The GM Plan
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Larry Gude
Strung Out
Tilted
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U.S. Is Said to Rein in G.M. Stock Offering
As some suggested when the IPO was first announced, and (I think) I refrained from suggesting: political stunt. Let's create a headline - headlines become the narrative these days anyway, nobody pays attention to the details.
If anyone thinks GM will stop being thought of as Government Motors by many as a result of the government owning 49% of it rather than 50+%, well then ... I can't think of a witty 'I've got a bridge to sell them' line right now, but hopefully you get the point.
As some suggested when the IPO was first announced, and (I think) I refrained from suggesting: political stunt. Let's create a headline - headlines become the narrative these days anyway, nobody pays attention to the details.
If anyone thinks GM will stop being thought of as Government Motors by many as a result of the government owning 49% of it rather than 50+%, well then ... I can't think of a witty 'I've got a bridge to sell them' line right now, but hopefully you get the point.
Tilted
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GM snuck the meaningful amendment (i.e. the one with the important details) to its IPO filing in the day after the elections. It's since been amended again.
I haven't been through all of the interesting parts yet, but it turns out that the U.S. government is getting to sell a larger portion of the common shares it holds than the Canadian Government and the UAW VEBA Trust are. It's also getting paid for the Series A preferred shares that it owns.
I've found a number of interesting things that are probably worth commenting on, but for now here's the most obvious one: the U.S. government owns 912,394,068 shares of common stock in the new GM. This IPO is pricing shares at between $26 and $29. At the high end, that comes to a little less than $26.5 Billion. U.S. taxpayers are also getting a little over $2 Billion for their preferred shares. I'll confess that I haven't been diligent about keeping up with the amounts that the U.S. government has thus far received back from GM, but I'm all but certain that more than $40 Billion of our investment is still outstanding and I'm not aware of any other significant ownership interest or debt assets (i.e. other than the common and preferred stock) that the U.S. government has in the new GM.
So, how much is the UAW bailout gonna cost us? How much are the bailouts of the big banks gonna cost us? What was at stake with the former and what was at stake with the latter?
I haven't been through all of the interesting parts yet, but it turns out that the U.S. government is getting to sell a larger portion of the common shares it holds than the Canadian Government and the UAW VEBA Trust are. It's also getting paid for the Series A preferred shares that it owns.
I've found a number of interesting things that are probably worth commenting on, but for now here's the most obvious one: the U.S. government owns 912,394,068 shares of common stock in the new GM. This IPO is pricing shares at between $26 and $29. At the high end, that comes to a little less than $26.5 Billion. U.S. taxpayers are also getting a little over $2 Billion for their preferred shares. I'll confess that I haven't been diligent about keeping up with the amounts that the U.S. government has thus far received back from GM, but I'm all but certain that more than $40 Billion of our investment is still outstanding and I'm not aware of any other significant ownership interest or debt assets (i.e. other than the common and preferred stock) that the U.S. government has in the new GM.
So, how much is the UAW bailout gonna cost us? How much are the bailouts of the big banks gonna cost us? What was at stake with the former and what was at stake with the latter?
Tilted
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I don't have much time to comment right now, but some updates on the GM IPO situation:
Why the GM IPO is Not About the US
GM IPO price increase is good news for taxpayers
GM Boosts IPO Size to Reduce US Government Stake
GM offering may leave out many small investors
GM Sets IPO Terms, Could Raise up to $22.7 Billion
GM Shares Open Sharply Higher as Trading Begins
GM's IPO filing was amended 3 more times after my last post about it. Here is the last version (#10).
Most notably, the size of the offering was increased (both as to price and as to common shares offered). The U.S. government was set to sell up to 412.3 million shares, or roughly 45% of the common shares it owned.
At some point, I hope to be able to comment on some of the less headline worthy (at least in so far as news media consensus probably sees it) aspects of the IPO filling.
