Gm ipo

[clambake]

General Motors Is Going Public
By Chuck Squatriglia August 18, 2010 | 6:15 pm | Categories: Miscellaneous


GM’s turnaround is almost complete.

Today the General filed the first reams of paperwork needed to go public, a move that will free the automaker from government ownership and pay back the last of the billions it needed to stay afloat following its bankruptcy last year.

GM’s 700-page S-1 Registration form filed with the Securities and Exchange Commission begins the process that will lead to the initial public offering of stock. Although no date has been given for the IPO, analysts tell Reuters it could come as early as October. There also is no word on how many shares might be offered. The company’s stakeholders — including the U.S. Treasury and possibly the United Auto Workers and the Canadian government — will sell common stock. GM also will offer Series B preferred stock.

“The amount of securities offered will be determined by market conditions and other factors at the time of the offering,” the company said.

It was not clear how much stock Uncle Sam might want to unload, and details on how much money might be raised will come as we get closer to the sale. But the Los Angeles Times cites Renaissance Capital when it says the IPO could be among the largest IPOs in American history, rivaling the deal by Visa Inc. that raised $17.9 billion in March, 2008.

The U.S. Treasury poured some $50 billion into General Motors in 2008, a bailout that gave Uncle Sam 60.8 percent of GM’s stock. The bailout included a $6.7 billion loan through the Troubled Asset Relief Program. The Treasury Department said in a statement today that it would “retain the right, at all times, to decide whether and at what level to participate in the offering.”

Things have gone well for GM this year. Beyond paying back the TARP loan in April, the company has earned $2.2 billion in the first six months of 2010. The IPO announcement came one week after GM posted a second-quarter profit of $1.6 billion, its largest in six years.

“GM is rolling again – thanks the investment and patience of the American taxpayer,” U.S. Rep. John Dingell, D-Dearborn, told the Detroit Free Press. “I’m glad to see GM taking steps to pay that money back and putting Americans back to work.”

GM plans to trade on the New York and Toronto stock exchanges under its common symbol GM.

GM, founded on Sept. 16, 1908, was once among the most widely held stocks in the country. At its height, it had more than 1 million individual investors in the early 1960s. GM hit its highest market capitalization — $52 billion — in 2000, but its investors were almost completely wiped out when the company filed for bankruptcy in June, 2009. GM exited bankruptcy 40 days later.

:p: thank you, mr. president


anyone else going in?

[DarrinS]

Is it really an IPO if it used to be public?

[LnGrrrR]

Pretty awesome. It's amazing the turnaround they've been able to make. Kudos to them, and for paying us back!

[Marcus Bryant]

Yippidee fucking doo dah.

[LnGrrrR]

Yippidee fucking doo dah.

Come now Marcus, it's like raising a child. You have to encourage small steps. :lol

[CosmicCowboy]

GM IPO stock is fools gold for the stupid.

The US government has already fucked GM stockholders and bondholders once.

Big labor was the winner in the bailout.

Stockholders and bondholders will get fucked again next time too.

Clambake, you need to bet your life savings on the new GM.

[ChumpDumper]

So you wanted the stock and bond holders to be bailed out?

[CosmicCowboy]

So you wanted the stock and bond holders to be bailed out?

You are smarter than that.

I thought.

Bond holders at a minimum should have at LEAST gotten a percentage on the dollar.

That's how corporate bonds work. They are first tier in a bankruptcy/liquidation.

[ChumpDumper]

You are smarter than that.

I thought.

Bond holders at a minimum should have at LEAST gotten a percentage on the dollar.

That's how corporate bonds work. They are first tier in a bankruptcy/liquidation.So you wanted them at least partially bailed out?

[CosmicCowboy]

How do you think the system works?

Bondholders are the people that loaned them the money to do business.

They took their savings and LOANED them to GM with the promise that they would get a small return (probably 100 basic points over treasuries) in what normally was a safe investment.

In a normal scenario, GM would have gone into bankruptcy and those bondholders would have had first claim on the assets as they were liquidated.

That's not what happened. Those people who invested their savings in GM were wiped out and the UNIONS got GM.

Pure political payback.

Yeah, the bondholders should have gotten something.

50 BILLION of savings stolen.

50 BILLION of savings wiped out.

If the US government can do that, why should anyone invest in US corporate bonds?

[ChumpDumper]

How do you think the system works?

Bondholders are the people that loaned them the money to do business.

They took their savings and LOANED them to GM with the promise that they would get a small return (probably 100 basic points over treasuries) in what normally was a safe investment.

In a normal scenario, GM would have gone into bankruptcy and those bondholders would have had first claim on the assets as they were liquidated.

That's not what happened. Those people who invested their savings in GM were wiped out and the UNIONS got GM.

Pure political payback.

Yeah, the bondholders should have gotten something.

50 BILLION of savings stolen.

50 BILLION of savings wiped out.

If the US government can do that, why should anyone invest in US corporate bonds?I wouldn't have invested in GM back then.

Bad risk.

Now?

Maybe.

[CosmicCowboy]

I wouldn't have invested in GM back then.

Bad risk.

Now?

Maybe.

Back then when?

Bonds are supposed to be safe long term investments. GM was "blue chip". There are people that invested in them way back before 2000 for their retirement that got wiped out. zero. so sorry. We just changed the rules. You aren't a secured investor anymore. We just took your life savings and gave it to the UAW. They will own GM from now on.

It was a totally unprecedented fucking of average investors that got no press at all.

50 fucking BILLION.

Chump, I know you like to be difficult just to be adversarial but PLEASE tell me you don't think this was right...

[LnGrrrR]

Gotta agree with CC here. Bondholders should have gotten something back, you would think. At the least, they should be recompensed the amount of stocks they had.

[ChumpDumper]

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

[clambake]

cc hedging his bets by walking backward. lol

[Nbadan]

The company is making profit although I would feel better if Whitacre had stayed on as CEO

[Nbadan]

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

From what I've read that was unsecured bond debt...so CC does want an investor bail-out when they accepted the risk for a greater return...TFB...

[EmptyMan]

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

lmao, my tragically shitty gm vehicle has 110k and has had 0 problems.

[TeyshaBlue]

I made a nice chunk buying GM pre-bailout @ $2.31/share and selling immediately thereafter @ $5.50.
I'm interested to see what it opens at. I might be in for a little bit.

[TeyshaBlue]

lmao, my tragically shitty gm vehicle has 110k and has had 0 problems.

lol...I've got an old 93 S-10 extended cab. It's my weekend, run-to-Home Depot-truck, except I drove it almost everyday for about 6 months when I had a brace of Fords crap out on me. 225,000 miles. I replaced the clutch at 150,000, put 1 alternator on it, and I'm about to put a starter on it...that's it.

