Tilted
..
I find that hopelessly naive these days.
Quaint but, naive.
What can I say - I'm old fashioned. I'll catch up eventually.
The GM Plan
- Thread starter Tilted
- Start date
What can I say - I'm old fashioned. I'll catch up eventually.
Larry Gude
Strung Out
What can I say - I'm old fashioned. I'll catch up eventually.
This story is huge and yet it is hidden.
Tilted
..
Majority of GM Bondholders Back Debt-for-Equity Deal - WSJ.com
I wonder what the strike price on the warrants is. I saw where the UAW suggested that it would be a price that equates to a GM market cap of around $30 Billion. I hesitate to believe anything that the UAW, and certainly anything that Gettelfinger, says. But, even if the strike price isn't higher than that, I estimate that the value of those warrants is very small.
GM to file for bankruptcy, Chrysler sale cleared | Reuters
Again, it deserves repeated emphasize. The U.S. taxpayer is going to be laying out at least $50 Billion, to GM alone, so that the U.S. government gets to own a majority interest in the company, and so that the UAW comes out of this bankruptcy smelling like a rose.
I wonder what the strike price on the warrants is. I saw where the UAW suggested that it would be a price that equates to a GM market cap of around $30 Billion. I hesitate to believe anything that the UAW, and certainly anything that Gettelfinger, says. But, even if the strike price isn't higher than that, I estimate that the value of those warrants is very small.
GM to file for bankruptcy, Chrysler sale cleared | Reuters
Again, it deserves repeated emphasize. The U.S. taxpayer is going to be laying out at least $50 Billion, to GM alone, so that the U.S. government gets to own a majority interest in the company, and so that the UAW comes out of this bankruptcy smelling like a rose.
Larry Gude
Strung Out
And that, boys and girls, is how socialism is supposed to work! I just can't WAIT to see what fine products this produces!
Tilted
..
I tracked down the terms of the warrants that are to be issued to the bondholders that agreed to the last debt-exchange offer - they were included in an 8-K filing by GM to the SEC. I don't know why news sources wouldn't report them as part of the story, because frankly, the information that they were to receive warrants for another 15% of the company is almost completely worthless if you don't know the strike price of the warrants. Those warrants could be completely worthless, or they could be worth a lot, depending on that price.
Anyway, warrants for 7.5% of New GM's equity are to be for a price that would equal a market cap for GM of $15 Billion. The warrants for the other 7.5% would be at a price equal to a market cap of $30 Billion. In other words, if GM isn't worth $15 Billion, then the warrants aren't worth anything. They only start to have any value at that point (7.5% of however much GM is worth more than $15 Billion, plus 7.5% of however much GM is worth more than $30 Billion). The warrants expire in 7 years.
So, armed with that knowledge and some more information I found in that 8-K, I can make the following estimates for the market value which GM would have to have, in order for the three main parties to be 'whole'. (I'm not implying that they should be made whole, just offering another metric which provides a different perspective on how inequitably they have been treated.)
UAW - about $10 Billion
Bondholders (that took the take it or leave it deal) - about $125 Billion
U.S. Taxpayer - about $80 Billion
If we are to believe the threats of the U.S. government, the bondholders that didn't take the deal are in much worse shape.
That last number is particularly difficult to estimate, in part because the extent of our financial support to GM is still unknown. According to that 8-K, the total money provided to GM by the U.S. government is estimated to be in excess of $60 Billion. A small portion of that may come from the Canadian government, but the total figure may also be higher. And, all but $10.5 Billion of that is supposed to be converted to equity. In other words, only that much of it is a loan to GM - money that we are owed back. The other $50+ Billion was not a loan - but rather, the purchase price for our share of the company.
Anyway, warrants for 7.5% of New GM's equity are to be for a price that would equal a market cap for GM of $15 Billion. The warrants for the other 7.5% would be at a price equal to a market cap of $30 Billion. In other words, if GM isn't worth $15 Billion, then the warrants aren't worth anything. They only start to have any value at that point (7.5% of however much GM is worth more than $15 Billion, plus 7.5% of however much GM is worth more than $30 Billion). The warrants expire in 7 years.
So, armed with that knowledge and some more information I found in that 8-K, I can make the following estimates for the market value which GM would have to have, in order for the three main parties to be 'whole'. (I'm not implying that they should be made whole, just offering another metric which provides a different perspective on how inequitably they have been treated.)
UAW - about $10 Billion
Bondholders (that took the take it or leave it deal) - about $125 Billion
U.S. Taxpayer - about $80 Billion
If we are to believe the threats of the U.S. government, the bondholders that didn't take the deal are in much worse shape.
