I just heard on CNN that you hit the nail on the head. This is exactly where all the laid off UAW workers are going to go. ACORN and the DNC are going to use them to help recruit new voters...... in Orange County and San Diego County. They'll have a lot of work to do there so it's a long term job.
They're going to live in tents supplied by the state of CA on the beaches and bluffs overlooking the Pacific during the 5 days that they're off each week. Jobs Bank and all that ya know. Isn't this a great country?
They'll think that they died and went to heaven after being relocated out of Michigan.
You are a funny guy. I was thinking of sending you a couple million illegals to mow your lawn also. All they want is $100 per day cash and a hot meal for lunch.
The NYT and others are reporting that the BK judge in NYC dismissed the objections of a large number ( with a small holding ) of debtholders that wanted Chrysler to go into liquidation. The auction of Chrysler's assets can proceed by the end of the month.
When the market recovers and both GM and Chrysler are printing money since they've freed themselves from their huge debt burdens and their huge legacy costs there's no reason why they can't make money. If that's the case, and I stress IF, then some sharpies such as the current bondholders that are screaming so loudly may gather several billions together and buy out the US Treasury's share and a good part of the UAW VEBA's share.
Well, don't expect any taxpayer loan funds to be repaid. The high cost of supporting C and GM is only warming up. This is why I argued that NO BAILOUT from the beginning.
The U.S. and Canadian governments have combined to loan Chrysler $4.5 billion in debtor-in-possession financing during its bankruptcy, but neither country will likely be repaid for the loans. Additionally, Chrysler will be off the hook for the $4 billion it received from the U.S. government in January.
Ron Manzo, one of Chrysler’s senior financial advisors, revealed to The Detroit News that it is “highly likely” neither government will receive repayment from Chrysler on the loans. Moreover, Chrysler is not required to pay any interest on the $4.5 billion loan. About $3.34 billion of that loan belongs to the U.S. Treasury Department and ultimately U.S. taxpayers.
A source familiar with the situation also revealed to The Detroit News that Chrysler likely won’t repay a $4 billion loan issued by the Treasure back in January.
Despite having $8.5 billion in limbo, the United States and Canada plans to loan Chrysler another $6 billion when it exits bankruptcy. However, both governments will prohibit Fiat from taking a majority stake in Chrysler until all loans are repaid.
I guess the 800 pound Gorilla in the room with mud on it's face looks a lot like Janet Pelosi or Barney Frank. :mad:
>they've freed themselves from their huge debt burdens and their huge legacy costs
But all those pols have kept the UAW alive and active. GM will not be free of the problem. C is not free of the problem. The UAW has been set up to help buy more votes for 2012 (and 2010), The UAW spent 1 Billion in the last election campaigning. Think they'll be spending to elect a balanced congress?
All the people hoping revenge on GM or C for some long ago car they didn't like are going to get what they deserve: long term healthcare for two car companies because they were not able to shake the UAW loose. Alinsky and Ayers will be proud.
Yep, the big four is alive and well UAW/ Ford/GM/Chryler or FIAT (fix or fund it again tony). They just jumped hosts.
Again the questions remain...., but here is one: what will make more democrats buy 4-7 M more American cars than what they have in 2009 MY (ala the Wash DC article) ?
Interesting point that the people wanting to save the Big2 for the UAW's power and politics by major percentages will continue buying their foreign brand cars.
54 or so years (that I have been "interested" in cars) of history have already answered the questions. Continue to vote "democratic" aka, buy Mazda's?
The truth (which is being ignored) is the "American" cars are better made than they EVER have been!! :shades: So "coincidently" it is aligned with the WORST problems the BIG 4 have EVER HAD. :surprise: :surprise:
Buick for example has been bullet proof for literally DECADES, the examples go on and on.
Yes, even the so called "deny 'ers". Combined with the almost TOTAL lack of acknowledgment of what will be the new profit "mule" team (other than PU's/SUV's) make the BIG 4 deals DOA actually, DEAD before starting.
long term healthcare for two car companies because they were not able to shake the UAW loose.
UAW is like a pit bull who grabbed onto your leg while you were walking and as you keep walking you drag it along. It doesn't EVER release its hold. You'll have to kill it because it will never let go on it's own.
Sounds more like the Feds are converting their loans into an equity stake.
Yes this is a much more balanced pov than the hyperbole and gas from certain anti-everythings. The Feds ( us ) will have shares in the new entity that can be sold to new owners at some time down the road when the market picks up and after Chrysler ( and soon GM ) prove that they can survive and make money. The sale of these shares will recoup the loans given and forgiven.
that can be sold to new owners at some time down the road when the market picks up and after Chrysler ( and soon GM ) prove that they can survive and make money.
GM has not made a decent profit in 20 Years. In all likelihood we will never get back to the vehicle sales levels spawned during the Dot.com and housing bubbles. If GM did not make a decent profit when some of the other auto makers made record profits. What makes you think they will anytime in the future? Or is it just your salesman's optimistic outlook? This is not 1980, and it is not Chrysler led by Lee Iococca. It is C & GM led by a guy that thinks Cinco de Quatro is a clever statement.
According to several sources the rights of the bondholders are being violated by the President and staff. They are trying to use the media to brow beat them into taking less than they are entitled to under the 5th Amendment.
If the Obama administration expected the senior creditors of Chrysler to fold their tents under political pressure, they may have gotten a rude shock today. Thomas Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy. Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.