Ugly as hell, but you can't kill it.:lol

[coyotes_geek]

GM might be a good stock play out of the gate while traders are all abuzz about the IPO, but I don't see this as a buy and hold one. After what happened to the bondholders GM is going to have a hard time borrowing money and will have to pay significantly higher interest rates. That will be a drag on their growth prospects.

[Ignignokt]

I agree that it should have gone through a real bankruptcy, but I don't shed a tear for investors if they weren't smart enough to be diverse and recognize a company that was making tragically shitty cars. If you believe in risk, accept it.

Are you justifying the govt's actions??

Is sanctioned theft which is what this really is, okay??

[CosmicCowboy]

I made a nice chunk buying GM pre-bailout @ $2.31/share and selling immediately thereafter @ $5.50.
I'm interested to see what it opens at. I might be in for a little bit.

?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

[Drachen]

?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

I don't know if this is what TB was talking about, but the shareholders were not immediately wiped out. Their shares were put in a holding company trading under GMQ (if I remember correctly). It was still trading at a high volume because some people (mistakenly) thought that the shareholders would be given shares in the new GM IPO. The SEC feared that this could cause an uproar when people "found out" (the info was already out there) that they would not make it through bankrupcy. They even changed the trading symbol to MTLQQ (Q denotes bankrupcy, they added a second Q in order to be more forceful). This is when the stock truely dropped and traded in the 0.50 range. It was full of pumpers and dumpers, but it even climbed back to around 1.50 when good news about GM would come out (all numbers are from memory so don't crucify me if I am a little off). Not saying that TB DID DO this, however this is how it COULD have happened.

[ChumpDumper]

Are you justifying the govt's actions??I said it should have gone through a real bankruptcy. Apparently you can't read.


Is sanctioned theft which is what this really is, okay??It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

[coyotes_geek]

The government deliberately circumventing bankruptcy laws to benefit a favored political contributor wasn't part of the risk the bondholders agreed to take on.

[ChumpDumper]

The government deliberately circumventing bankruptcy laws to benefit a favored political contributor wasn't part of the risk the bondholders agreed to take on.What risks did they agree to take on?

Do you have a list?

Link?

[CosmicCowboy]

It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

The problem there, Chump, is that Corporate Bonds are typically not high risk investments. Many of the long GM bonds that were defaulted on were initially highly rated...it wasn't until 2005 that they were downgraded. even then, historical precedent was that they would be top tier secured creditors in a bankruptcy...after the assets were sold the bondholders would be the first to be paid.

Instead, the bondholders were told "sorry, you are shit out of luck' and they just wiped out the debt and gave the company to the UAW.

VERY bad form. I find it hard to believe that you are actually defending this.

[ChumpDumper]

The problem there, Chump, is that Corporate Bonds are typically not high risk investments. Many of the long GM bonds that were defaulted on were initially highly rated...it wasn't until 2005 that they were downgraded. even then, historical precedent was that they would be top tier secured creditors in a bankruptcy...after the assets were sold the bondholders would be the first to be paid.

Instead, the bondholders were told "sorry, you are shit out of luck' and they just wiped out the debt and gave the company to the UAW.

VERY bad form.So they knew they were increasingly risky investments for four years?

VERY bad decision making.

[coyotes_geek]

What risks did they agree to take on?

Do you have a list?

Link?

If you really need a link and a list explaining how bonds work then this topic is over your head.

[clambake]

someone saved the company and jobs.

why u hate amerika?

[ChumpDumper]

If you really need a link and a list explaining how bonds work then this topic is over your head.You claim to know all of the risks bondholders take.

Let's see them.

[TeyshaBlue]

?????

When they did the pre-packaged deal the original shareholders were wiped out. You must have sold on one of the rumors and not the official bailout.

You're right...when it was confirmed that GM would seek a bailout, the share price jumped and I sold. I went back and looked at the screen shot of the sale. I actually sold at $4.98. Doh! I sold on 11/26/2008. The Fed loans were granted 12/19/08.

I could've ridden it longer and made a bit more, but it was a very good return at sale, so I can't complain.

[ChumpDumper]

TeyshaBlue was a smart investor in this case.

The people who held on or bought in? Not so much -- but they assumed the risk.

[CosmicCowboy]

TeyshaBlue was a smart investor in this case.

The people who held on or bought in? Not so much -- but they assumed the risk.

You are confusing the relative risk of stocks and bonds. It is virtually unheard of for bondholders to be wiped out.

If a "regular" company tried that in bankruptcy they would get laughed out of the bankruptcy court and the attorney that proposed it would probably be disbarred for ignorance.

[coyotes_geek]

You claim to know all of the risks bondholders take.

Let's see them.

You claim to not know them. If you're seriously interested in the topic then go learn. Google is your friend.

[clambake]

bonds are risky. period.

[ChumpDumper]

You are confusing the relative risk of stocks and bonds. It is virtually unheard of for bondholders to be wiped out.

If a "regular" company tried that in bankruptcy they would get laughed out of the bankruptcy court and the attorney that proposed it would probably be disbarred for ignorance.So it's not actually unheard of.

Thanks again.


You claim to not know them. If you're seriously interested in the topic then go learn. Google is your friend.I'll take that as an admission that you don't know either. Otherwise it would have been easy for you to say.

Thank you, too.

[ChumpDumper]

bonds are risky. period.They are virtually unrisky!

[clambake]

"virtually"

[clambake]

"unheard"

[clambake]

"of"

[coyotes_geek]

I'll take that as an admission that you don't know either. Otherwise it would have been easy for you to say.

Thank you, too.

And I'll take that as an admission that you weren't really interested in learning about bonds. Otherwise it would have been easy for you to look up the information. Glad we've got that settled.

[CosmicCowboy]

So it's not actually unheard of.

Thanks again.



On further research I can find NO cases where the bondholders were wiped out in bankruptcy. I had vaguely remembered some bondholders might have gotten hurt in the huge asbestos litigation settlement but they were made completely whole too as part of the agreement.

If you can find a SINGLE CASE where the bondholders were wiped out in a bankruptcy hearing feel free to refute me.

[clambake]

would you have preferred the company be wiped out, solely for shareholder benefits?

[Ignignokt]

I said it should have gone through a real bankruptcy. Apparently you can't read.

It is one of many possible outcomes when one risks his or her money. If you don't believe in risk and want everyone to be bailed out in every situation, fine.

It's the bondholders fault for the govt stealing their assets. Okay :tu

[coyotes_geek]

would you have preferred the company be wiped out, solely for shareholder benefits?

Shareholders or bondholders? The shareholders got exactly what they deserved, which is jack squat.

[ChumpDumper]

And I'll take that as an admission that you weren't really interested in learning about bonds. Otherwise it would have been easy for you to look up the information. Glad we've got that settled.Nah, I was asking you directly to see if you really knew.

You didn't know at all.

Glad we've got that settled.


On further research I can find NO cases where the bondholders were wiped out in bankruptcy. I had vaguely remembered some bondholders might have gotten hurt in the huge asbestos litigation settlement but they were made completely whole too as part of the agreement.