Why the GM IPO is Not About the US
GM IPO price increase is good news for taxpayers
GM Boosts IPO Size to Reduce US Government Stake
GM offering may leave out many small investors
GM Sets IPO Terms, Could Raise up to $22.7 Billion
GM Shares Open Sharply Higher as Trading Begins
GM's IPO filing was amended 3 more times after my last post about it. Here is the last version (#10).
Most notably, the size of the offering was increased (both as to price and as to common shares offered). The U.S. government was set to sell up to 412.3 million shares, or roughly 45% of the common shares it owned.
At some point, I hope to be able to comment on some of the less headline worthy (at least in so far as news media consensus probably sees it) aspects of the IPO filling.
Larry Gude
Strung Out
It never ceases to amuse me when you make a new post to this tread and "GM Plan" pops up under 'new posts'.
It's like "Jumbo Shrimp" or "Snyder Plan" or "Summer Vacation in Antarctica".
It just makes me smile. GM plan? This is a plan?
It's like "Jumbo Shrimp" or "Snyder Plan" or "Summer Vacation in Antarctica".
It just makes me smile. GM plan? This is a plan?
kom526
They call me ... Sarcasmo
It just makes me smile. GM plan? This is a plan?
Sure there's a plan.
The Gov't bails out GM has majority ownership.
GM cooks their books and tells America that "We paid our bailout money back, with interest." IIRC they basically used the Visa to pay the MasterCard.
More books get cooked and viola we can now have an IPO!
The money we make will pay off the REAL bailout money
and we return to respectability.Meanwhile the WH is mandating that GM force feed the American Public an "electric car" that will be over priced and under performing. HEY wait a minute! Hasn't this been the real issue for the past several years?
Larry Gude
Strung Out
Sure there's a plan.
The Gov't bails out GM has majority ownership.
GM cooks their books and tells America that "We paid our bailout money back, with interest." IIRC they basically used the Visa to pay the MasterCard.
More books get cooked and viola we can now have an IPO!
The money we make will pay off the REAL bailout money
Meanwhile the WH is mandating that GM force feed the American Public an "electric car" that will be over priced and under performing. HEY wait a minute! Hasn't this been the real issue for the past several years?
That's just silly.
Mastercard and VISA have limits.
Tilted
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I suppose I'll post this here, as his involvement in the GM/Chrysler situations is the only reason I care. It couldn't have happened to a nicer asswipe. 
Steven Rattner Accused by New York, SEC in Kickback Case
Steven Rattner Accused by New York, SEC in Kickback Case
Tilted
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Auto Work Force Gets Dividend From Industry’s Rebound
Ahh... it's nice to be among the groups of people whose votes are highly coveted by politicians with the power to 'bend' the law enough to make sure your piece of the crumbling cookie turns out to be a little bigger than it should.
To the foolish pension fund beneficiaries and mutual fund investors that for so long provided Detroit with the money to keep operating and paying those weighty UAW compensation packages, trusting that the rule of law would protect them against near total loss of their money even in a worst case scenario: HA HA, SUCKERS! That'll teach you to provide the capital that makes America go and allows jobs to be created and maintained.
Ahh... it's nice to be among the groups of people whose votes are highly coveted by politicians with the power to 'bend' the law enough to make sure your piece of the crumbling cookie turns out to be a little bigger than it should.
To the foolish pension fund beneficiaries and mutual fund investors that for so long provided Detroit with the money to keep operating and paying those weighty UAW compensation packages, trusting that the rule of law would protect them against near total loss of their money even in a worst case scenario: HA HA, SUCKERS! That'll teach you to provide the capital that makes America go and allows jobs to be created and maintained.
Larry Gude
Strung Out
Tilted
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US told GM to selectively fund pensions: Rattner
Again, the so called auto bailouts were not really auto bailouts, they were little more than UAW bailouts. The going concerns could have been saved without the political hanky-panky, and they'd likely be in even better condition today and going forward. But parties in the U.S. government couldn't pass up the opportunity to use taxpayer money to orchestrate theft on a grand scale - to steal value from politically disfavored entities and give it to politically favored entities.
It's worth repeating, Steven Rattner is among the lowest of the low-lifes, and the auto bailout chapter is among the most lawless in our government's history. The UAW is worthy of contempt if for no other reason than its complicity in this abominable escapade.