The Treasury Department relies on TARP as the purported authority to justify the disparate treatment under the 363 Sale, even though TARP was enacted after the Senior Lenders’ liens on the Debtors’ property were already in place. The Supreme Court long ago recognized, however, that a secured creditor’s interest in specific property is protected in bankruptcy under the Fifth Amendment. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594 (1935)
GM currently is servicing $27 Billion in long term debt. Only about $9 Billion is 'attached' to current production facilities. It has factories and facilities today that can make 5 million vehicle annually. In addition to the debt on the plants to build these 5 MM units it has to cover the cost of maintaining these facilities. However the current annual sales is only about 2 million units. Finally GM incurs $2000 to $4000 on each vehicle as legacy costs. This would normally be the profit for say Toyota or Honda. Soon these legacy cost will be gone.
I don't think the legacy is gone from the tax payers standpoint. And will the VEBA bunch accept worthless GM stock when they look closely. I have no idea what GM is doing. I wonder if anyone in their management team knows.
DETROIT (AP) -- General Motors Corp. notified shareholders Tuesday it is planning a reverse stock split that would give them one share of new stock for every 100 shares they currently own.
The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares. GM will send the information to shareholders currently holding a total of 610.5 million outstanding shares.
GM spokeswoman Julie Gibson said the company is merely notifying shareholders of what it may do if it reaches deals to swap debt for stock with the Treasury Department and bondholders. The company, she said, is not making an offer to shareholders.
GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection. Under GM's plan, the U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
For the deal to work, GM has to reach agreement with the United Auto Workers to swap stock for about $10 billion of the $20 billion in payments GM must make into a trust fund that will take over retiree health care expenses starting next year. The UAW's stake would total about 39 percent. Bondholders would get 10 percent and current stockholders would get 1 percent.
It sounds to me like the stockholders could force GM into liquidation if enough of them can control the board.
The truth (which is being ignored) is the "American" cars are better made than they EVER have been!!
Yeah, but are they better than the competition? Only in some cases...trucks...Fusion blows them away, Malibu is competitive, but the domestics have been inconsistent at best, and really bad at worst. Even Buick has been out-couched by Toyota. Even Ford, the best of the three, still has some ways to go to be consistently competitive.
You want people to buy your product? Build the best product. All there is to it. Party doesn't even enter into it you know. I bet you can even find some UAW guys driving imports.
First, the few holdouts in the Chrysler case only hold about $200 million out of $6.9 Billion in debt. The largest portion of the debt is held by the TARP banks and they have accepted ( reluctantly ) the 29c offer. The other tiny investors want more. they want Chrysler liquidated so that they can recover 50c or 60c on the dollar.
Second, This is all normal business negotiations that Chrysler can't do on its own because its parent orphaned it last year.
Third, the judge will rule on the issue. It's in his hands now.
According to several sources the rights of the bondholders are being violated by the President and staff.
Not at all. As you may or may not recall, part of the whole bailout deal was that the company's debt to the government would be highest in terms of seniority. As in the taxpayer gets paid back before even the bondholders. We already know the sole stockholder, Cerberus, already got wiped out. You hear them complaining?
This is just the bondholders squealing because their (risky) investment choices went sour. Again. You see, that "All investments involve risk" fine print isn't supposed to apply to multi-million dollar investment houses that own their own herd of lobbyists.
The stockholders have no rights whatsoever. They are last in line for everything. Besides they wouldn't put themselves into BK. That never happens. It's the debtholders that put a company into BK.
I don't think the legacy is gone from the tax payers standpoint. And will the VEBA bunch accept worthless GM stock when they look closely. I have no idea what GM is doing. I wonder if anyone in their management team knows.
Huh?? There is nothing in the legacy costs that involve the taxpayers unless GM or Chrysler are forced into liquidation and the retirees are thrown on the PBGC. Then we step in to keep them afloat.
The legacy costs of the D3 will disappear forever when the VEBA goes into effect. The union reluctantly agreed to accept shares of the new Fiat/Chrysler in lieu of cash to fund the VEBA and it also agreed to accept less than what was negotiated 2 yrs ago. But what is certain is that the vehicle maker is free of this burden.
Presumably this is the trial balloon for the GM BK.
.."You want people to buy your product? Build the best product."...
No. I don't. It is more than apparent they don't/can't/want to build the best products- all there is to it. They haven't for a good 4 decades. All there is to it is to let them go Chap 11. Yet, the Democrats want to preserve the ability to make lousy cars (on my dime, yours also), which they don't/won't buy. I vote they do it on folks' who wants it dime, not those that can see reality and DON'T want it!
Democrats do not buy them in any numbers to make the big 4 profitable. The majority buy "import cars" NON GM/FORD/Chrysler. You are completely ignoring the implications and the utter disingenousness of it all. Even you agree that 2/3rds or 67% of the big three make lousy cars. My take is all three do, so we are not far apart.
As you point out even their OWN workers drive imports. (like you think they are stupid)
>what is certain is that the vehicle maker is free of this burden.
But the ongoing burden of the production costs of UAW workers who are still there and receiving reduced but still high salaries and benefits. How will those labor production costs and benefits be compared with Honda Marysville or Toyota Georgetown?
I would like to see the UAW costs gone which could have happened with a full bankruptcy.
You are right about the stockholders being last. So why would the UAW accept worthless stock for a deal they made with GM to put money into VEBA? Unless the Government guaranteed the stock to be good. In which case it would be good for all stockholders.
PBGC only guarantees a portion of the pension for the retirees. Not the health care that is to be covered by VEBA. Again we are not playing by any legal precedence. This administration is shooting from the hip. Damn the constitution.