If you can find a SINGLE CASE where the bondholders were wiped out in a bankruptcy hearing feel free to refute me.This wasn't a bankruptcy. It should have been. But it wasn't. Bondholders knew that was a risk.

[CosmicCowboy]

would you have preferred the company be wiped out, solely for shareholder benefits?

Are you so fucking stupid you don't know the difference between stocks and bonds?

[clambake]

bondholders are subject to market risks, too.

[ChumpDumper]

bondholders are subject to market risks, too.They are virtually not!

[CosmicCowboy]

This wasn't a bankruptcy. It should have been. But it wasn't. Bondholders knew that was a risk.

Are you kidding? The bondholders were supposed to know that the fucking US GOVERNMENT was going to DENY them a bankruptcy hearing and steal their money?

There was ZERO precedent for that.

NONE

[CosmicCowboy]

bondholders are subject to market risks, too.

The only risk bondholders normally have is interest rate related as it affects the current value of the bond. If they are simply planning to buy and hold and clip coupons there is essentially no risk unless the government decides to steal your money.

[ChumpDumper]

Are you kidding? The bondholders were supposed to know that the fucking US GOVERNMENT was going to DENY them a bankruptcy hearing and steal their money?

There was ZERO precedent for that.

NONETeyshaBlue saw it coming. I know stocks are different, but it was clear they were looking for something other than a bankruptcy. Bondholders expecting to be treated as they would in a bankruptcy weren't very smart, or they chose to assume the risk they would be.

[ChumpDumper]

The only risk bondholders normally have is interest rate related as it affects the current value of the bond. If they are simply planning to buy and hold and clip coupons there is essentially no risk unless the government decides to steal your money.This was not a normal situation and essentially there was risk.

The smart and risk-averse saw it coming.

[coyotes_geek]

bondholders are subject to market risks, too.

They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.

[clambake]

The only risk bondholders normally have is interest rate related as it affects the current value of the bond.

see, you got it. it's all right there.

[ChumpDumper]

They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.This wasn't a bankruptcy.

[clambake]

They are, but those risks are limited via bankruptcy laws which put them at the head of the line when a company goes under. According to the bankruptcy laws the only scenario I can think of where bondholders would get completely wiped out would be if a company somehow managed to enter bankruptcy with $0 in assets.

their debt was greater than their assets.

[coyotes_geek]

their debt was greater than their assets.

Which is why they wouldn't have gotten $1.00 / $1.00. Nor should they have. Still, they deserved to get something > $0.

[CosmicCowboy]

see, you got it. it's all right there.

No it's not, shithead.

If you buy a bond for retirement with an 8% coupon with the intention of holding it there is normally no risk. You don't care about the day to day fluctuation of the bond price as interest rates rise and fall because you aren't trading the bond.

In this case, the government stepped in and denied the bondholders their rights to a GM bankruptcy and flat out stole their money.

You guys can dance around and play your cute word games by picking on specific qualifying words I use but it was THEFT. Plain and simple.

[clambake]

shithead?

[ChumpDumper]

Did you lose bond money in GM, CC?

[clambake]

and you can't dance around those qualifying words.

because they are the reality.

[spurster]

What has happened at GM ...

http://articles.moneycentral.msn.com/Investing/Extra/the-hottest-ipo-of-2010-gm.aspx

The holders of $27 billion of GM's public debt, as well as other creditors, got a 10% equity stake, plus warrants for an additional 15% of the company.


... does not seem all that different from this example ...

http://en.wikipedia.org/wiki/Bond_%28finance%29

There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company Worldcom, in 2004 its bondholders ended up being paid 35.7 cents on the dollar. In a bankruptcy involving reorganization or recapitalization, as opposed to liquidation, bondholders may end up having the value of their bonds reduced, often through an exchange for a smaller number of newly issued bonds.


... and seems in line with what general info I could easily find.

http://stocks.about.com/od/investing101/a/052709busted.htm

Bondholders may receive some payment, but often have their bonds converted to shares of stock in the reorganized company.

If the company emerges from bankruptcy and does well, the previous bondholders (now stockholders) may come out OK. However, some companies don’t survive even after Chapter 11.

...

If you own stocks or bonds in a company the files for Chapter 7 bankruptcy, you will probably receive nothing for your investment. Bondholders may receive a partial payment, but not always.


http://stocks.about.com/od/understandingstocks/a/121308bank3.htm

What happens to bond owners?

As noted in Part 2 of this series, bondholders are second in line for proceeds in either reorganization (Chapter 11) or liquidation (Chapter 7).

Under the best of circumstances, bond owners may receive pennies on the dollar in a Chapter 11 and could possibly receive some of the proceeds from Chapter 7 liquidation.

It is unlikely that bondholders will see their original principal returned.

[ChumpDumper]

What has happened at GM ...

http://articles.moneycentral.msn.com/Investing/Extra/the-hottest-ipo-of-2010-gm.aspxWait.

So they weren't wiped out?

[ChumpDumper]

The agreement, revealed in a Securities and Exchange Commission filing by GM (GM, Fortune 500) early Thursday, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

http://money.cnn.com/2009/05/28/news/companies/gm_bondholders/?postversion=2009052810

So if these are still the terms (anyone is free to correct me here), former bondholders could make quite a bit of money from this IPO.

Is that a correct assumption, CC?

[CosmicCowboy]

Wait.

So they weren't wiped out?

That remains to be see. So far their new "stock" is worthless.

The fact remains that the bondholders were SENIOR CREDITORS and their claim was subordinated to the claims of an UNSECURED CREDITOR (The United Auto workers). The unsecured creditor ended getting almost twice as much "stock" in the new company as the secured creditor.

[CosmicCowboy]

The agreement, revealed in a Securities and Exchange Commission filing by GM (GM, Fortune 500) early Thursday, would essentially give the bondholders 10% of the company but also give them the rights to buy an additional 15% of the company's stock at a low price.

http://money.cnn.com/2009/05/28/news/companies/gm_bondholders/?postversion=2009052810

So if these are still the terms (anyone is free to correct me here), former bondholders could make quite a bit of money from this IPO.

Is that a correct assumption, CC?

No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.

[ChumpDumper]

That remains to be see. So far their new "stock" is worthless.

The fact remains that the bondholders were SENIOR CREDITORS and their claim was subordinated to the claims of an UNSECURED CREDITOR (The United Auto workers). The unsecured creditor ended getting almost twice as much "stock" in the new company as the secured creditor.So you are saying they weren't wiped out.

Thanks.

Here's more:

The original bondholders have been hammered -- the debt traded at 95 cents on the dollar as recently as 2007 -- but prices have tripled from about 10 cents since before the bankruptcy filing as Wall Street has warmed to the company's story.

The debt carries obvious risk, given the uncertain recovery value. Many institutional investors avoid such complex distress-debt situations....

