion doesn’t begin to scratch the surface of what G.M. actually owes us. Over the past 12 months, the Treasury has given it some $52 billion in the form of cash, loans and the purchase of that 60 percent of the company’s post-bankruptcy equity. And that number fails to take into account the two bailouts of G.M.’s former lending arm, GMAC…

    Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy.

    I think GM should give us all free cars, since it’s our tax dollars that are going into making them.

    “Drive a GM for FREE! Bring in your TAX ID # (social security number) AND GET A FREE GOVER-er GENERAL MOTORS vehicle FREE since you’ve ALREADY paid for it!”

    /sarcasm off, back to work…

    • 0 avatar
      The Walking Eye

      If we assume 100 MM taxpayers (and yes, everyone who receives a paycheck from an employer is a taxpayer despite receiving refunds if their deductions take them below poverty level – social security, medicare, etc. are taxes) it only comes to $520 per person, which isn’t quite a whole car free. Now if we go into the future with interest, sure it gets higher but still nowhere near a free car.

      Just food for thought.

    • 0 avatar

      This is how the Gov’t Motors Cash Grab should have been handled.

      Right next to the “Do you wish to contribute $3 towards the Presidential election fund?” question on each 1040 filled out by a US taxpayer, there should have been the question “Do you wish to pay an additional $520 towards rescuing a failed US automaker, regardless of whether or not you plan to ever buy one of its cars?”

      I think that would have been quite the wake-up call as to the public’s desire to resuscitate GM (or Chrysler.) But nah, that would have been far too democratic for our country today.

    • 0 avatar
      Zasdoogy

      @Eye

      Hence the “/sarcasm off…” remark… though, a rebate check from GM for USD$582 would really help me about now… I need a new set of 22″ spinners and that could go along with my SSD check and FA check as well, so I can drive my ’87 Caprice in STYLE…

      /more sarcasm off… and again, back to work…

      ^_^

  • avatar
    bmoredlj

    From GM’s homepage: “We’re proud to announce we’ve repaid our government loan. In full. With interest. Five years ahead of the original schedule.” But only $5.8 billion? Their math is definitely off. They should thank their lucky stars the Treasury isn’t known for breaking thumbs.

  • avatar
    guyincognito

    GM should have taken a $1 loan in addition to all its other loans so it could have paid $2 back and claimed the US Government made 100% profit on a loan to GM.

  • avatar
    mikey

    SYKE ….Right on the money, you nailed it, dude. Look at all the comments,even one from the “death watch” creator.

    I’m betting on 40+ comments, and 36 of them will prove your point.

    • 0 avatar
      wsn

      mikey and SYKE are a league or their own. To them, bail out money = improved cash flow.

      For UAW members, past and present, that seemed true. But the rest of us aren’t that low.

    • 0 avatar
      jkross22

      mikey, Did you read the link in the 2nd comment above where it’s quite clear that GM used borrowed TARP money to pay back borrowed bailout money?

      C’mon man! Someone ceases to be negative when they use facts to back up what their opinion is.

      Do you have some insider knowledge that the whole TARP/bailout payback is not correct?

  • avatar
    bnolt

    Just last week a thief put a gun to may head and asked for $100. Didn’t really have an option. Low and behold, just today a ‘refund’ check landed in my mailbox for $9.95. Memo said “paid in full”. All is forgiven! I’m on my way to the local GM dealer as we speak!

  • avatar
    slumba

    Remember, they screwed over the bondholders, who are supposed to have first crack at all assets if there is a liquidation; that won’t be on any balance sheet.

  • avatar
    donkensler

    And meanwhile, the reason Whitacre was in Fairfax was to announce that they’re tooling up two plants for the Malibu. WTF? Toyota gets by with just Georgetown for the Camry, Honda has just Marysville for the Accord, and Ford uses only Hermosillo for Fusion, Milan, and MKZ. Is GM planning to give the Malibus away to rental companies and other fleets to soak up that much capacity. They’re sure not going to be making much money on these plants.

    • 0 avatar
      The Walking Eye

      Camrys (Camries?) are produced in Lafayette, IN too. They converted at least one of the former Isuzu lines to make XLEs a couple years ago when Toyota bought GM’s share of Fuji Heavy. Don’t know if they have any other plants that do the same. Also, aren’t the newer plants set-up as a one-stop-shop deal (for the major parts) while the old production system has parts made elsewhere and shipped to assembly plants? Am I wrong there?