How Big Banks Want to Game the Mortgage Mess - ERIC BRENNER and HAMISH HUME - But in the rush to do something, Congress is showing a regrettable willingness to adopt constitutionally suspect legislation that runs roughshod over the Fifth Amendment of the Constitution, which prohibits the taking of private property without just compensation. The problem is that servicers also get a free pass to game the system. The only thing protecting against this blatant conflict of interest is the contractual right of investors in first mortgages to sue servicers. - Wall Street Journal
Just because the big bond holders are already sucking on the TARP teat does not mean the little guys have to follow suit. If your 401K was part of the $200,000,000 being randomly discounted to satisfy the UAW, I am sure you would be screaming as loud as these bondholders and rightly so. I just do not understand this air of complacency to throw our rights under the Obama bus. Today the Chrysler bondholders tomorrow your car agency or my pension plan. Nothing is sacred in this administration.
No. It is more than apparent they don't/can't/want to. They haven't for a good 4 decades. Yet the demos want to preserve the ability to make lousy cars, which they don't won't buy. Democrats do not buy them in any numbers to make the big 4 profitable. You are completely ignoring the implications and the utter disingenousness of it all. Even you agree that 2/3rds of the big three make lousy cars.
It's Big3...though now it's Big2, since one of them is in Bankruptcy right now. Who sent them there? :shades: When it comes out it looks like it's going to be an Italian car company, which will be very interesting from several angles. One, we don't get enough Italian cars here. Two, can you imagine the UAW messing with Italians? They'll get an offer they can't refuse. :shades: Three, if you call Italian cars lousy, you might end up with an offer you can't refuse. :P
GM actually was showing glimmers of starting to figure out how to make cars. Have to see what happens when (notice I don't say "if") they end up in Ch11
For some reason the Government has decided the benchmark for wages should be the UAW. Yet only a handful of unskilled workers enjoy that high of a wage, while most unskilled labor in this country work for less than half of that. Now IF the UAW as they claim had brought the unskilled workforce in this country up to their level. I would say they have a legitimate right. That is not the case. They have only made it more difficult for business to survive in the Midwest and any place they have their tentacles.
You are right about the stockholders being last. So why would the UAW accept worthless stock for a deal they made with GM to put money into VEBA? Unless the Government guaranteed the stock to be good. In which case it would be good for all stockholders.
They're not taking stock in (in this case) Chrysler. They're not stupid, come on. :shades: VEBA would be getting stock in the new Fiatsler or whatever they'll be calling it.
"Fifth Amendment of the Constitution, which prohibits the taking of private property without just compensation"
The bondholders are being offered a lot more than their bonds are realistically worth...which is zero.
f your 401K was part of the $200,000,000 being randomly discounted to satisfy the UAW, I am sure you would be screaming as loud as these bondholders and rightly so.
It was (just found out recently, one of my bond funds, ouch) and I'm not screaming. It's an investment decision, and all investments involve some sort of risk of losing the principal. You want no risk, stick your money in an FDIC-insured savings account. Otherwise, you have to be willing to accept the chance that the value of your investment will go down. Maybe even down to zero.
The whole idea is so that taxpayer bailout funds don't go to cover losses in bond investments. That's why the stipulation regarding debt seniority. The whole point of the bailout funds is to rescue the company, not rescue bondholders from bad investment choices.
Well I did vote for those that want to pay for it pay for it!! :shades: :shades: And those that don't want to pay for it...fah get ta bout it !!! :shades:
So is that really FIAT's plan? Take over a failing oem and then.... get more bail out money when the absolutely obvious happens down the road?
That's why the stipulation regarding debt seniority. The whole point of the bailout funds is to rescue the company, not rescue bondholders from bad investment choices.
It is the fiduciary responsibility of the lender to do all in his power to protect the investment of those that put money in his care. If it means suing to protect those rights. That is what court is for. The bondholders have first rights by law. Just because the big banks got a huge chunk of cash they are less likely to worry about your bond fund in a portfolio. This is just more of the same old Wall Street corruption with the administration pulling the strings. I understand risk. We should still play by the laws of the land. Not some conjured up scheme to protect a few UAW voters. GM and Chrysler going away may be the best thing to happen in this country. It would prove no company or person is too big to fail.
You are right about the stockholders being last. So why would the UAW accept worthless stock for a deal they made with GM to put money into VEBA? Unless the Government guaranteed the stock to be good. In which case it would be good for all stockholders.
You're mixing up two different situations. The shareholders of the current GM and Chrysler are last in line they get nothing. The shareholders of the new GM or Chrysler will have ownership of a much more vibrant, leaner and presumably agressive and profitable company. At some time in the future when this is proven and the markets restabilize somebody is going to want to buy these money machines. Then the UAW VEBA and the Feds sell off their ownership stakes and exit with cash in hand.
When they talk about everybody taking a haircut this is one of the cuts that the UAW has to take. It has to take some risk in making the new entities strong, vibrant and profitable.
PBGC only guarantees a portion of the pension for the retirees. Not the health care that is to be covered by VEBA. Again we are not playing by any legal precedence. This administration is shooting from the hip. Damn the constitution.
This paragraph makes no sense whatsoever. It's childishness. You have 4 sentences that say nothing and the last the dumbest. What the hell are you talking about?
What I wrote in relation to the PBGC is that one of the major benefits of saving GM and Chrysler is that the retirees are not dumped on the PBGC. That's it. What has that got to do with healthcare, legality and of all thing constitutionality. Logic please not emotionalism.
You've must have Faux News, Rush and Savage mainlined into your arm everyday. Please don't tell me you get any of your views from any of those sources. They're all clowns and entertainers.