....GM bond bulls, including analysts at JPMorgan and Morgan Stanley, have argued that the debt could rise to 40 cents on the dollar if the company's recovery plays out and equity investors gravitate toward the debt ahead of an IPO. Probably the best plays are GM's old convertible debt, including the 6.25% and 5.25% issues formerly listed under the tickers GPM and GBM. They trade for about $6.50 -- 26% of their $25 face value.

http://articles.moneycentral.msn.com/Investing/Extra/the-hottest-ipo-of-2010-gm.aspx

Things have probably changed since March, but equity in the company and a possible 40% of the initial bond investment?

It's clear the unions got the better deal (though they made several billions of dollars worth of concessions as well), but how much better do you think the bondholders would have made out through a traditional bankruptcy?

[ChumpDumper]

No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.If a bondholder owns stock and buys more stock at a low price, and the price goes up after an IPO, does that bondholder make any money?

Yes or no.

[CosmicCowboy]

Even if the debt rallies, bondholders will fare the worst, reflecting the restructuring of GM by the Obama administration that favored the union over bondholders despite their similar legal claims. The union is also apt to do better than taxpayers, based on its sweet deal.

[ChumpDumper]

I guess the original bondholders no longer own that debt, but a majority of them agreed to the terms of the deal -- so contrary to what has been claimed in this thread, they knew exactly what was happening.

[CosmicCowboy]

If a bondholder owns stock and buys more stock at a low price, and the price goes up after an IPO, does that bondholder make any money?

Yes or no.

Three if's to end up making money?

I think you should buy GM bonds, CHUMP since you think they are such a fucking good investment.

[ChumpDumper]

In short:

1) The bondholders weren't completely wiped out.

2) The majority of bondholders approved of the deal that was reached outside of bankruptcy.

[CosmicCowboy]

I guess the original bondholders no longer own that debt, but a majority of them agreed to the terms of the deal -- so contrary to what has been claimed in this thread, they knew exactly what was happening.

Actually only 20% agreed (some of the institutional investors that had bought in at the end on the cheap) and it was crammed down on the others.

[ChumpDumper]

Three if's to end up making money?

I think you should buy GM bonds, CHUMP since you think they are such a fucking good investment.Looks like it tripled in value since its low point. That probably won't happen again.

I understand you are upset since everything you were arguing here turned out to be completely false, but resorting to straw men again is just pathetic.

[ChumpDumper]

Actually only 20% agreed (some of the institutional investors that had bought in at the end on the cheap) and it was crammed down on the others.Take it up with the Wall Street Journal:

Majority of GM Bondholders Back Debt-for-Equity Deal


http://online.wsj.com/article/NA_WSJ_PUB:SB124377589042969721.html

[coyotes_geek]

No it is not a correct assumption. The two are unrelated. The bondholders who had 100% of old GM debt still only own 10% of "new" GM which is still essentially worthless. Any money from the IPO goes to pay off the Feds and is not invested in productive capacity as is normal with IPO money.

As I understand it the shares for the IPO are going to come from two sources. The govt is going to sell off just enough of it's stake in the company so that they own less than 50% of it. Those proceeds go to the Treasury. There are also going to be new preferred shares created, the proceeds of which go to the company. Those new preferred shares will also end up diluting the shares that the bondholders received.

[CosmicCowboy]

Take it up with the Wall Street Journal:

Majority of GM Bondholders Back Debt-for-Equity Deal


http://online.wsj.com/article/NA_WSJ_PUB:SB124377589042969721.html

So someone told WSJ 54% approved.

CNN at the same time said 20%.

http://money.cnn.com/2009/05/28/news/companies/gm_bondholders/?postversion=2009052810

I honestly don't know the exact number but I know it was the speculators that bought discounted bonds that cut the deal.

[ChumpDumper]

So someone told WSJ 54% approved.

CNN at the same time said 20%.

http://money.cnn.com/2009/05/28/news/companies/gm_bondholders/?postversion=2009052810

I honestly don't know the exact number but I know it was the speculators that bought discounted bonds that cut the deal.From your article:


According to GM's filing, advisors to the unofficial committee of major bondholders which accepted the deal hold about 20% of $27 billion in unsecured bonds.

The administration official said that about 15% of the bondholders not represented by the committee accepted the original deal. The official added it will now be up to the committee to round up additional support from other bondholders.

The remaining bondholders have until Saturday afternoon to indicate whether they support the new offer.

Since this article was written on a Friday and the rest of the bondholders had until Saturday afternoon to approve, I will assume a majority did so which was reflected in the WSJ article the following Monday.

[clambake]

its better this way. gm wouldn't be the only one suffering.

[coyotes_geek]

its better this way. gm wouldn't be the only one suffering.

hooray for corporate welfare and trickle down economics.

[clambake]

hooray for corporate welfare and trickle down economics.

sub contractors and jobs. taxes and families. another death for american manufacturing.




hooray it's still breathing.

did you ever consider that?

[TDMVPDPOY]

seems like a ponzi scheme

[coyotes_geek]

sub contractors and jobs. taxes and families. another death for american manufacturing.

hooray it's still breathing.

did you ever consider that?

Yes, I have considered it. Your case for how important it is to hold taxpayers liable for private business losses is very compelling.

[clambake]

in the long run, i think it's important for america's manufacturing base.

they are paying back their bailout.......in case you didn't notice.

[coyotes_geek]

in the long run, i think it's important for america's manufacturing base.

According to GM's own IPO filing about only about 1/4 of the cars they build are getting built in North America these days. That 1/4 includes Canada and Mexico.

By next year GM will be building cars in China and importing them into the U.S.

So who's manufacturing base are we really supporting?


they are paying back their bailout.......in case you didn't notice.

They're not going to come anywhere close to paying back the full amount they were given.

[clambake]

According to GM's own IPO filing about only about 1/4 of the cars they build are getting built in North America these days. That 1/4 includes Canada and Mexico.

By next year GM will be building cars in China and importing them into the U.S.

So who's manufacturing base are we really supporting?
the current base of american workers. would you like these car companies to be forced into using american factories only?




They're not going to come anywhere close to paying back the full amount they were given.
how close?

[CosmicCowboy]

how close?

Well considering that all they have done so far is use government money to pay back government money to get more government money I would say not close at all.

They took 6.7 Billion out of a 13.4 billion escrow account created by the government when they were in bankruptcy (the escrow account was for working capital) to pay the original "loan" back (the other 40+ billion they gave GM was for stock) so they could borrow another 10 Billion from DOE to meet new CAFE standards.

In truth, they haven't paid back a fucking dime and have borrowed an additional 3.3 Billion.

[clambake]

so, you're saying they're not paying back?

[coyotes_geek]

the current base of american workers. would you like these car companies to be forced into using american factories only?

What I'd like is to not be in the corporate welfare business. But I've accepted that I'm in the minority on that.


how close?

