How much would you pay for “New GM”?
About a year ago, all of GM’s common stock put together was worth maybe $2 billion, give or take, depending on the day. Go back three years, when things were merely bad instead of catastrophic for them, and people laughed at me whenever I said that GM was going to die. Back then, the stock was worth about $20 billion. For contrast, Toyota Motor at that time was worth more than $200 billion. That’s not a typo.
What would it have taken to buy GM out of bankruptcy, right now? Three years ago, when I first floated the idea to private-equity guys of my acquaintance, the answer would have been in the range of $75 billion. A few months ago, you could have done it for considerably less, depending on how far you could cram down the debt.
But now, We The Taxpayers have gotten suckered into buying the thing as a turnaround play. Barack Obama solved the debt problem by simply killing the bondholders, so he could have gotten the company for next to nothing, as opposed to the 20 to 40 billion dollars it might have cost a private syndicate. (That’s not to say, of course, that you’d ever find private investors stupid enough to do that.)
Instead, we’ve now put $50 billion in cold hard cash into this pig, with a lot more to come. And that’s to buy an asset the market has recently valued at a tiny fraction of that.
So when Obama says he’s going to sell GM back out to the public “very shortly,” what will the price be? Just to break even on his (actually, YOUR and MY) investment in 60% of the company, it’ll have to be almost $100 billion, and that’s ignoring the time value and opportunity cost. To get any kind of a decent return, it’ll have to be way more than $100 billion.
But who would pay even a little fraction of that much for “New GM,” even cleansed of its pension liabilities and long-term debt? New GM, in all candor, is an electric-car startup. I’d pay no more for New GM than I’d pay for Tesla. (And Tesla, according to the speculation which surrounded a capitalization they recently closed, is worth an absolute upper bound of $10 billion, and probably far, far less.)
Barack Obama is in the process of pulling off the biggest ream-job in financial history. Even worse than Bernie Madoff.
Step back and look at the bigger picture
Duke Wednesday, June 3rd at 10:31AM EDT (link)The whole purpose of taking over GM wasn’t to make Impalas and Monte Carlos - it was to insure the success of the health care and pension plans of the UAW. When GM is “sold back out” it will be owned lock, stock (about 60% worth) and barrel by the union as their gigantic bake sale to fund their benefits.
Our Great and Glorious Leader and his henchmen are in there only to protect the UAW benefit plans from extinction during the trumped-up, show trial of a bankruptcy proceeding. The side benefit for the liberals is they get to control an Amtrak-like car company that can produce their pie-in-the-sky “green cars” that no one in their right minds wants to buy!
I agree
Jonah Shumate Wednesday, June 3rd at 10:42AM EDT (link)I was telling my wife the other day that as we are expecting our first child, I wanted to get a bigger vehicle in anticipation of all the stuff we are going to have to lug around. But, with this move, smaller cars will be made. I told her that I dont want some little, green car, that we can not fit everything in to, and would be incredibly unsafe, etc.
What chaps my hide is why cant President Obama just work to incentivze the car companies to make more hybrids with fuel that is not ethanol based and does not get government subsidies? I want a vehicle with horsepower, etc. What he wants me to have I will not buy. The GM deal was all about getting the Union set up for a while. But, even they wont win out in the long run if smaller cars prevail. People wont buy and then we, the taxpayer, will be even worse off.
Bernie indeed.
You're right, but look at how Obama is selling it
Francis Cianfrocca Wednesday, June 3rd at 10:47AM EDT (link)He’s telling us that, in just a few short months, GM will become a new, independent company with great products and a bright financial future.
I’d feel a whole lot better if he would just admit that the point of the exercise is to keep funding the UAW and their retirees. It’s one thing for GM to come to me and say “Look! We’re reinventing ourselves for a great future!” At least, in that case, I have the liberty of evaluating their claims and their business plans and deciding for myself.
But when the President of the United States says “Look! We’re reinventing GM for a great future!” that’s totally different.
It’s different because he’s not giving me a choice. You and I have to fund this misbegotten thing whether we like it or not.
We are going to have Trabants of our own
LJ "Beaglescout" Miller Wednesday, June 3rd at 11:09AM EDT (link)If that reference to cardboard cars is too obscure, then we’ll have a British Leyland Corp. of our own with Jaguars that spend more time in the shop than on the road.
“Each of us has a natural right, from God, to defend his person, his liberty, and his property.”
Obama = Madoff
E Pluribus Unum Wednesday, June 3rd at 10:46AM EDT (link)I think, first of all it’s a TRUE comparison. What I think is even better is it’s an APT comparison.
I plan on using this.
Carthago delenda est
remember...
Taniwha Wednesday, June 3rd at 11:09AM EDT (link)…when we were kids, and we used to worry that some low-life punk would break in and steal our TV? Or when some worthless piece would break into your car and take the stereo? What did anyone think would happen when we got not only someone like that as president, but one who owned the press lock stock and barrel?
3 months in, and he’s stolen Chrysler and GM. Yes, stolen. And not just stolen, but with money he stole from us. And he didn’t even give the stolen money to the people who owned those companies — THOSE people got jack. He took the companies for nothing, and gave the stolen money from us to the UAW.
Used to be, a locked door and maybe a firearm could keep the burglars out of your sh**. What do we do NOW?
My only consolation is that since nobody will ever buy a GM again, the union will die soon enough anyway. But since the lowlife thug in the White House already gave them enough of our money that they hardly should need to work anymore anyway, it is a small consolation indeed. They’ll all probably just retire anyway.