Again, the so called auto bailouts were not really auto bailouts, they were little more than UAW bailouts. The going concerns could have been saved without the political hanky-panky, and they'd likely be in even better condition today and going forward. But parties in the U.S. government couldn't pass up the opportunity to use taxpayer money to orchestrate theft on a grand scale - to steal value from politically disfavored entities and give it to politically favored entities.
It's worth repeating, Steven Rattner is among the lowest of the low-lifes, and the auto bailout chapter is among the most lawless in our government's history. The UAW is worthy of contempt if for no other reason than its complicity in this abominable escapade.
Larry Gude
Strung Out
Which is to say nothing of the vulgarity of his clunk for clunkers program.
Again, however, can we really fault the thieves if the 'cops' are in on it, too? When Bush started all this, a GOP president bailing out the United Auto Workers, the world was turned on its head. There is no up. There is no down.
This, the IRS abuses, the spying on reporters, the assertion of presidential authority to wax your ass with a drone if he thinks it's the thing to do, anytime, anywhere.
Where is the reference point for calling Ratner so low? Compared to what? To who? He is, in many ways, the poster child of the Bush/Obama era; just do it.
:shrug:
Tilted
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The leaders, the course setters, deserve wrath and derision as well. I mention Mr. Rattner by name, and not others, because this recent revelation relates to statements he made. That said, I also think there's a special strain of heinousness involved in effectuating atrocities as compared with conceiving or ordering them - it isn't necessarily a more intense strain or a role worthy or greater contempt, but it's different somehow. One man orders another to be beaten for no reason, a third man carries out the order - the actions of two of those men inspire ire and warrant punishment, but there's something different about being the man willing to swing the whip.
As for President Bush II, I don't hold as much contempt for his intent as regards the way the so-called auto bailouts played out. Yes, he was wrong for trying to bailout the auto industry (at least through TARP), and but for his initial actions what came latter may not have been possible. But I don't think, at least I can't assume based on his actions in this matter, that he was trying to orchestrate the massive heist that the bailout was to turn into. He was trying to save the going concerns, to allow for them to continue to operate and to become long-term viable - which, though the government shouldn't have intervened as it did, was at least a noble goal. It wasn't stealing from one of the involved parties to favor another, it was trying to help all of the parties involved and avoid a further shock to the U.S. economy.
The Obama Administration came in and changed the goal into an especially inappropriate one. Its actions did little to improve the prospects of the going concerns (that would have happened anyway through a bankruptcy process), its actions were focused on helping the UAW maintain its parasitic position as regards GM and Chrysler's operations and to make sure the UAW was made whole to a far greater extent than the other creditors would be, and to a far greater extent than the UAW could reasonably have expected in that situation, at the expense of the other creditors.
President Bush II began an improper process, but for otherwise good reasons; President Obama perverted that process further for bad reasons. Rather than mere misguided public policy, the bailouts became blatantly political - and, speaking colloquially, criminal - public policy.
Larry Gude
Strung Out
You sure about that?
There isn't a business person in the world that would think bail outs is how you keep a concern going. Bush, as our only MBA president, ever, acted exactly like a bog government progressive; just add more money. To keep a concern going, what is wrong with it MUST be fixed or it's just good money after bad.
Bush gets this 'noble' label which, at one time, I was open to. However, if you KNOW my business needs to make some tough choices, and make them when they need to be made, and your goal was to help me keep it going, the LAST thing you would do is hand me a bunch of money WITHOUT making ANY of the changes.
All the UAW and GM did was keep kicking the can down the road counting on government help. Can you imagine having been Ford, forced to sit there, hat in hand, fussed at over executive jets, having been the ONE guy at the table who made the touch choices WHEN they needed to be made AND here sits these two ####tards whose market share you were poised to gobble up BECAUSE you did the right things...get bailed out. Obviating every last touch choice you made. Making a joke out of your integrity and fealty to the ideas of risk and reward based commerce.