That last number is particularly difficult to estimate, in part because the extent of our financial support to GM is still unknown. According to that 8-K, the total money provided to GM by the U.S. government is estimated to be in excess of $60 Billion. A small portion of that may come from the Canadian government, but the total figure may also be higher. And, all but $10.5 Billion of that is supposed to be converted to equity. In other words, only that much of it is a loan to GM - money that we are owed back. The other $50+ Billion was not a loan - but rather, the purchase price for our share of the company.
Tilted
..
Come on Larry, let's not go throwing around nasty words like 'socialism'. It's one thing to disagree with what is going on, but there is no need to start 'labeling' things just to scare people.
Tilted
..
Barney Frank, Car Czar - WSJ.com
Yeah, I'm sure there won't be any problems with the U.S. government owning, and controlling the board of, GM - it's not like those in power will use it to further their own political goals.
Yeah, I'm sure there won't be any problems with the U.S. government owning, and controlling the board of, GM - it's not like those in power will use it to further their own political goals.
Tilted
..
Plan to Sell General Motors' Assets Is Approved
Once again - so much for the notion of checks and balances. The Judiciary has again failed us. The speed with which these very large, very complex bankruptcies have been able to move through the bankruptcy process and receive court approvals continues to be amazing - mind-boggling would be a fair choice of descriptor.
Of course, in this case, that haste no doubt had something to do with the manipulative, disingenuous threat from our government - 'If you don't approve this sale irresponsibly quick so that there is less time for people to realize how wrong it is and for people to mount effective legal fights against it, then, we are going to take our ball (our money) and go home. Because, you know, despite how vehemently we have argued that GM and all of the associated jobs HAVE to be saved - if the sale wasn't approved by July 10th then that wouldn't be important anymore.' If they couldn't force the court into approving the sale by then, somehow it magically would have become a bad idea for the government to loan them $50 Billion-ish to facilitate the deal.
At what point does someone, in a position to do so, step up and say 'No', to this spoiled brat of an Administration? Who will be the one to do their job, and take actions consistent with the Constitution and the 2+ centuries of law that have developed in accordance with it, in spite of the fact that such actions might conflict with the desires and agendas of a politically popular, politically powerful man. Is anyone willing to affirm the notion that, ultimately, we are a nation governed by laws, not a nation governed by the whims of men - and that, at the end of the day, we can rely on those laws to protect us from tyranny? Is there anyone in a position that matters, who still recognizes that it is the rule of law, and not the whimsical rule by whatever individual happens to be in political favor at the moment, that has separated us from most of the rest of the world for 200 years - that that is the source of our strength and the rich soil out of which the beauties which are America have sprung? Those beauties, all of them, will shrivel up and die if we don't stop poisoning the ground from which they've grown - if we don't affirm the rule of law which provides the nutrients that make that growth possible.
Once again - so much for the notion of checks and balances. The Judiciary has again failed us. The speed with which these very large, very complex bankruptcies have been able to move through the bankruptcy process and receive court approvals continues to be amazing - mind-boggling would be a fair choice of descriptor.
Of course, in this case, that haste no doubt had something to do with the manipulative, disingenuous threat from our government - 'If you don't approve this sale irresponsibly quick so that there is less time for people to realize how wrong it is and for people to mount effective legal fights against it, then, we are going to take our ball (our money) and go home. Because, you know, despite how vehemently we have argued that GM and all of the associated jobs HAVE to be saved - if the sale wasn't approved by July 10th then that wouldn't be important anymore.' If they couldn't force the court into approving the sale by then, somehow it magically would have become a bad idea for the government to loan them $50 Billion-ish to facilitate the deal.
At what point does someone, in a position to do so, step up and say 'No', to this spoiled brat of an Administration? Who will be the one to do their job, and take actions consistent with the Constitution and the 2+ centuries of law that have developed in accordance with it, in spite of the fact that such actions might conflict with the desires and agendas of a politically popular, politically powerful man. Is anyone willing to affirm the notion that, ultimately, we are a nation governed by laws, not a nation governed by the whims of men - and that, at the end of the day, we can rely on those laws to protect us from tyranny? Is there anyone in a position that matters, who still recognizes that it is the rule of law, and not the whimsical rule by whatever individual happens to be in political favor at the moment, that has separated us from most of the rest of the world for 200 years - that that is the source of our strength and the rich soil out of which the beauties which are America have sprung? Those beauties, all of them, will shrivel up and die if we don't stop poisoning the ground from which they've grown - if we don't affirm the rule of law which provides the nutrients that make that growth possible.
Larry Gude
Strung Out
Like who? The legislative branch? The judicial?