Not very. Basically GM would have to achieve a market capitalization twice as big as they ever were while only making about half the cars for the shares the treasury owns to be worth the money put into GM. Not going to happen.

[CosmicCowboy]

so, you're saying they're not paying back?

uhhhhh...yeah. I'm saying when GM gives the US 6.7 Billion and then turns around and borrows 10 Billion that they didn't "pay back" shit and instead borrowed an additional 3.3 Billion.

It really IS simple third grade math.

[Mikesatx]

GM builds cars abroad and the foreigh auto makers build cars hear. The problem for GM was the inability to compete with the imports on cost driven primarily by their crippling union contracts.

The order of liquidation is secured lien holders, bondholders and then stock holders. Where do union members fit in? The only claim they would have would be for unpaid earned wages. Those claims didn't exist.

If the union labor was given a choice of restructuring their deal to fall in line with what the going rate for their skill was or be unemployed I am confident the majority would take the job. That leaves the bondholders to have their fate determined by the normal process of bankruptcy liquidation.

I agree GM should have been helped. But this was a bone thrown to union labor by Obama at the expense of the bondholder and taxpayer.

[clambake]

uhhhhh...yeah. I'm saying when GM gives the US 6.7 Billion and then turns around and borrows 10 Billion that they didn't "pay back" shit and instead borrowed an additional 3.3 Billion.

It really IS simple third grade math.

you didn't answer the question, unless you're implying that they'll never pay back.

for the record, is that what you're implying?

[CosmicCowboy]

you didn't answer the question, unless you're implying that they'll never pay back.

for the record, is that what you're implying?

Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

[Cry Havoc]

Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

At least the company is turning a profit now.

[clambake]

Of course I answered you question. Can you add and subtract? They have not paid any loans back and in fact have borrowed an additional 3.3 billion.

they just recently turned a profit. i'm not implying that they have paid back. i'm implying that there's a plan (success or failure to be determined) to start paying back.

have you concluded that they'll never pay back?

[CosmicCowboy]

they just recently turned a profit. i'm not implying that they have paid back. i'm implying that there's a plan (success or failure to be determined) to start paying back.

have you concluded that they'll never pay back?

I have concluded that the US will never get back any substantial portion of the 50 billion they put into GM. Will they EVER get ANY back? Probably some token repayments that will be heavily publicized. Eventually other things will take front and center priority and the public will just forget about the GM loans.

[coyotes_geek]

At least the company is turning a profit now.

Not that hard to turn a profit when the government comes along, gives you a boatload of cash and tells everyone you owe money to to piss off.

[clambake]

i don't think the public should forget or forgive the loan, but it will probably go the way of oil subsidies.

[TeyshaBlue]

According to GM's own IPO filing about only about 1/4 of the cars they build are getting built in North America these days. That 1/4 includes Canada and Mexico.

By next year GM will be building cars in China and importing them into the U.S.

So who's manufacturing base are we really supporting?


Don't confuse "building" with "assembling". Where do you think those parts come from? *hint* It aint Mexico or China.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051303382.html

[TeyshaBlue]

I have concluded that the US will never get back any substantial portion of the 50 billion they put into GM. Will they EVER get ANY back? Probably some token repayments that will be heavily publicized. Eventually other things will take front and center priority and the public will just forget about the GM loans.

I think the Fed is reportedly going to get something like 16 billion back when it reduces it's stake from 61 to 49% or there abouts.

That's a pretty good initial payment.

[coyotes_geek]

I have concluded that the US will never get back any substantial portion of the 50 billion they put into GM. Will they EVER get ANY back? Probably some token repayments that will be heavily publicized. Eventually other things will take front and center priority and the public will just forget about the GM loans.

They'll get back something. 60% of GM's stock will be worth something. It's just not going to be worth anything close to $50 billion.

Of course another concern is that GM's S-1 filing for their IPO is also saying that they're carrying $26 billion worth of unfunded pension obligations so the US taxpayer may not be done giving money to GM just quite yet.

[coyotes_geek]

Don't confuse "building" with "assembling". Where do you think those parts come from? *hint* It aint Mexico or China.

http://www.washingtonpost.com/wp-dyn/content/article/2009/05/13/AR2009051303382.html

I'm just using GM's own numbers.


I think the Fed is reportedly going to get something like 16 billion back when it reduces it's stake from 61 to 49% or there abouts.

That's a pretty good initial payment.

Can't see it. 12% of GM being worth $16B would mean that the company as a whole would have a market cap of $133B. GM's all-time high for market cap is in the low $50's.

[Cry Havoc]

Not that hard to turn a profit when the government comes along, gives you a boatload of cash and tells everyone you owe money to to piss off.

You really think it's that simple to suddenly turn the largest company on the planet into a full 180? They were losing something like $3,000,000 an hour at one point.

[Mikesatx]

Everyone hopes for GM's success. Whether they pay back the funds or not is not the point. With the taxpayer fitting the bill the government's responsibility was to the taxpayer and putting together a reorganization package that gave GM the best opportunity for success. I find it hard to believe that catering to the same group that was largely responsible for the company's demise is putting the taxpayers interest first.

The bigger issue for the bondholders is the precedent set by the government. If the investors of the world now have to worry about the U.S. government stepping in and changing the rules of bankruptcy law fewer investors will invest in bonds. This will then make it more difficult for companies and municipalities to raise capital.

[CosmicCowboy]

The bigger issue for the bondholders is the precedent set by the government. If the investors of the world now have to worry about the U.S. government stepping in and changing the rules of bankruptcy law fewer investors will invest in bonds. This will then make it more difficult for companies and municipalities to raise capital.

We have a winner.

[clambake]

We have a winner.

we all understand that cowboy. but the critical timing was a hit this country couldn't absorb.

[ChumpDumper]

The order of liquidation is secured lien holders, bondholders and then stock holders. Where do union members fit in? The only claim they would have would be for unpaid earned wages. Those claims didn't exist.Are you sure there is no other claim union members would have other than unpaid earned wages?

[CosmicCowboy]

Are you sure there is no other claim union members would have other than unpaid earned wages?

The big union claim was unsecured pension obligations.

[CosmicCowboy]

By agreeing to reduce GM's health care liabilities by 11 Billion the UAW got 17.5% of the new GM.

To contrast that, the Bondholders gave up 27 billion of debt and got a measly 10% of new GM.

Not exactly equitable was it?

[ChumpDumper]

The big union claim was unsecured pension obligations.And they made a sizable concession that they approved, just as majority of the bondholders approved their concessions.

If the parties agreed to this in an attempt to avoid a traditional bankruptcy, why are you acting like they were forced to do it?

[cue "Because the government is powerful" and could have made it worse canard]

[ChumpDumper]

By agreeing to reduce GM's health care liabilities by 11 Billion the UAW got 17.5% of the new GM.

To contrast that, the Bondholders gave up 27 billion of debt and got a measly 10% of new GM.

