Topic: GM pays off remaining loans

[articsteve]

What utter BS...

but, to the masses that can't tell you the difference between a deficit and a debt, this Whitaker ad is pretty good with both Canadian and American versions.

[articsteve]

I agree with my fellow artics this is BS. Total BS GM!

It is far more important to fixate on this so called re-payment instead of the MULTIPLE Toyota safety recalls and Toyota's efforts to hide the truth about their corporate screw ups and hinder lawsuits by not revealing the truth.

GM could have at least learned from Toyota Motor Corp. who saved $100 million through a “negotiated” equipment recall on Toyota Camry and Lexus ES models..... and paid the US Gov with real blood money!

So somehow these loans are Toyota's doing .... 

[Erik]

^^No, they haven't.  The TARP operating equity account they were given was ~$13 Billion.  They took out ~$6 Billion from that account.  How does 13-6= repaid?

All smoke and mirrors my friend.  Sadly you are buying into it.....Do your own research.  Look on the web.  They are even joking around about the "repayment" here, on Detroit radio...the home of GM.  But hey..if you'll sleep better at night thinking GM paid their loans, who am I to wreck a good night's sleep for you? 

Unless I am missing something, there were two separate steps to this:

1) Bridging loan given by Bush to GM and Chrysler
2) Governments take equity stake in GM for $50 billionish dollars.

GM used money from 2 to pay back 1, no?

Not according to what I read.  The $13 Billion operating equity fund was separate.  So in effect...if you took a cash advance from one Visa and paid off the other Visa, technically you could say you paid off your Visa.  But you didn't.

"But lawmakers, and even the inspector general for the bailout fund GM borrowed from, point out that General Motors only repaid the bailout money by dipping into a separate pot of bailout money.[/size] They say the company did not actually use its own earnings to make the early payment and are questioning why executives are making such a big deal out of it. "

http://www.foxnews.com/politics/2010/04/26/lawmakers-accuse-gm-administration-misleading-public-loan-repayment/?test=latestnews


The day before the GM story broke, Neil Barofsky, the government TARP watchdog, testified before the Senate Finance Committee. He explained that GM did not use earnings to repay its TARP debt. The April quarterly report to Congress from his office stated: “The source of funds for these quarterly [debt] payments will be other TARP funds currently held in an escrow account.”

GM filings with the SEC reveal that GM was paying 7 percent interest on a $6.7 billion TARP debt. The filings also confirm that the source of funds for GM’s debt repayments was a multibillion-dollar TARP-funded escrow account at Treasury; that means it was taxpayer money — not earnings.

http://www.nancap.com/?p=915


The company’s chief executive, Fritz Henderson, called the repayment plan “a personal commitment.” The Obama administration, wardens of the 60 percent taxpayer stake in the company, declared itself “encouraged” by the news. Many commentators followed suit. But in the premature rush to herald the beginning of the end of the government’s involvement in the auto industry, a number of key considerations were left out, Edward Niedermayer, the editor of The Truth About Cars

For starters, $6.7 billion doesn’t begin to scratch the surface of what G.M. actually owes us. Over the past 12 months, the Treasury has given it some $52 billion in the form of cash, loans and the purchase of that 60 percent of the company’s post-bankruptcy equity. And that number fails to take into account the two bailouts of G.M.’s former lending arm, GMAC, or the $3 billion spent on the “cash for clunkers program,” which doubtless kept the company from posting even deeper losses.

Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy. The rest of that account will be used to cover fourth-quarter losses (including $2.8 billion pledged for the rescue of G.M.’s major parts supplier, Delphi), repay loans from the Canadian government, and possibly prop up the automaker’s shaky European operations. That escrow account is due to expire in June, at which time G.M. will repay what remains of the $6.7 billion from this week’s pledge — and then pocket the estimated $5.6 billion remainder.

http://mcauleysworld.wordpress.com/2010/04/23/general-motors-repayment-scam-paying-one-bailout-loan-with-another-bailout-loan-plans-1st-outlined-in-november-2009/

http://www.creditwritedowns.com/2009/11/gms-phony-taxpayer-repayment.html#ixzz0lw40O0bb

However, this is not new money they are tapping into. These are the original Tarp funds they sold 60% of the company for. They are NOT borrowing new money to pay for it. This was money put aside for the restructuring. Last I heard was that GM came out of the bankruptcy with $40 million in cash.

So, Whitacre is right. They did pay off the loans. The TARP money used for this are not loans, they were the "proceeds" of the purchase of GM stock by the government.