When judges see it thusly;
...the fix is in. If anything, we're talking about organ donating, not saving the patient.
Tilted
..
Anybody - but members of those branches of government would seem to be the ones with the ability to meaningfully say 'No', had only they the will.
Larry Gude
Strung Out
Ok, but this is why actions matter; what is a Boehner or a McConnell gonna say about this? They were on board with all this mess last fall. Do they say "We didn't think it would go this far..." and sound like dupes? Do they say the magic words "We were wrong then and this is a perfect example of why..."?
People like Ron Paul who said this was wrong when it mattered, when the voting was going on, are marginalized in the GOP. Is some judge gonna stand in front of the Obama machine when there isn't even an effective opposition party to, at the very minimum, give them some cover or PR help?
Tilted
..
Judge Denies Motion to Fast-Track GM Sale Appeal
Another group getting treated completely unfairly in this farce - people with potential liability claims against GM. It's okay to expedite one of the largest bankruptcies in U.S. history, and to rush it through irresponsibly quick before the parties involved have had sufficient opportunity to explore the propriety of many of its provisions; but, it isn't okay to expedite the process by which some of the potential victims of that hastily approved bankruptcy (sale) might seek to have their rights protected. This situation continues to earn description as the mother of all farces.
GM to Get Final $20 Billlion From US This Year
Another group getting treated completely unfairly in this farce - people with potential liability claims against GM. It's okay to expedite one of the largest bankruptcies in U.S. history, and to rush it through irresponsibly quick before the parties involved have had sufficient opportunity to explore the propriety of many of its provisions; but, it isn't okay to expedite the process by which some of the potential victims of that hastily approved bankruptcy (sale) might seek to have their rights protected. This situation continues to earn description as the mother of all farces.
GM to Get Final $20 Billlion From US This Year
Tilted
..
Yes - those that supported the initial bailout of Detroit should acknowledge that it was wrong and that it opened the door to actions by the current Administration which might have devastating consequences on American prosperity going forward. If they want to qualify that acknowledgment so as to mitigate the perception of their own responsibility for this calamity, they can assert that they didn't expect, and couldn't have anticipated, what that opened door would lead to. I don't know if such an assertion could be sincerely made, but I'd give them the benefit of the doubt, because even I would not have been inclined, back toward the end of 2008, to believe that this Administration could get away with what it has done with regard to the GM and Chrysler situations.
With regard to the actions of the Judicial branch - the judges shouldn't need cover or PR help - they are supposed to do their jobs and defend the laws and Constitution of our nation. If they wanted to be able to dodge the ire of (and possibly recriminations from) politically powerful forces by abandoning the obligations of their jobs, then they should have signed up for a different profession. Perhaps it would have been naive to have expected them to have stood up and done their jobs, but it is still appropriate to criticize them for not having done so. If they lacked the judicial courage to do what is so obviously right, then they should have left the bench and left that pivotal job to someone who might not lack it.
Last edited:
Larry Gude
Strung Out
I totally disagree.
At the end of the day, governing is a very simple thing to do as far as right and wrong/good idea, bad idea. The problem is the compromising and vote gathering. This is why 1/2 of us never vote; just too cynical about the whole thing.
It was easy to foresee what would happen if you gave that kind of power to one person with little to no oversight especially when they come up with the argument that we MUST do THIS and we must do it NOW. That was clue #1 Paulson/Bush were totally wrong. Absent the rush, rush, it was still an obviously wrong thing to do for anyone who does not possess a strong socialist bent.
Most of these people have a top down view and that is the path to being patronizing and paternalistic; "We're just doing what is good for you." Well, the 'doing what's good for you' is supposed to be up to individuals. So, letting AIG and GM and whatever banks collapse serves several purposes;
1. It's how markets work; risk/reward
2. It would do Americans good to see the titans take their falls when they've earned it.
3. Markets would have fixed the problems sooner and better than government could ever dream of.
As for what Obama is doing, why isn't that foreseeable? He is far more of a socialist than Bush was. This stuff is right up his alley. Pandora's box was opened for them by the GOP. They were handed the keys; here, screw the law and screw checks and balances, do whatever you want, just do it quick.
We've witnessed a president, Bush, make one of the HUGE mistakes of all time. This time period will go down in the history books as a mind numbing up is down, war is peace Orwellian time. Obama is doing far worse than Bush did but Obama can do NONE of this without the disasters of Bush, housing, energy, the wars, culminating with the poison TARP is. Bush cleared the way for them. He failed as sentinel, as gate keeper. Terribly.
And, again, sincerely or otherwise, there is NO getting around most national level GOP'ers being on board with this calamity. How do you trust them again, ever, when they argue that THIS time, they'd be free market, small government types?
