Bailout Watch 387: GM's Buffet Banquet

by Edward Niedermeyer

February 14th, 2009 7:33 PM

The more tax money GM asks for the more it seems to need. Starting at home, it had come to the attention of our elected leaders that their $13.4 billion bailout of GM would bump GM’s tax liability by $7-$10 billion dollars. Specifically, the loan terms (new equity structure) would have constituted a “change in ownership,” potentially triggering the massive tax bill under terms set to prevent companies from merging to avoid tax liability. Luckily for GM, the new compromise stimulus bill exempts TARP-receiving firms from these ownership requirements, reports MLive. Good luck digging through the 778-page bill to find the exact wording, though. Meanwhile, we’re still waiting on word from the International Swaps and Derivatives Association as to whether these same equity structure changes and government regulations will trigger GM’s default swaps. And while DC kisses $7-$10 billion in potential GM tax revenue goodbye (which should be reflected in the total bailout cost), GM has already moved on to the next trough.

Automotive News [sub] reports that GM’s South Korean division, GM-Daewoo has requested an unspecified amount of “liquidity” from the Korean government. “Liquidity support in the longer term would help the company’s management, although we do not need that imminently,” says GM-DAT spokesman Hwang Nam-chul. According to AN, local media are reporting that the government had rejected the proposal, saying it did not have a plan to support the country’s No. 3 automaker yet. Did we mention that the Korean automaker Ssangyong recently filed for court receivership? Well, it looks like there’s no special treatment on deck for the General’s Korean unit. “GM must clearly explain plans for GM Daewoo and the unit’s own efforts to deal with the industry downturn in its viability plan due to the U.S. government on Feb. 17, before asking for South Korea’s help,” Yonhap News Agency quoted Korea’s auto sector ministry as saying.

Comments

Join the conversation

2 of 8 comments

JK43123 on Feb 12, 2009
Why doesn’t GM just start going door-to-door. Hell, take the employees from the jobs bank and tell them to start combing the neighborhoods asking for handouts.\ Better yet, stand at off ramps with a sign: WILL SIT IN JOBS BANK FOR FOOD John

Like Reply
Usta Bee on Feb 12, 2009

I was sitting in my basement. I just rolled myself a taste Of something green and gold and glorious To get me through the day. Then my friend yelled through the transom "Grab your coat and get your hat son, There's a nut down on the corner, Givin' dollar bills away" But I laid around a bit Then I had another hit. Then I rolled myself a bomber. Then I thought about my mama. Then I fooled around, played around jacked around a while and then I got stoned and I missed it. I got stoned and I missed it. I got stoned and it rolled right by. I got stoned and I missed it. I got stoned and I missed it. I got stoned... oh me... oh my.

Like Reply

Recent Comments

Kat Laneaux Agree with Michael500, we wasted all that money just to bail out GM and they are developing these cars in China and other countries. What the heck. I understand the cheap labor but that is just another foothold the government has on their citizens and they already treat them like crap. That is pretty disgusting to go forward to put other peoples health and mental stability on a crazy crazed, control freak, leader, who is in bed with Russia. Thought about getting a buick but that just shot that one out of the park. All of this for the greed. They get what they lay in bed with. Disgusting.
Michael500 Good thing Obama used $50 billion of taxpayer money to bail them out and give unions a big stake. GM is headed to BK again with their Hail Mary hope of EVs. Hopefully a Republican in office will let them go BK the next time, and it's coming. The US economy is not related/dependent on GM and their Chinese made Buicks.
MaintenanceCosts "Rural areas hardly noticed COVID at all."I very much doubt that is true in places like the Navajo Nation or the Kenai Peninsula in Alaska, some of which lost 2% or more of their population to COVID.No city had a death rate in the same order of magnitude.Low-density living is a very modern invention. Before cars, people, even in agricultural areas, needed to live densely to survive.
Wjtinfwb Always liked these MN12 cars and the subsequent Lincoln variant. But Ford, apparently strapped for resources or cash, introduced these half-baked. Very sophisticated chassis and styling, let down but antiquated old pushrod engines and cheap interiors. The 4.6L Modular V8 helped a bit, no faster than the 5.0 but extremely smooth and quiet. The interior came next, nicer wrap-around dash, airbags instead of the mouse belts and refined exterior styling. The Supercharged 3.8L V6 was potent, but kind of crude and had an appetite for head gaskets early on. Most were bolted to the AOD automatic, a sturdy but slow shifting gearbox made much better with electronic controls in the later days. Nice cars that in the right color, evoked the 6 series BMW, at least the Thunderbird did. Could have been great cars and maybe should have been a swoopy CLS style sedan. Pretty hard to find a decent one these days.
Inside Looking Out You should care. With GM will die America. All signs are there. How about the Arsenal of Democracy? Toyota?