End of the day, GM is MANY billions of dollars less in debt and doesn't actually have to pay back anymore loans. All they have to do is run their company now, create a decent IPO and then make the governments shares worth something.

Yes, this is all money from the government. I get that. But the government just got a good chunk of their investment back, and GM marches on.

[rrocket]

So about 10% is a good chunk in your opinion??  LOL

[Erik]

So about 10% is a good chunk in your opinion??  LOL

Considering all the folks around these parts who said the government wouldn't see a dime of it back, yup I think it is a good chunk. Oh, and it is 100% of the LOAN money that is being paid back, not 10%. It absolves GM of it's debt to the government. Now, it just has to look after the shareholders.

[rrocket]

So about 10% is a good chunk in your opinion??  LOL

Considering all the folks around these parts who said the government wouldn't see a dime of it back, yup I think it is a good chunk. Oh, and it is 100% of the LOAN money that is being paid back, not 10%. It absolves GM of it's debt to the government. Now, it just has to look after the shareholders.

   If you say so....keep on drinking the coolaid.....

[Erik]

So about 10% is a good chunk in your opinion??  LOL

Considering all the folks around these parts who said the government wouldn't see a dime of it back, yup I think it is a good chunk. Oh, and it is 100% of the LOAN money that is being paid back, not 10%. It absolves GM of it's debt to the government. Now, it just has to look after the shareholders.

   If you say so....keep on drinking the coolaid.....

Ok. You can keep saying that until all the TARP money is repaid. Actually, you will likely keep saying it AFTER the all the TARP money is repaid.

[rrocket]

Ok. You can keep saying that until IF all the TARP money is repaid. Actually, you will likely keep saying it AFTER IF all the TARP money is repaid.

Fixed...

[Erik]

Ok. You can keep saying that until IF all the TARP money is repaid. Actually, you will likely keep saying it AFTER IF all the TARP money is repaid.

Fixed...

Either way, you'll just keep saying it....

[rrocket]

Ok. You can keep saying that until IF all the TARP money is repaid. Actually, you will likely keep saying it AFTER IF all the TARP money is repaid.

Fixed...

Either way, you'll just keep saying it....

Well they DO have a very, very long way to go.  As I said earlier, for them to "pay back" the gov't so the gov't breaks EVEN with their shares, they will have to be worth more than they have ever been worth in the history of GM.

[articsteve]

So, Whitacre is right. They did pay off the loans. The TARP money used for this are not loans, they were the "proceeds" of the purchase of GM stock by the government.

That is why the financial media immediately labeled the Whitacre Ad as a FARCE.

Under any definition the Ad was extremely misleading.  Did I miss Whitacre explain the 4.3 Billion post bankruptcy loss to the audience?

Why take a risk like that?

Is the profit picture for 2010 at GM that dismal?  Is GM finding that they can't push sales without profit killing incentives?   

[Erik]

Ok. You can keep saying that until IF all the TARP money is repaid. Actually, you will likely keep saying it AFTER IF all the TARP money is repaid.

Fixed...

Either way, you'll just keep saying it....

Well they DO have a very, very long way to go.  As I said earlier, for them to "pay back" the gov't so the gov't breaks EVEN with their shares, they will have to be worth more than they have ever been worth in the history of GM.

Pretty well agree with this at least. Don't know about the "worth more than they have ever been worth" idea. Corrected for inflation, GM had to be worth HUGE backs back in the 50's and 60's.

[rrocket]

Pretty well agree with this at least. Don't know about the "worth more than they have ever been worth" idea. Corrected for inflation, GM had to be worth HUGE backs back in the 50's and 60's.

Again...do some research.  GM's highest net worth, which peaked during their heyday in 2000, made GM worth ~$57 Billion.   For the Gov't to break even, (depending on the source) they need to be worth anywhere from $70 Billion to $83 Billion.  To BREAK EVEN. 

[Erik]

Pretty well agree with this at least. Don't know about the "worth more than they have ever been worth" idea. Corrected for inflation, GM had to be worth HUGE backs back in the 50's and 60's.

Again...do some research.  GM's highest net worth, which peaked during their heyday in 2000, made GM worth ~$57 Billion.   For the Gov't to break even, (depending on the source) they need to be worth anywhere from $70 Billion to $83 Billion.  To BREAK EVEN. 

Let me add the  just for good form.

