Quote Of The Day: Abandoning The Bailout Edition
The Detroit News reports that top White House economic adviser Austan Goolsby indicated today that the government would be exiting its equity position in GM in the short term. The DetN’s David Shepardson quotes Goolsby as saying
The writing is clearly on the wall that the government is getting out of the GM position. The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we’re trying to get out of that. We’re not trying to be Warren Buffet and figure out what the market is doing
And he’s not kidding: GM’s stock just closed at its lowest level since the IPO, after GM’s Q4 results came in below analyst expectations and the overall market experienced turmoil due to Middle East unrest.
If Treasury pulled the trigger today, the taxpayers would stand to lose some $10b on its bailout of GM. Luckily, Treasury signed a six-month “lock up” agreement for The General’s IPO, so it can’t sell off until at least late May. The bad news: Automotive News [sub] leads its analysis of GM’s Q4 results with the following gloomy ‘graph:
General Motors Co. today posted a fourth-quarter net profit that was its smallest of 2010, exposing profit drags that are likely to linger this year. [emphasis added]
It’s beginning to look like the GM bailout will lose at least few billion. Meanwhile, GM’s market cap is just under the $50b the government put into it. But hey, “negative event on the economy” averted, right?
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John your whole post is doing what you accuse those who were against the bailout of doing. You're engaging in pure speculation, guesses and what ifs. You don't understand one thing or you are conveniently omitting it because it goes against your side. A debtor in possession bankruptcy would have happened anyway with the senior debt holders taking the company and running it. All the supplier and union contracts would have been invalidated and renegotiated but people would still have had jobs and cars would have been made. Now their would have been changes, no UAW contract and assembly line workers making a fair wage instead of what they are making now for example. There would have been economic pain from all this, UAW leeches and retirees but the country would have survived. The major thing that the people who support the bailout wanted, if you could get an honest answer from them, is the continued survival of the UAW so they could keep bleeding the companies dry and contribute to the Democratic Party.
Dear God, GM can't wait to pay undeserved bonuses to all those asshats that drove the company bankrupt. Executive, UAW, et al. Please sell off the entire company, stop giving grants and loans, and let this company die already. BTW, B O Y C O T T U A W P R O D U C T S
"A debtor in possession bankruptcy would have happened anyway with the senior debt holders taking the company and running it. All the supplier and union contracts would have been invalidated and renegotiated but people would still have had jobs and cars would have been made" And that would have been the best thing for GM because it would have forced cutlture change which you will never convince me happened w/bailout.
In the end, if we don't support the bail outs and nationalization, we each have the option NOT to buy GM or Chrysler products, which, in turn will leave a lot more choice for the GM and/or Chrysler fan-club members. In reading this and other boards it has become increasingly clear to me that there is a major shift in the buying habits of Americans today. Toyota is losing sales to...... Hyundai and KIA, for instance. VW is robbing aficionados of all other brands for sale in the US. The people committed to buying GM and/or Chrysler will continue to do so, but I do not believe for one instance that there are enough of them to make both these companies viable and on-going concerns ever again. And isn't that what caused carmageddon in the first place: not enough sales for GM and Chrysler?