Just because the big bond holders are already sucking on the TARP teat does not mean the little guys have to follow suit. If your 401K was part of the $200,000,000 being randomly discounted to satisfy the UAW, I am sure you would be screaming as loud as these bondholders and rightly so. I just do not understand this air of complacency to throw our rights under the Obama bus. Today the Chrysler bondholders tomorrow your car agency or my pension plan. Nothing is sacred in this administration.
Here's another false idea held by those not doing any research. The small group of hedgefunds are NOT investors that pensions are allowed to invest 401k or pensions in. In fact GM and Chrysler bonds being rated 'junk' are prohibitted from being part of any pension portfolio.
What these hedgefunds do is invest small amounts of money for the uber-wealthy that want to gamble and don't have the time to go to Las Vegas. They take positions with a small part of the clients' portfolios in certain ultra-risky situations in order to hope to gain a shortterm windfall....then they get out. Just like playing craps.
THIS is the group you feel sorry for? Get real. Research....
God Almighty.... those aren't sources. They opinions like yours and mine. They mean nothing. You know what they say about opinions....they're like ********, everybody has one.
When the judge WSJ article rules then we'll have a valid legal opinion that carries some weight.
Until then you, me and all the rest of your sources are only exercising our right of free speech and filling the air with gas.
Bankers and investors cause 5 million Americans to lose jobs buying and selling derivatives. Now there is a plan to save some of the D3 jobs that are still left and they don't want to play.
The UAW has always thought they owned and controlled GM. Now they will have 39% of it. They finally will be getting pay tied to performance. That surely makes them angry.
America is the land of safety nets.
Now bondholders have to be named who didn't agree to deal. Wonder if they were The Foreign owned banks that sucked up $35 Billion in TARP money?
I try not to. It is difficult when debating with people that think they no it all. And try to put you down or into a category with right wing talk show hosts. If you have fiscal conservative ideas in this day of Socialistic ideals you are automatically made out to be a demagogue.
I did not agree with the bank bailouts. I don't agree with the auto bailouts. I think our last President, and current President are over stepping their bounds. And to discount a bond holder as some kind of lower class citizen is scary. If not for people with money taking chances on companies in this country we would be in deep trouble. So I believe in the protection of everyone's rights under OUR Constitution. Something our current administration has targeted to change.
I did not agree with the bank bailouts. I don't agree with the auto bailouts.
I agree with that.
And to discount a bond holder as some kind of lower class citizen is scary.
Well, sorry. If we blame Wagoner and his cronies for being idiots for steering sinking ships that were taking on water for >20 years, then anybody who invested in the debt of these companies could have seen the iceberg. All you had to do is look at the balance sheet of GM to see the disaster looming. If the government had not stepped in the bondholders would have had $Billions less to split up. All that high interest-paying debt is that way for a reason.
What I wonder about is why the ratings agencies (Moody's, etc.) didn't downgrade the credit sooner. Why didn't the ridiculously expensive Sarbanes-Oxley controls warn us that the D3 and especially the banks were all just houses of cards? That's where we should throw our ire. The bondholders of GM and C debt were idiots. They took their chances and lost.
It is the fiduciary responsibility of the lender to do all in his power to protect the investment of those that put money in his care. If it means suing to protect those rights. That is what court is for. The bondholders have first rights by law.
No, they don't...TARP is also law. When bondholders saw them getting TARP money, they had every right to attempt to sell their holdings, knowing that they no longer had ultimate seniority. They knowing chose to take the risk.
You're right about the responsibility of the lender...but in this case the federal government, acting on behalf of the taxpayer, is also a lender. Therefore they have that same responsibility to protect the investment of the taxpayers, don't they? Only in this case, it involves protecting every taxpayer, not just a select few hedge funds.
Let me put it this way....if the bondholders get their way, and Chrysler liquidates in order to pay off their bonds with bailout money, what we have is redistribution of wealth from the ordinary taxpayer to hedge funds acting largely on the behalf of the wealthy. And frankly, I'm tired of covering investment losses for gamblers who decided afterward that they couldn't handle the risk.
And to discount a bond holder as some kind of lower class citizen is scary. If not for people with money taking chances on companies in this country we would be in deep trouble.
That's the key phrase there...."taking chances." Taking chances and investing means running the risk of loss. There was always a possibility that Chrysler would default on the bonds...heck if it wasn't for bailout money, they would have long ago, and the bonds would be toilet paper.
When the government (like it or not) enacted TARP legislation, it became law that those bailouts would be senior debt. This was written in specifically to prevent "wealth redistribution," the conservative buzz-word, only up instead of down. I think that's fair, since there shouldn't be any wealth redistribution, period.
That is the debate. Can the government pass a law that circumvents the Constitution, which gives rights to the lenders. The Supreme Court has upheld those 5th Amendment rights that the TARP law would like to take away.
Only in this case, it involves protecting every taxpayer, not just a select few hedge funds.
I have NO love for hedge fund operators. I believe they are a big part of our financial problems. However the tax payers money should not be spent in the way it is being used. That I blame on the Treasury and Congress. I think we are totally out of control with no one at the helm.
Let me put it this way....if the bondholders get their way, and Chrysler liquidates in order to pay off their bonds with bailout money, what we have is redistribution of wealth from the ordinary taxpayer to hedge funds acting largely on the behalf of the wealthy. And frankly, I'm tired of covering investment losses for gamblers who decided afterward that they couldn't handle the risk.