Has anyone done the math? Couldn’t he have basically GIVEN each UAW member half a million dollars with all the money we’ve lost, and just cut out the middleman? How many UAW ‘workers’ are there in the first place?
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It's not JUST about keeping the UAW funded,
The_Gadfly Wednesday, June 3rd at 12:08PM EDT (link)although that is point 1.0.0. It’s also about keeping the Democrat election slush fund well stocked, and that is point 1.0.1.
We’ve been called racists enough now that it shouldn’t bother us any more.
-AChance, http://www.redstate.com/moe_lane/2009/11/03/what-men-may-do-we-have-done/#comment-24463
If NY23 was a beat down for Conservatives, what do you call what happened to Progressives in NJ and VA?
inspired by ColdWarrior, http://www.redstate.com/hooah_mac/2009/11/04/ny-23-the-agony-of-defeat-not-so-much/#comment-156
The government is a Ponzi scheme
uttles Wednesday, June 3rd at 11:47AM EDT (link)All the government is can be summed up under the title “Ponzi scheme”
Only it’s made legal through the ignorance of the public.
~~~ http://www.itsmyblog.com
this is just silly
Streiff Wednesday, June 3rd at 7:07PM EDT (link)It might be related to extortion, but to call government a Ponzi scheme is ridiculous.
“A man does what he can and endures what he must.”
not entirely...
JLenardDetroit Wednesday, June 3rd at 7:16PM EDT (link)If what is being referred to is Social Security, per se’ …. it pays off former investors with monies being extorted from current “investors” … real loose definition of “investors” there of course… but I think I can understand what was being inferred…
But yes, it is definately Extortion, pure and simple (to raise taxes or avoid/enact legislation) whether it be local, State, or Federal level threats to cut off “key” (Police, Fire, Defense, Garbage collection, etc) services to grab funds for other non-(or less essential)-services/functions.
Is that what was meant?
Does that clear it up?
(RS:Help) (JLD) (Hollyweird) (Brain-deads) (SPIN-cycle) (Obamaocare) (Party of kNOw) (Conservatism) (TEApeats) (respectful) (Reco) (Quotes) (removeRINOs.com)
+ 0bama Lies & your Bank acct will Die! (4/15 Truthers)
+ Heil “O” Hell No Obamao is NOT MY PRESIDENT! “No U won’t”
+ I want “O” to FAIL (here, here, & whole Diary (Ofail) here, is why)
“The first Liberal was Satan” - a Rush caller (other Quotes)
I think we should rename Ponzi Schemes to
Tbone Wednesday, June 3rd at 8:04PM EDT (link)Social Security Schemes. After all, shouldn’t the biggest deserve the moniker?
Envisioning when all that is Left is the Right.
But look at all the jobs Obama "saved"!
Common_Cents Wednesday, June 3rd at 12:17PM EDT (link)I’m sure we’ll be hearing all about that $50billion straw man.
“Never interrupt your enemy when he’s making a mistake.” Napoleon - Well, unless he is ruining your country! Common Cents
A cult of personality arises when a country’s leader uses mass media to create a heroic public image, often through unquestioning flattery and praise.[1] Cults of personality are often found in dictatorships.
Look for the gov.'t to "help"
louisiana Wednesday, June 3rd at 12:33PM EDT (link)Toyota & other auto industries that are not yet unionized.
5!
youthgrunt Wednesday, June 3rd at 1:32PM EDT (link)Francis, this is an excellent analysis. It is also useful to have in my head when I talk with people who think this is a “good thing”.
obama is worst then Bernie Madoff
bobojake Wednesday, June 3rd at 1:43PM EDT (link)and ENRON officials who are in Jail also.
black you evil neocon your in my Commentary
Alberta Wednesday, June 3rd at 5:15PM EDT (link)thread jack over
Sir, my concern is not whether God is on our side; my greatest concern is to be on God’s side, for God is always right.
Abraham Lincoln
Something needed to be done
edkay6 Wednesday, June 3rd at 6:51PM EDT (link)I am all for a hands off government, but something had to be done here. Maybe the government takeover will get things on the right track in the Green sector for GM/ Clearly one Hybrid vehicle basically was not something to brag abotu on GMs side.
Ed
Trump
"I am all for a hands off government, but something had to be done here."
Taniwha Wednesday, June 3rd at 6:59PM EDT (link)Sorry, but I don’t see how you can have both of those. If one is for hands off government, then it is the market’s role to decide what the “right track in the green sector” is, not the emperor’s.
Under what other circumstances (besides this, apparently) would you not stand by your own unsollicited statement that you are “for a hands off government”?
Not trying to be rude, here; I just don’t see how one person could say both those things, in the same sentence, no less.
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agenda
seesalrun Wednesday, June 3rd at 9:37PM EDT (link)I thinkI know, but it’s all so shady I am not sure, so I’d be curious as to what fellow red staters believe the true agenda is.
What we know
Bondholders got screwed
UAW got rewarded
Taxpayers got or will get nothing but a ultimately destroyed set of companies
My hypothesis is this. Free cars? Will the Government get into the financing business or a Section 8 kind of deal with cars too? Where is the money? There has to be a profit motive - or do they even care?
And long term (if they even think that far) what is it for the UAW besides instant gratification? How in the world can this kind of deal be sustained long term if nothing is sold (see hypothesis).
Just curious.
Wow, that's quite succinct Francis
JoeG Wednesday, June 3rd at 9:50PM EDT (link)You can simply ask people: “Do you believe the ‘new’ GM will be worth more than Toyota anytime in the next decade?”
Nope? Then this whole thing is a snow job.