Not exactly equitable was it?If the bondholders thought they were being treated so terribly, they shouldn't have agreed to the terms.

They agreed to the terms.

[CosmicCowboy]

And they made a sizable concession that they approved, just as majority of the bondholders approved their concessions.

If the parties agreed to this in an attempt to avoid a traditional bankruptcy, why are you acting like they were forced to do it?

[cue "Because the government is powerful" and could have made it worse canard]

exactly. Thats how extortion works.

[ChumpDumper]

exactly. Thats how extortion works.But they could have just gone into bankruptcy.

They agreed not to.

[Mikesatx]

Are you sure there is no other claim union members would have other than unpaid earned wages?

Yes. Pension plans are defined benefit plans watched over by ERISA. ERISA ensures that plans are funded properly on an annual basis. If a company goes out of business the plan assets are administered by a third party. The participants then typically take the lump sum and move it to an IRA.

[MannyIsGod]

Yes, I have considered it. Your case for how important it is to hold taxpayers liable for private business losses is very compelling.

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.

[Mikesatx]

They agreed not to because of the money promised by our government. With that money came the power to influence and structure the deal around benefitting the unions. If we as the taxpayer don't own GM's bonds and are not part of the union wouldn't we want to structure the deal to give GM the best opportunity to resume profitability as quickly as possible. As I mentioned before I find it hard to believe that putting the union first in line considering the role the union played in the companies downfall was the best strategy for us as taxpayers.

[ChumpDumper]

They agreed not to because of the money promised by our government. With that money came the power to influence and structure the deal around benefitting the unions. If we as the taxpayer don't own GM's bonds and are not part of the union wouldn't we want to structure the deal to give GM the best opportunity to resume profitability as quickly as possible. As I mentioned before I find it hard to believe that putting the union first in line considering the role the union played in the companies downfall was the best strategy for us as taxpayers.So the bondholders benefited from the taxpayers as well.

OK.

If all we are doing is shaking our fists at unions, there is no need to cloak it in something else.

[CosmicCowboy]

Why do you guys keep saying it was an all or nothing? What if GM had been purchased in bankruptcy by someone like Toyota? The successful product lines/factories would remain open and the workers would still be employed.

[ChumpDumper]

They all agreed not to go into bankruptcy.

[CosmicCowboy]

They all agreed not to go into bankruptcy.

With the government gun to their heads. Sure, they agreed. At that point it wouldn't have been rational not to.

[Winehole23]

What gun?

[Mikesatx]

I'm shaking my fist at the government who is spending my tax dollars. The unions did what every other interested party tried to do which is get all they could. The unions won out because there members vote with the libs.

[CosmicCowboy]

What gun?

It's a commonly used metaphor for "threat" or "The big stick" if you don't take the carrot.

I concede the bondholders did not have a REAL gun to their heads. You win. Whoopee!

[ChumpDumper]

It's a commonly used metaphor for "threat" or "The big stick" if you don't take the carrot.

I concede the bondholders did not have a REAL gun to their heads. You win. Whoopee!What was the threat?

[TeyshaBlue]

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.

Couched in those terms, and considering the collateral damage as even more lost their jobs as suppliers' buisinesses went under, I suspect $50B might've been a pretty good buy.
As the supplier chain imploded, it would have had a huge, negative impact on Ford, Toyota, Honda and any other manufacturer that builds/assembles from US sourced parts.

[CosmicCowboy]

What was the threat?

From GM Insider during the negotiations:



The majority of GM bonds is held by the largest banks in the U.S. One of which is JP Morgan. In an effort to nearly force the debt holders to agree to a debt-equity swap, the Senate is considering legislation that would require the bond holders to agree to swap or they would potentially lose their TARP funds. We're told part of the deal would also automatically reject said bond holders from receiving any further TARP funding if they were to deny swapping GM debt.

[clambake]

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.


Couched in those terms, and considering the collateral damage as even more lost their jobs as suppliers' buisinesses went under, I suspect $50B might've been a pretty good buy.
As the supplier chain imploded, it would have had a huge, negative impact on Ford, Toyota, Honda and any other manufacturer that builds/assembles from US sourced parts.

it would be nice if people could see the entire screen.

[ChumpDumper]

From GM Insider during the negotiations:So the threat for not accepting the taxpayer bailout was not being bailed out by taxpayers?

:lmao

The ironing is delicious.

[Mikesatx]

Here is a novel idea: Have the Congressional Budget Office in conjunction with the major auto manufacturers and suppliers estimate the financial impact to our economy by letting GM go. This seems to make more sense than assuming the broader economic impact would have been far more devastating.

The bailout only makes sense if the company can regain profitability. Without addressing the issues that led GM down the road of ruin is simply putting off the inevitable with the added burden of throwing away our 50 bil. I think GM should have been helped, I don't agree that the government assisted impartially with the greatest sensitivity to the taxpayer.

[Winehole23]

From GM Insider during the negotiations: In other words, the threat consisted of rescinding TARP funds you yourself have argued were inappropriate gov't intervention in the market.

Do you play both sides of the fence much, CC?

[MannyIsGod]

Here is a novel idea: Have the Congressional Budget Office in conjunction with the major auto manufacturers and suppliers estimate the financial impact to our economy by letting GM go. This seems to make more sense than assuming the broader economic impact would have been far more devastating.


Wow if only someone would have done this back when this was being discussed.

Except they did. There are studies that show the amount of burden on the taxpayer FAR in excess of what we spent to bail out big auto.

[MannyIsGod]

Can someone remind me again what percentile CC was in?

[MannyIsGod]

http://www.financialpost.com/story.html?id=935684

[Mikesatx]

Wow if only someone would have done this back when this was being discussed.

Except they did. There are studies that show the amount of burden on the taxpayer FAR in excess of what we spent to bail out big auto.


Great!! Can I see it?

[MannyIsGod]

Great!! Can I see it?

http://lmgtfy.com/?q=center+automotive+research+study

[Mikesatx]

Center for Automotive Research out of Ann Arbor. Anything from the congressional budget office? Almost seems like the tobacco companies doing research on the health risks of smoking. Don't have a problem with the government stepping in. I think the government gains an enormous amount of credibility if they come to the people and explain with numbers and reasons why they are doing it. Here is what we are spending and why, here is the impact to all parties, this is why we think it will work and this is when would expect to be fully reimbursed.

[Marcus Bryant]

All dessert and no greens, as it were.

[MannyIsGod]

Center for Automotive Research out of Ann Arbor. Anything from the congressional budget office? Almost seems like the tobacco companies doing research on the health risks of smoking. Don't have a problem with the government stepping in. I think the government gains an enormous amount of credibility if they come to the people and explain with numbers and reasons why they are doing it. Here is what we are spending and why, here is the impact to all parties, this is why we think it will work and this is when would expect to be fully reimbursed.

Do you have a problem with anything in the actual study the posted other than where the center is located?

[clambake]

it's funny. half the time people claim the cbo can't find their ass in the dark.