I agree and that was my gripe with the bailouts. Our bailout history is a mixed bag. We the tax payers are out way more than we have gotten back. That in spite of those that believe these loans/gifts will ever be repaid. Here are the bailout losses up to 2001. Figures in 2008 dollars 1970 Penn Central RR loss ($16.02B) 1971 Lockheed loan fees paid $122,220,000 1974 Franklin National bank still owes $185,300,000 1975 NYC All loans and fees paid 1980 Chrysler bought back 14.4 million shares of stock netting the US $660,000,000 1984 Continental Illinois Bank FDIC suffered $1.8 Billion loss 1989 Savings and Loan Bailout cost the tax payers $178,560,000,000 the rest was covered by the private sector.
I see this current round of bailouts in the same light as the Savings and loan losses in the late 1980s.
heck if it wasn't for bailout money, they would have long ago, and the bonds would be toilet paper.
That is not necessarily true. Liquidation could have made the bondholders money. I would assume that was in their minds when they loaned Chrysler the money. The Government stepping in should not change the terms of a loan agreement. That is what the 5th Amendment is addressing.
I think it is pretty scary to run off all those willing to invest in shaky business ventures. The Federal government cannot be the lender for all businesses in the country. We have proven with Fannie Mae that the Feds are incapable of being a responsible lender even on a small scale.
If the Feds can steal money you have loaned they can steal your land or any other property.
If the Feds can steal money you have loaned they can steal your land or any other property.
On the other hand, if the bondholders can steal money we have loaned, they may just be able to do the same. Then we're really up a certain creek without a paddle, aren't we?
These days I have (a little) more faith in the government than in large, rich (and crooked) investment houses. They both try to steal, they both figure they're entitled to. But at least there's more accountability in the government. Considering how little accountability there actually IS in the government....again, anyone have a paddle?
What I wonder about is why the ratings agencies (Moody's, etc.) didn't downgrade the credit sooner. Why didn't the ridiculously expensive Sarbanes-Oxley controls warn us that the D3 and especially the banks were all just houses of cards? That's where we should throw our ire. The bondholders of GM and C debt were idiots.
Comments
They're going to live in tents supplied by the state of CA on the beaches and bluffs overlooking the Pacific during the 5 days that they're off each week. Jobs Bank and all that ya know. Isn't this a great country?
They'll think that they died and went to heaven after being relocated out of Michigan.
Well, don't expect any taxpayer loan funds to be repaid. The high cost of supporting C and GM is only warming up. This is why I argued that NO BAILOUT from the beginning.
The U.S. and Canadian governments have combined to loan Chrysler $4.5 billion in debtor-in-possession financing during its bankruptcy, but neither country will likely be repaid for the loans. Additionally, Chrysler will be off the hook for the $4 billion it received from the U.S. government in January.
Ron Manzo, one of Chrysler’s senior financial advisors, revealed to The Detroit News that it is “highly likely” neither government will receive repayment from Chrysler on the loans. Moreover, Chrysler is not required to pay any interest on the $4.5 billion loan. About $3.34 billion of that loan belongs to the U.S. Treasury Department and ultimately U.S. taxpayers.
A source familiar with the situation also revealed to The Detroit News that Chrysler likely won’t repay a $4 billion loan issued by the Treasure back in January.
Despite having $8.5 billion in limbo, the United States and Canada plans to loan Chrysler another $6 billion when it exits bankruptcy. However, both governments will prohibit Fiat from taking a majority stake in Chrysler until all loans are repaid.
I guess the 800 pound Gorilla in the room with mud on it's face looks a lot like Janet Pelosi or Barney Frank. :mad:
Regards,
OW
But all those pols have kept the UAW alive and active. GM will not be free of the problem. C is not free of the problem. The UAW has been set up to help buy more votes for 2012 (and 2010), The UAW spent 1 Billion in the last election campaigning. Think they'll be spending to elect a balanced congress?
All the people hoping revenge on GM or C for some long ago car they didn't like are going to get what they deserve: long term healthcare for two car companies because they were not able to shake the UAW loose. Alinsky and Ayers will be proud.
2014 Malibu 2LT, 2015 Cruze 2LT,
Again the questions remain...., but here is one: what will make more democrats buy 4-7 M more American cars than what they have in 2009 MY (ala the Wash DC article) ?
Same as what it'll take to make more Republicans buy their cars...they have to make better cars.
2014 Malibu 2LT, 2015 Cruze 2LT,
The truth (which is being ignored) is the "American" cars are better made than they EVER have been!! :shades: So "coincidently" it is aligned with the WORST problems the BIG 4 have EVER HAD. :surprise: :surprise:
Buick for example has been bullet proof for literally DECADES, the examples go on and on.
UAW is like a pit bull who grabbed onto your leg while you were walking and as you keep walking you drag it along. It doesn't EVER release its hold. You'll have to kill it because it will never let go on it's own.
2021 Kia Soul LX 6-speed stick
Yes this is a much more balanced pov than the hyperbole and gas from certain anti-everythings. The Feds ( us ) will have shares in the new entity that can be sold to new owners at some time down the road when the market picks up and after Chrysler ( and soon GM ) prove that they can survive and make money. The sale of these shares will recoup the loans given and forgiven.
Perhaps, but don't hold your breath you say. Point taken. We'll see.
GM has not made a decent profit in 20 Years. In all likelihood we will never get back to the vehicle sales levels spawned during the Dot.com and housing bubbles. If GM did not make a decent profit when some of the other auto makers made record profits. What makes you think they will anytime in the future? Or is it just your salesman's optimistic outlook? This is not 1980, and it is not Chrysler led by Lee Iococca. It is C & GM led by a guy that thinks Cinco de Quatro is a clever statement.