  • avatar
    thornmark

    Until GM IPOs we will not know an approximation of taxpayer losses. Moreover, those losses do not include the pension time bomb.

    With GM still losing money on top of all those issues why did GM repay TARP? The likely answer is to get out from under TARP restrictions on CEO and executive pay.

    With the Obama administration crowing about the “success” of this bailout, let’s go back to the beginning, to those $45 billion in loans. Had the government not made those loans (now converted to equity), GM would have gone bankrupt just as it did. GM would likely be producing cars just as it is now, taxpayers would not be out $45 billion, and GM would not be Government Motors.

    The bailout was a total and complete failure.
    http://globaleconomicanalysis.blogspot.com/2010/04/gm-repays-government-debt-its-still.html

    An economic failure but a success for gangster government.

    • 0 avatar
      Dr Lemming

      It’s one thing to question the logic of the bailout, but quite another to declare that this is a “gangster government.” That’s one of the more insulting Republican talking points about Obama. Might we stick to cars?

    • 0 avatar
      jkross22

      Dr. Lemming,

      You’re right. Let’s add George Bush’s name to the quote. Feel better? The end result is the same. It’s still gangster government, and it doesn’t matter if there’s a D or an R next to our leader’s names.

      As have oft been said as of recently, the bigger the government, the smaller the citizen.

    • 0 avatar
      porschespeed

      While what W. & O. have done with bailouts is/was reprehensible, there was little choice in the matter. Sadly, we do not have the social safety net in place that would have allowed the government to let most of Wall Street and GM, etc. to simply collapse.

      I’m always bemused that for all the talk of “socialism” that seems to be floating around, none of the accusers seem willing to have their own job lost to capitalism, or are willing to live off the land because they would never accept social safety net services.

  • avatar
    Contrarian

    Just make sure to put “Bush did it” on your resume. It will really open doors for you.

  • avatar
    Odomeater

    TTAC living up to it’s rep! GM bashing nonstop 24/7. LOL!

    • 0 avatar
      Zasdoogy

      @Odo

      How is it that it’s GM bashing? jberger posted as such:

      They didn’t really repay the loan, they just paid off one credit facility with another.

      Jaime Dupree has a nice quick description of what really occured:
      http://wsbradio.com/blogs/jamie_dupree/2010/04/gm-money-game.html

      This went into the details of how TARP money was used to payoff one subsidized loan with another. I don’t see that as GM bashing at all and I’m sure most readers here would agree with that assessment.

      Paying off one loan with another does not equal “paid in full” as far as I’m concerned. That’s like taking one credit card and paying it off with another and then declaring “I’m debt free!” Reality doesn’t work like that, because you STILL have the debt, it’s just not showing up as anything owed yet.

      Hell, if reality were that way, I’d be floating credit for as long as I could and just buy everything on virtual money just like the government does… why the hell not, right? Unfortunately, since I’m not Uncle Sam, I can’t do that…

      Besides, I thought we were Toyota bashing this month? No? …..

    • 0 avatar
      nonce

      This went into the details of how TARP money was used to

      Except it didn’t. It was very very vague.

      I would love to hear that GM is just playing a shell game, but even better would be to hear it from a credible source.

  • avatar
    Mike Kelley

    There’s this about the supposed pay back: http://corner.nationalreview.com/post/?q=YWM4MmQwMDQ2YTU2Y2RiYTQ5ZTFjNzVhMWU5YTI0MTc=

  • avatar
    jmatt

    It doesn’t matter. This shell game won’t save them. People don’t buy GM cars now for the same reasons they haven’t bought them for decades: they suck and the competition is much, much better.

    This “IPO” oughtta be a hoot. Who in their right mind would fork over their cash to a company that screwed its bondholders and shareholders as hard as humanly possible the last time around? Who wants to own a company that is still staffed by the same union employees that destroyed it, the City of Detroit and most of the State of Michigan the first time around?

  • avatar
    DetroitsaRiot

    Whitacre is a flim-flam artist who honed his skills at AT&T. Now hes perpetrated the biggest con of all with the American taxpayers as his victims. A substandard thinker who has taken over a company that perpetuates its existence by selling substandard products to consumers then lieing to customers about problems until their purchase is out of Warranty.


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