Bush wasn't noble. He made things worse and, if he didn't know it, then he ought to turn that MBA back in.
Tilted
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I'm not suggesting that he did the wise thing (and to be clear, my comments were only regarding his role in the auto bailouts, they don't reflect my thoughts regarding his presidency in general or his handling of the economic crisis in general). I'm not suggesting that it was the right way to achieve the goal, or to achieve a desirable result. As I suggested, it was misguided - that goes to your point about it being the wrong thing to do. My point was that he wasn't just trying to steal money from certain debtors so that he could pay off (or just help, if someone wants to interpret it that benignly) other debtors. He set out conditions for the government following through with further financial aid to the auto makers, and those conditions related to making them viable, not just taking care of the UAW. That stands in stark contrast with the efforts of the Obama Administration.
Misguided, unwise, improper, all sorts of other negative adjectives - yes, President Bush II's actions as regards the auto bailouts can be described as such. But he wasn't trying to steal money from the pension funds of Indiana school teachers and police officers to give it to the UAW, he was trying to help the American auto industry survive. (Again, he may have acted foolishly or improperly toward that end.) The same can not be said of President Obama's intentions. He was trying to steal money from those Indiana workers to give it to the UAW, he perverted the bankruptcy process and ran roughshod over long-established legal principles in order to do so. There's a difference there worth noting, even if we go on to rightfully criticize both presidents' actions.
As for Ford's perspective, I generally agree. Americans should go out of their way to reward Ford's discipline, foresight, and integrity as regards this situation. (Full disclosure: I still own some F shares, but a very small amount, I've sold the vast majority of what I bought back during the bailout discussions.) That said, I'm not sure I think that Ford's relative market position is harmed by the way the Obama Administration engineered the GM and Chrysler bankruptcies. Ford's relative position is harmed by their having reaped the general benefits of bankruptcy, but a more typical bankruptcy (i.e. a more legal one) would likely have left Ford at a greater disadvantage. The process that the Obama Administration directed probably left at least GM in worse condition going forward than it could have been in otherwise - e.g., it's still saddled with disadvantageous union agreements that it could have gotten away from in a proper bankruptcy process. Ford on the other hand would have been (and is) left with similar disadvantageous union agreements. In other words, the going concerns of GM and (possibly) Chrysler didn't benefit as much from the bankruptcy process as they could have, so the relative advantages that process gave them over Ford are less than they might have been.
Larry Gude
Strung Out
If I pour gasoline on a fire, knowingly so, how can I be said to have been trying to put the fire out? That, in my view, is what Bush did.
To be clear, I am in no way trying to rationalize this vs Obama. You did a wonderful job at the time of pointing out how the administration, Obama's, was simply shredding contract law over Chrysler and I think we both commented how it was the big untold story of the time.
kwillia
n/a
Saving General Motors from bankruptcy was among President Obama’s most frequently cited achievements when he ran for re-election last year. Democrats everywhere touted the company’s revival as proof of the 2009 bailout’s wisdom. That was then. Now, Obama has quietly released the auto manufacturer from a bailout requirement that it increase its production in the U.S. Instead, GM is spending billions of dollars building up its production capacity in ... China.
This is happening despite the fact that the Treasury Department has to date recovered just $36 billion of its original $51 billion loan to GM. By most analysts’ predictions, American taxpayers will be out approximately $10 billion when the remaining stock is sold off. Which is a long way of saying that it now appears that taxpayers paid $10 billion to make it easier for GM to accelerate its foreign outsourcing and send more manufacturing jobs to China.
Examiner Editorial: GM got bailout, now ships jobs to China | WashingtonExaminer.com
This is happening despite the fact that the Treasury Department has to date recovered just $36 billion of its original $51 billion loan to GM. By most analysts’ predictions, American taxpayers will be out approximately $10 billion when the remaining stock is sold off. Which is a long way of saying that it now appears that taxpayers paid $10 billion to make it easier for GM to accelerate its foreign outsourcing and send more manufacturing jobs to China.
Examiner Editorial: GM got bailout, now ships jobs to China | WashingtonExaminer.com