If the Obama administration expected the senior creditors of Chrysler to fold their tents under political pressure, they may have gotten a rude shock today. Thomas Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy. Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.
The Treasury Department relies on TARP as the purported authority to justify the disparate treatment under the 363 Sale, even though TARP was enacted after the Senior Lenders’ liens on the Debtors’ property were already in place. The Supreme Court long ago recognized, however, that a secured creditor’s interest in specific property is protected in bankruptcy under the Fifth Amendment. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594 (1935)
GM currently is servicing $27 Billion in long term debt. Only about $9 Billion is 'attached' to current production facilities.
It has factories and facilities today that can make 5 million vehicle annually. In addition to the debt on the plants to build these 5 MM units it has to cover the cost of maintaining these facilities. However the current annual sales is only about 2 million units.
Finally GM incurs $2000 to $4000 on each vehicle as legacy costs. This would normally be the profit for say Toyota or Honda. Soon these legacy cost will be gone.
DETROIT (AP) -- General Motors Corp. notified shareholders Tuesday it is planning a reverse stock split that would give them one share of new stock for every 100 shares they currently own.
The automaker said in a filing with the Securities and Exchange Commission that the deal would be part of an agreement with the Treasury Department in which the government would assume at least half of GM's debt in exchange for company shares. GM will send the information to shareholders currently holding a total of 610.5 million outstanding shares.
GM spokeswoman Julie Gibson said the company is merely notifying shareholders of what it may do if it reaches deals to swap debt for stock with the Treasury Department and bondholders. The company, she said, is not making an offer to shareholders.
GM has received $15.4 billion in U.S. government loans and faces a June 1 deadline to restructure or be forced into Chapter 11 bankruptcy protection. Under GM's plan, the U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.
For the deal to work, GM has to reach agreement with the United Auto Workers to swap stock for about $10 billion of the $20 billion in payments GM must make into a trust fund that will take over retiree health care expenses starting next year. The UAW's stake would total about 39 percent. Bondholders would get 10 percent and current stockholders would get 1 percent.
It sounds to me like the stockholders could force GM into liquidation if enough of them can control the board.
Yeah, but are they better than the competition? Only in some cases...trucks...Fusion blows them away, Malibu is competitive, but the domestics have been inconsistent at best, and really bad at worst. Even Buick has been out-couched by Toyota. Even Ford, the best of the three, still has some ways to go to be consistently competitive.
You want people to buy your product? Build the best product. All there is to it. Party doesn't even enter into it you know. I bet you can even find some UAW guys driving imports.
First, the few holdouts in the Chrysler case only hold about $200 million out of $6.9 Billion in debt. The largest portion of the debt is held by the TARP banks and they have accepted ( reluctantly ) the 29c offer. The other tiny investors want more. they want Chrysler liquidated so that they can recover 50c or 60c on the dollar.
Second, This is all normal business negotiations that Chrysler can't do on its own because its parent orphaned it last year.
Third, the judge will rule on the issue. It's in his hands now.
Not at all. As you may or may not recall, part of the whole bailout deal was that the company's debt to the government would be highest in terms of seniority. As in the taxpayer gets paid back before even the bondholders. We already know the sole stockholder, Cerberus, already got wiped out. You hear them complaining?
This is just the bondholders squealing because their (risky) investment choices went sour. Again. You see, that "All investments involve risk" fine print isn't supposed to apply to multi-million dollar investment houses that own their own herd of lobbyists.
I don't think the legacy is gone from the tax payers standpoint. And will the VEBA bunch accept worthless GM stock when they look closely. I have no idea what GM is doing. I wonder if anyone in their management team knows.
Huh?? There is nothing in the legacy costs that involve the taxpayers unless GM or Chrysler are forced into liquidation and the retirees are thrown on the PBGC. Then we step in to keep them afloat.
The legacy costs of the D3 will disappear forever when the VEBA goes into effect. The union reluctantly agreed to accept shares of the new Fiat/Chrysler in lieu of cash to fund the VEBA and it also agreed to accept less than what was negotiated 2 yrs ago. But what is certain is that the vehicle maker is free of this burden.
Presumably this is the trial balloon for the GM BK.
No. I don't. It is more than apparent they don't/can't/want to build the best products- all there is to it. They haven't for a good 4 decades. All there is to it is to let them go Chap 11. Yet, the Democrats want to preserve the ability to make lousy cars (on my dime, yours also), which they don't/won't buy. I vote they do it on folks' who wants it dime, not those that can see reality and DON'T want it!
Democrats do not buy them in any numbers to make the big 4 profitable. The majority buy "import cars" NON GM/FORD/Chrysler. You are completely ignoring the implications and the utter disingenousness of it all. Even you agree that 2/3rds or 67% of the big three make lousy cars. My take is all three do, so we are not far apart.
As you point out even their OWN workers drive imports. (like you think they are stupid)
But the ongoing burden of the production costs of UAW workers who are still there and receiving reduced but still high salaries and benefits. How will those labor production costs and benefits be compared with Honda Marysville or Toyota Georgetown?
I would like to see the UAW costs gone which could have happened with a full bankruptcy.
2014 Malibu 2LT, 2015 Cruze 2LT,
PBGC only guarantees a portion of the pension for the retirees. Not the health care that is to be covered by VEBA. Again we are not playing by any legal precedence. This administration is shooting from the hip. Damn the constitution.