GM's Heyday was no where near 2000. That might have been the point of their highest value in todays dollars, but my point was, corrected for inflation, what was GM really worth in it's heyday of the 50's, 60's and 70's. In 2000, their value was already being dragged down by huge amounts of debt. Be interesting to look back and see when GM last carried as little debt as they do now.

[tpl]

   without some inflation numbers in there its a meaningless computation.

[toolatecrew]

Of course GM is carring less debt than before. That tends to happen when you decalre BANKRUPTCY.

Thats what happens when creditors get stiffed or get 10cents on the dollar for their debt.

[rrocket]

Pretty well agree with this at least. Don't know about the "worth more than they have ever been worth" idea. Corrected for inflation, GM had to be worth HUGE backs back in the 50's and 60's.

Again...do some research.  GM's highest net worth, which peaked during their heyday in 2000, made GM worth ~$57 Billion.   For the Gov't to break even, (depending on the source) they need to be worth anywhere from $70 Billion to $83 Billion.  To BREAK EVEN. 

Let me add the  just for good form.

GM's Heyday was no where near 2000. That might have been the point of their highest value in todays dollars, but my point was, corrected for inflation, what was GM really worth in it's heyday of the 50's, 60's and 70's. In 2000, their value was already being dragged down by huge amounts of debt. Be interesting to look back and see when GM last carried as little debt as they do now.

The point is, their stock is going to have to be worth substantially MORE than it's peak value (as a company) in 2000 for them to break even. 

OK..let's see.  I checked.  GMs stock price through the 50s into the early 60s was between $9-$11 a share. I checked with a US site for inflation, and inflation from 1955-2010 is %712.  So it would seem that the 2000 stock price was still more valuable than GM through the 1955-1960 even though they had more debt. (on paper).

[articsteve]

GM's Heyday was no where near 2000. That might have been the point of their highest value in todays dollars, but my point was, corrected for inflation, what was GM really worth in it's heyday of the 50's, 60's and 70's. In 2000, their value was already being dragged down by huge amounts of debt. Be interesting to look back and see when GM last carried as little debt as they do now.

Don't confuse  BALANCE SHEET/ NET TANGIBLE ASSETS  with

..... MARKET CAPITALIZATION  ...  two completely different measurements.

The "PLAN" is that the US and Canadian taxpayer will recover their "EQUITY" 
through MARKET CAPITALIZATION.  Market Cap is determined by many variables including INFLATION, but in year 2000 GM had it's largest Market Cap in it's history; approx. 50 BILLION.  After that it started to slide, eventually to NIL.

So in order for the Taxpayers to recover their "EQUITY", being that the two countries own 70% of the shares, it's forecast that GM's market cap needs to be 80 some BILLION dollareenos to successfully transfer those shares to the private market.

In 2000, GM's US share of the vehicle market was approx. 25%.  Today it is 17.5%

Let's face it, best case scenario is that GM keeps it's 17% market share and manages to break even.  The taxpayer will never see another dime and the US taxpayer will probably inject more cash.  The actual scenario is eventual insolvency.  Whitacre's "fibbin" AD foreshadows that, IMO.   

[rrocket]

^^Did you know they lost more market share this past quarter?



As for numbers I keep seeing $83 Billion as the number needed to break even.

[articsteve]

^^Did you know they lost more market share this past quarter?

I know that GM customers that bought from model years 2005 to 2008 who are now shopping dealers and are finding out from all of them regardless of brand that their GMs have extremely low trade numbers and they vow never going to get burned again.

2008 loaded Suburban with only 8k, rear deck badly scratched from backing incorrectly to hook up a utility trailer, originally paid 70K plus tax!!!, took 27K and we are breaking even on that. 1K to repair the rear deck.

2008 Pursuit, didn't see it personally, book is $6800.  Could put that on the lot for $9999.  PPL owe $16K.  This is normal.

We should also install a sign outside:

Any one looking to deal a Deville .... sell privately.  The book numbers on those things are brutal.  The situation is always the same.  Old white guy, goes south for the winter.  At first there is anger, then next visit acceptance that they got burned.  Two in two weeks: a 2002 and a 2004. One was a STS and the other a Deville.  The 02 pulled $6500 in a private sale, and the Deville guy has not quite reached the acceptance stage yet.

So GM's "other" problem is mass defection due to horrible resale value.  Their past 5 years is catching up.  All this talk about the "new GM" may be good for new customers, but not for past customers.   Maybe different in the US market. 

BTW:  The 2002 STS had 78K, original owner, Florida winters, mint.