[ElNono]

Center for Automotive Research out of Ann Arbor. Anything from the congressional budget office? Almost seems like the tobacco companies doing research on the health risks of smoking. Don't have a problem with the government stepping in. I think the government gains an enormous amount of credibility if they come to the people and explain with numbers and reasons why they are doing it. Here is what we are spending and why, here is the impact to all parties, this is why we think it will work and this is when would expect to be fully reimbursed.

The problem is that even if they were to do that (I'm not sure wether they did or not, honestly) it gets lost in the partisan innuendo. For the right, it doesn't matter if the numbers add up. It's all about "more and bigger government", "socialist state", etc etc etc. The minutiae is basically irrelevant to the discourse.

Obviously, when they actually had to decide to bail out the 'too big to fail' banks, the majority had a vote at hand.

It works just the same with the left in other topics, for example, tax cuts. It doesn't matter if they favor middle and lower class somewhat. If there's even a hint it might give some sort of relief to the upper class, then you get the "tax cut for the rich" innuendo.

[Marcus Bryant]

The middle class already make out like bandits wrt federal taxes. Both parties suck up to that group as if they know what a 30%+ marginal federal tax rate is like.

[coyotes_geek]

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.

People understand the concept just fine. They agree with it. That's why corporate welfare is so popular and so readily endorsed by both our political parties.

[CosmicCowboy]

Can someone remind me again what percentile CC was in?

99th every time. Did you even crack top 50?

[Marcus Bryant]

Soak the rich, because obviously the rich are immoral whereas the virtue of the people is without par.

[CosmicCowboy]

In other words, the threat consisted of rescinding TARP funds you yourself have argued were inappropriate gov't intervention in the market.

Do you play both sides of the fence much, CC?

I obviously don't write the rules or things would be VERY different. The fact that I might have disagreed with TARP has nothing to do with whether it was real or not and whether the banks wanted it.

A threat is a threat is a threat.

[ChumpDumper]

I obviously don't write the rules or things would be VERY different. The fact that I might have disagreed with TARP has nothing to do with whether it was real or not and whether the banks wanted it.

A threat is a threat is a threat.If you don't take this shitload of free money, we won't give you another shitload of free money.

You can threaten me with this any day of the week.

[CosmicCowboy]

If you don't take this shitload of free money, we won't give you another shitload of free money.

You can threaten me with this any day of the week.

No wonder you love your President so much.

[ChumpDumper]

No wonder you love your President so much.No wonder the bondholders took both shitloads of free money.

[CosmicCowboy]

BTW, unlike GM, I'm pretty confident the banks will eventually repay their TARP money.

[Marcus Bryant]

Fuck the banks and fuck GM.

[ChumpDumper]

BTW, unlike GM, I'm pretty confident the banks will eventually repay their TARP money.And?

[CosmicCowboy]

And?

I used proper punctuation with a period at the end.

[ChumpDumper]

I used proper punctuation with a period at the end.So that's it?

I believe neither will be paid back in full, it won't be anywhere near the $800 billion that people will still insist it costs from here on out.

[Marcus Bryant]

As if being paid back makes it all better.

[CosmicCowboy]

Fuck the banks and fuck GM.

I agree. The problem was the other 40% or so of bondholders that weren't banks that got sold down the river. The banks were mostly speculating and bought the bonds at a severe discount when GM got in trouble. After all, they were theoretically senior secured debt. The little conservative investors that bought AAA GM bonds for their retirement funds at face were the ones that got well and truly fucked.

[ChumpDumper]

As if being paid back makes it all better.16% of the advertised cost is better than 100%

[boutons_deux]

"Fuck the banks"

You Can't Touch This, you can't fuck the banks.

They have all the power, they run the country, and they aren't finished fucking citizens.

They have hired the Repugs to privatize SocSec, Medicare, Medicaid. And that will make it more expensive for less service rendered.

[ChumpDumper]

I agree. The problem was the other 40% or so of bondholders that weren't banks that got sold down the river. The banks were mostly speculating and bought the bonds at a severe discount when GM got in trouble. After all, they were theoretically senior secured debt. The little conservative investors that bought AAA GM bonds for their retirement funds at face were the ones that got well and truly fucked.
How would they have made out in a regular bankruptcy?


Numbers please.

[CosmicCowboy]

16% of the advertised cost is better than 100%

So you get mugged and have $100 in your wallet. The thief takers $85 and leaves you $15.

In Chumps world this is OK?

[ChumpDumper]

So you get mugged and have $100 in your wallet. The thief takers $85 and leaves you $15.

In Chumps world this is OK?Actually I would have kept $85.

I guess those tests weren't in math, eh?

[Marcus Bryant]

16% of the advertised cost is better than 100%

So it's relatively better and that means something? Absurd.

[CosmicCowboy]

How would they have made out in a regular bankruptcy?


Numbers please.

There was 27 billion of senior secured debt. I'm pretty confident that GM could have been sold off in parts for more than that.

If you don't believe it was worth 27 billion last year how the hell can you claim it's worth 60 billion now?

[ChumpDumper]

So it's relatively better and that means something? Absurd.Relatively better means relatively better.

[ChumpDumper]

There was 27 billion of senior secured debt. I'm pretty confident that GM could have been sold off in parts for more than that.What is your evidence of this?

[Marcus Bryant]

Hey, as long as you're paid for it that doesn't make it theft.

Fucking stupid.

[ChumpDumper]

Hey, as long as you're paid for it that doesn't make it theft.

Fucking stupid.Losing $15 is better than losing $100.

That's all I said.

Do you disagree with this?

[CosmicCowboy]

Actually I would have kept $85.

I guess those tests weren't in math, eh?

You make absolutely no sense.

The bondholders gave up 27 Billion for 10% of a company that in the rosiest of estimates is now worth 60 Billion. that makes their share worth 6 Billion.

You call that getting back the majority of the money?

[Marcus Bryant]

I disagree that it's worthy of positing. Hey Jethro, we's got paid back! In full. That means it wuz great!

[ChumpDumper]

You make absolutely no sense.

The bondholders gave up 27 Billion for 10% of a company that in the rosiest of estimates is now worth 60 Billion. that makes their share worth 6 Billion.

You call that getting back the majority of their investment?We're talking about TARP in total.

Try to keep up.

Thanks.

[ChumpDumper]

I disagree that it's worthy of positing. Hey Jethro, we's got paid back! In full. That means it wuz great!That means it wasn't as bad as most will continue to claim.

[Marcus Bryant]

So you agree that it was better and I am the superior human being. /chump

[CosmicCowboy]

We're talking about TARP in total.

Try to keep up.

Thanks.

I'm talking about the other 40% of the bondholders that lost their retirement savings and didn't get TARP like the big banks.

YOU try to keep up, CHUMP.

[spursncowboys]

I would buy it at $0.70 per share.