How Big Banks Want to Game the Mortgage Mess - ERIC BRENNER and HAMISH HUME - But in the rush to do something, Congress is showing a regrettable willingness to adopt constitutionally suspect legislation that runs roughshod over the Fifth Amendment of the Constitution, which prohibits the taking of private property without just compensation. The problem is that servicers also get a free pass to game the system. The only thing protecting against this blatant conflict of interest is the contractual right of investors in first mortgages to sue servicers. - Wall Street Journal
Just because the big bond holders are already sucking on the TARP teat does not mean the little guys have to follow suit. If your 401K was part of the $200,000,000 being randomly discounted to satisfy the UAW, I am sure you would be screaming as loud as these bondholders and rightly so. I just do not understand this air of complacency to throw our rights under the Obama bus. Today the Chrysler bondholders tomorrow your car agency or my pension plan. Nothing is sacred in this administration.
It's Big3...though now it's Big2, since one of them is in Bankruptcy right now. Who sent them there? :shades: When it comes out it looks like it's going to be an Italian car company, which will be very interesting from several angles. One, we don't get enough Italian cars here. Two, can you imagine the UAW messing with Italians? They'll get an offer they can't refuse. :shades: Three, if you call Italian cars lousy, you might end up with an offer you can't refuse. :P
GM actually was showing glimmers of starting to figure out how to make cars. Have to see what happens when (notice I don't say "if") they end up in Ch11
http://www.google.com/search?hl=en&client=firefox-a&rls=org.mozilla%3Aen-US%3Aof- ficial&hs=2YB&q=chrysler+bond+holders+5th+amendment&btnG=Search
They're not taking stock in (in this case) Chrysler. They're not stupid, come on. :shades: VEBA would be getting stock in the new Fiatsler or whatever they'll be calling it.
"Fifth Amendment of the Constitution, which prohibits the taking of private property without just compensation"
The bondholders are being offered a lot more than their bonds are realistically worth...which is zero.
f your 401K was part of the $200,000,000 being randomly discounted to satisfy the UAW, I am sure you would be screaming as loud as these bondholders and rightly so.
It was (just found out recently, one of my bond funds, ouch) and I'm not screaming. It's an investment decision, and all investments involve some sort of risk of losing the principal. You want no risk, stick your money in an FDIC-insured savings account. Otherwise, you have to be willing to accept the chance that the value of your investment will go down. Maybe even down to zero.
The whole idea is so that taxpayer bailout funds don't go to cover losses in bond investments. That's why the stipulation regarding debt seniority. The whole point of the bailout funds is to rescue the company, not rescue bondholders from bad investment choices.
Cue Godfather music
Ruking, my friend....you have saida some things.....soma things that greatly disturba me....sucha things maka da family angry...
:shades: :shades:
So is that really FIAT's plan? Take over a failing oem and then.... get more bail out money when the absolutely obvious happens down the road?
It is the fiduciary responsibility of the lender to do all in his power to protect the investment of those that put money in his care. If it means suing to protect those rights. That is what court is for. The bondholders have first rights by law. Just because the big banks got a huge chunk of cash they are less likely to worry about your bond fund in a portfolio. This is just more of the same old Wall Street corruption with the administration pulling the strings. I understand risk. We should still play by the laws of the land. Not some conjured up scheme to protect a few UAW voters. GM and Chrysler going away may be the best thing to happen in this country. It would prove no company or person is too big to fail.
You're mixing up two different situations. The shareholders of the current GM and Chrysler are last in line they get nothing. The shareholders of the new GM or Chrysler will have ownership of a much more vibrant, leaner and presumably agressive and profitable company. At some time in the future when this is proven and the markets restabilize somebody is going to want to buy these money machines. Then the UAW VEBA and the Feds sell off their ownership stakes and exit with cash in hand.
When they talk about everybody taking a haircut this is one of the cuts that the UAW has to take. It has to take some risk in making the new entities strong, vibrant and profitable.
PBGC only guarantees a portion of the pension for the retirees. Not the health care that is to be covered by VEBA. Again we are not playing by any legal precedence. This administration is shooting from the hip. Damn the constitution.
This paragraph makes no sense whatsoever. It's childishness. You have 4 sentences that say nothing and the last the dumbest. What the hell are you talking about?
What I wrote in relation to the PBGC is that one of the major benefits of saving GM and Chrysler is that the retirees are not dumped on the PBGC. That's it. What has that got to do with healthcare, legality and of all thing constitutionality. Logic please not emotionalism.
You've must have Faux News, Rush and Savage mainlined into your arm everyday. Please don't tell me you get any of your views from any of those sources. They're all clowns and entertainers.
Here's another false idea held by those not doing any research. The small group of hedgefunds are NOT investors that pensions are allowed to invest 401k or pensions in. In fact GM and Chrysler bonds being rated 'junk' are prohibitted from being part of any pension portfolio.
What these hedgefunds do is invest small amounts of money for the uber-wealthy that want to gamble and don't have the time to go to Las Vegas. They take positions with a small part of the clients' portfolios in certain ultra-risky situations in order to hope to gain a shortterm windfall....then they get out. Just like playing craps.
THIS is the group you feel sorry for? Get real. Research....
When the judge WSJ article rules then we'll have a valid legal opinion that carries some weight.
Until then you, me and all the rest of your sources are only exercising our right of free speech and filling the air with gas.
Bankers and investors cause 5 million Americans to lose jobs buying and selling derivatives. Now there is a plan to save some of the D3 jobs that are still left and they don't want to play.
The UAW has always thought they owned and controlled GM. Now they will have 39% of it. They finally will be getting pay tied to performance. That surely makes them angry.
America is the land of safety nets.
Now bondholders have to be named who didn't agree to deal. Wonder if they were The Foreign owned banks that sucked up $35 Billion in TARP money?