Larry Gude
Strung Out
Ok, but, you've done a pretty good job of helping us understand the legal ramifications. I think we all know there is 'diversity' in our judiciary. As I said at the time, I was immediately suspicious of why this stuff went down in NY instead of Michigan; judge shopping.
Tilted
..
I wouldn't give them the benefit of the doubt with regard to not being able to foresee the basic problems with the auto bailouts - the general implications of being contrary to free-market, small government, non-socialist ideals. That's not what I'm talking about. I'm talking very specifically about the notion that our government would completely dismantle the sovereignty of the rule of law, and more importantly, that no one would be able or willing to stop it. I'm saying, that they might not have been able to foresee that Obama's Administration would be able to get away with blatantly throwing centuries of law out the window, and him, in essence, saying, 'I have complete control and can do whatever I want - rule of law be damned - there are no checks on my power.'
The reason I would give them the benefit of the doubt on that specific point is that, I myself wouldn't have believed that his Administration would be able to get away with what it got away with this quickly. I don't know if there is a bankruptcy lawyer alive who would have sincerely predicted 6 months ago that the things that have happened, with regard to the Chrysler bankruptcy in particular, would have happened - or been 'allowed' to happen. Not anticipating those blatant subversions of the law is the only point on which I would give them a pass. And, frankly, those transgressions are the most systemically important consequences of this whole calamity.
In general though, as I'm sure you realize from my past statements, I think they (i.e. anyone who has supported and made these bailouts possible from the beginning) are culpable for the consequences of these bailouts. They knew what they were doing - they knew what bridges they were choosing to cross - they knew, by and large, where this was leading.
They abandoned their supposed free-market, non-socialist principles, and willingly jumped on board the Marxism Express. They'll get no pass from me in that regard. You either believe that Marxism is a fundamentally flawed ideology or you don't - you either believe that the way nature has worked for billions of years should be respected and generally worked within or you believe that humans are smart enough to develop a new system, based on mechanisms which operate completely contrary to nature's mechanisms, which will work better than nature's system. Those who supported the auto bailouts necessarily fall into the latter parts of those paradigms, despite their vehement protestations that, fundamentally, they still fall into the former.
Anyway, I suspect your disagreeing with my statement about giving them the benefit of the doubt was based on my not sufficiently communicating the narrow grounds on which I meant it. If not - if you think this Administration's ability to quickly dismantle the entire notion of the rule so quickly, was easily foreseeable - then I have to give you a great deal of credit. I didn't see that coming so clearly.
One last set of thoughts about what Bush did toward the end of his second term. I don't think of myself as a Bush basher, and sometimes I see good in things that he did where others do not. But, I think the things he did in the waning months of his Administration, viewed in the aggregate, can reasonably be considered as (one of) the greatest political and ideological betrayal(s) in our nation's history. It is hard to explain them. Further, perceiving him as a conscientious man who wishes to do right, I believe that he will lament those actions as the great mistake of his Presidency, and indeed, of his life. I suspect that the full recognition of what he did will create a lingering agony, that he carries for the rest of his life and that is a source of constant, personal depression. I hope I am wrong about that - I hope he is able to put aside his mistakes - but I doubt he is of a temperament that would allow him to escape from the guilt which must inevitably result from an honest appraisal of his choices. Obama on the other hand - when his day comes to confront that guilt - I suspect will have little difficulty laying it to rest.
Larry Gude
Strung Out
But that is part and parcel to socialism in context of our laws and traditions.
What Bush did was throw the law out the window. He argued for and got the power of the purse and gave it to ONE person beyond the power of the legislature. The courts ignored this as well in stopping BOTH those branches from running wild.
Larry Gude
Strung Out
Find someone, any one, including people with tin foil hats who live in dumpsters, who would have predicted in September '08 that a GOP potus would do what W did with Paulson and the UAW.
We watched(ing) historical lawlessness at the highest level.
Larry Gude
Strung Out
Absolutely to the first. However, did you not contradict your benefit of the doubt in that last sentence?
I think Barney Frank knew damn well where Fanny would take the economy if only the standards could be lowered enough both to get Fanny hyper heated AND let the Wall Street Gods hang themselves with enough rope.
Keep in mind that the Social Security privatization idea was viscerally hated by the left because it is a bedrock fundamental of the Democratic party as is; government funded and controlled retirement.
Their argument against it was just what we saw; a catastrophic Wall Street meltdown that most people thought impossible on this scale in this age.
Now, SS is safe for generations from the free market argument.
I think Barney thought this was possible, hoped this was possible. Maybe not this bad, but bad enough to save SS in his lifetime.