"GMAC won approval in December to become a bank holding company with greater access to state credit lines.
The Treasury Department had injected six billion dollars to prevent its collapse.
The rescue funds came from the Treasury's 700-billion-dollar Troubled Asset Relief Program and included a one-billion-dollar loan to GM.
GMAC is owned by GM and Chrysler parent company Cerberus Capital Management, a private equity firm."
GMAC posts wider earnings loss (AFP)
That was yesterday. This is today:
GMAC Said to Need $11.5 Billion in Capital After Test (Bloomberg)
I try not to. It is difficult when debating with people that think they no it all. And try to put you down or into a category with right wing talk show hosts. If you have fiscal conservative ideas in this day of Socialistic ideals you are automatically made out to be a demagogue.
I did not agree with the bank bailouts. I don't agree with the auto bailouts. I think our last President, and current President are over stepping their bounds. And to discount a bond holder as some kind of lower class citizen is scary. If not for people with money taking chances on companies in this country we would be in deep trouble. So I believe in the protection of everyone's rights under OUR Constitution. Something our current administration has targeted to change.
I agree with that.
And to discount a bond holder as some kind of lower class citizen is scary.
Well, sorry. If we blame Wagoner and his cronies for being idiots for steering sinking ships that were taking on water for >20 years, then anybody who invested in the debt of these companies could have seen the iceberg. All you had to do is look at the balance sheet of GM to see the disaster looming. If the government had not stepped in the bondholders would have had $Billions less to split up. All that high interest-paying debt is that way for a reason.
What I wonder about is why the ratings agencies (Moody's, etc.) didn't downgrade the credit sooner. Why didn't the ridiculously expensive Sarbanes-Oxley controls warn us that the D3 and especially the banks were all just houses of cards? That's where we should throw our ire. The bondholders of GM and C debt were idiots. They took their chances and lost.
No, they don't...TARP is also law. When bondholders saw them getting TARP money, they had every right to attempt to sell their holdings, knowing that they no longer had ultimate seniority. They knowing chose to take the risk.
You're right about the responsibility of the lender...but in this case the federal government, acting on behalf of the taxpayer, is also a lender. Therefore they have that same responsibility to protect the investment of the taxpayers, don't they? Only in this case, it involves protecting every taxpayer, not just a select few hedge funds.
Let me put it this way....if the bondholders get their way, and Chrysler liquidates in order to pay off their bonds with bailout money, what we have is redistribution of wealth from the ordinary taxpayer to hedge funds acting largely on the behalf of the wealthy. And frankly, I'm tired of covering investment losses for gamblers who decided afterward that they couldn't handle the risk.
That's the key phrase there...."taking chances." Taking chances and investing means running the risk of loss. There was always a possibility that Chrysler would default on the bonds...heck if it wasn't for bailout money, they would have long ago, and the bonds would be toilet paper.
When the government (like it or not) enacted TARP legislation, it became law that those bailouts would be senior debt. This was written in specifically to prevent "wealth redistribution," the conservative buzz-word, only up instead of down. I think that's fair, since there shouldn't be any wealth redistribution, period.
That is the debate. Can the government pass a law that circumvents the Constitution, which gives rights to the lenders. The Supreme Court has upheld those 5th Amendment rights that the TARP law would like to take away.
Only in this case, it involves protecting every taxpayer, not just a select few hedge funds.
I have NO love for hedge fund operators. I believe they are a big part of our financial problems. However the tax payers money should not be spent in the way it is being used. That I blame on the Treasury and Congress. I think we are totally out of control with no one at the helm.
Let me put it this way....if the bondholders get their way, and Chrysler liquidates in order to pay off their bonds with bailout money, what we have is redistribution of wealth from the ordinary taxpayer to hedge funds acting largely on the behalf of the wealthy. And frankly, I'm tired of covering investment losses for gamblers who decided afterward that they couldn't handle the risk.
I agree and that was my gripe with the bailouts. Our bailout history is a mixed bag. We the tax payers are out way more than we have gotten back. That in spite of those that believe these loans/gifts will ever be repaid. Here are the bailout losses up to 2001.
Figures in 2008 dollars
1970 Penn Central RR loss ($16.02B)
1971 Lockheed loan fees paid $122,220,000
1974 Franklin National bank still owes $185,300,000
1975 NYC All loans and fees paid
1980 Chrysler bought back 14.4 million shares of stock netting the US $660,000,000
1984 Continental Illinois Bank FDIC suffered $1.8 Billion loss
1989 Savings and Loan Bailout cost the tax payers $178,560,000,000 the rest was covered by the private sector.
I see this current round of bailouts in the same light as the Savings and loan losses in the late 1980s.
http://www.propublica.org/special/government-bailouts
That is not necessarily true. Liquidation could have made the bondholders money. I would assume that was in their minds when they loaned Chrysler the money. The Government stepping in should not change the terms of a loan agreement. That is what the 5th Amendment is addressing.
I think it is pretty scary to run off all those willing to invest in shaky business ventures. The Federal government cannot be the lender for all businesses in the country. We have proven with Fannie Mae that the Feds are incapable of being a responsible lender even on a small scale.
If the Feds can steal money you have loaned they can steal your land or any other property.
On the other hand, if the bondholders can steal money we have loaned, they may just be able to do the same. Then we're really up a certain creek without a paddle, aren't we?
These days I have (a little) more faith in the government than in large, rich (and crooked) investment houses. They both try to steal, they both figure they're entitled to. But at least there's more accountability in the government. Considering how little accountability there actually IS in the government....again, anyone have a paddle?
link title
I completely agree.