[ChumpDumper]

I'm talking about the other 40% of the bondholders that lost their retirement savings and didn't get TARP like the big banks.

YOU try to keep up, CHUMP.Sorry you got so confused.

You must have been taking another test.

[coyotes_geek]

There was 27 billion of senior secured debt. I'm pretty confident that GM could have been sold off in parts for more than that.

Easily. Their bankruptcy filing listed over $80 billion in assets.

[ChumpDumper]

So you agree that it was better and I am the superior human being. /chumpSo you don't agree it was better?

I made no claims about myself, except that given the choice I would prefer having $85 of $100 than $0 or $100.

[Winehole23]

Easily. Their bankruptcy filing listed over $80 billion in assets.Why did the bondholders take the deal, if in the case of bankruptcy GM could've covered them easily?

[ChumpDumper]

Easily. Their bankruptcy filing listed over $80 billion in assets.And all those assets were desirable and easily sold?

[Marcus Bryant]

Too fucking easy. To all a good weekend, and to Chump a good cycle.

[ChumpDumper]

Too fucking easy. To all a good weekend, and to Chump a good cycle.I agree, it was too easy to say having $85 is better than $0.

[Mikesatx]

Do you have a problem with anything in the actual study the posted other than where the center is located?


The problem I have is that the government should do the study free of any conflicts of interest. After all they are the one's spending our money.

[ChumpDumper]

The problem I have is that the government should do the study free of any conflicts of interest. After all they are the one's spending our money.We should probably check to see if they in fact have done this.

[Winehole23]

After all they are the one's spending our money.And that's not a conflict of interest?

I understand that the OMB is nominally non-partisan, but no party out of power really believes that. The appearance of a conflict can't really be avoided.

[Mikesatx]

We should probably check to see if they in fact have done this.

If they have I would love to see it. As someone that stays more informed than most I never saw any studies.


And that's not a conflict of interest?

I understand that the OMB is nominally non-partisan, but no party out of power really believes that. The appearance of a conflict can't really be avoided.

I agree with you. Have a private consulting firm do the analysis then. Better yet have both sides choose a consulting firm and see how close they come. The differences between the two would be exposed and you and I would be left to determine for ourselves whose analysis is more realistic.

[coyotes_geek]

Why did the bondholders take the deal, if in the case of bankruptcy GM could've covered them easily?

They took the deal because they thought that was the best deal they'd be able to get. The only logical reason I can think of why a group of people standing at the front of the line for a bankruptcy hearing involving a company with assets 3 times the size of what they were owed would voluntarily step to the back and take pennies on the dollar would be because they were being pressured by the government in some manner or fashion.

[ChumpDumper]

Perhaps there was no chance the assets could have been sold at anywhere near their perceived value, if sold at all. Given the state of those assets set for liquidation, that's a fair assumption. But that isn't the old bondholder/new owners' problem anymore.

[MannyIsGod]

The problem I have is that the government should do the study free of any conflicts of interest. After all they are the one's spending our money.

You assume the study is compromised but offer no proof. And LOL @ anything the government does being free of conflict of interest.

[MannyIsGod]

If they have I would love to see it. As someone that stays more informed than most I never saw any studies.



I agree with you. Have a private consulting firm do the analysis then. Better yet have both sides choose a consulting firm and see how close they come. The differences between the two would be exposed and you and I would be left to determine for ourselves whose analysis is more realistic.

I gave you a think tank undergoing such a study and yet the only thing you can say is that they're located in Ann Arbor and then have a conflict of interest. Perhaps you can provide us with specifics on how that CoI affected the study and where it skewed the figures.

[Ignignokt]

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.

False dichotomy.

GM doesn't have to go out of buisiness together. IT's not like their assets were going to get burnt.

IF GM would have filed for bankruptcy, then who ever the new owners and inverstors were could have restructured the labor contract and set those same people back to work.

GM still had huge assets and infrastructure, you just had to let the corporation restructure thru bankruptcy.

Bankruptcy would have put the power back to the company instead of the govt and the unions.

[clambake]

" i won't believe any study that doesn't reflect my approved position"

[Ignignokt]

The people who would have opposed the bankruptcy would have been the unions. They were the ones that would lose leverage. Even after the restructure, their contract is to heavy and we're just going to have to bail them out one more time.

[EVAY]

Okay, somebody help me out here. I know that bondholders stand in front of stockholders in the case of bankruptcy, normally. There might be a reasonable argument that GM's bankruptcy was not normal since it was so huge, but nonetheless, what would normally come before bondholders?

I mean, the Union ended up being the largest shareholder after the U.S. taxpayer, but since the shares were worthless, that seemed to give up the sleeves out of the vest. The Unions had massive underfunded health care provisions that they gave up on entirely. My understanding at the time this all went down was that GM's obligation to the unions' health care costs was considered a liability, although not a debt. Moreover, the company's requirement for future payouts for retired union members was so enormous that the company would never have been able to become economically viable again unless they declared bankruptcy, wiping out that debt in the process.
We are talking billions and billions of dollars in unfunded liabilities.

It was my undestanding that the union's retirement costs for folks who had retired at pay levels in the past when things were good was so high that the company could NEVER become solvent again without a bankruptcy to wipeout those debts, and the ability to start over without them. Thus, the Union accepted shares in the hope that the company would exist in the future to re-hire them, and that the eventual (and future) sale of the shares they had received would be the only way they would have of recouping some of the lost benefits to retirees.


So, while bondholders are in front of equity holders, they are not necessarily in front of other liabilities, are they? So, even though the Union ends up having lots of equity, that may or may not be worth anything, and the bondholders were still in front of existing equity holders, who got zilch, because that is the risk that equity holders take. Isn't that the position the Union is in now? Total risk?

Is it not a good thing to make unions ( read socialists) capitalists?

[Ignignokt]

I gave you a think tank undergoing such a study and yet the only thing you can say is that they're located in Ann Arbor and then have a conflict of interest. Perhaps you can provide us with specifics on how that CoI affected the study and where it skewed the figures.

that think tank study takes into account all three filing bankruptcy. Ford didn't need a bailout. They were doing fine. That study is not pertinent to this situation because we are only talking about letting one Giant fail instead of three like the article and the think tank state.

So that scenario doesn't say much.

Also it's silly not to think that Toyota, or any other foreign car maker wouldn't have bought the assets of GM.

[Ignignokt]

Perhaps there was no chance the assets could have been sold at anywhere near their perceived value, if sold at all. Given the state of those assets set for liquidation, that's a fair assumption. But that isn't the old bondholder/new owners' problem anymore.

That's what happens when theft occurs.

[ChumpDumper]

That's what happens when theft occurs.No, that's what happens when all the bad assets are no longer part of the company you now own.

[clambake]

theft lol

[Ignignokt]

No, that's what happens when all the bad assets are no longer part of the company you now own.

because they were taking away from you without consent, theft.

[ChumpDumper]

theft lolNo shit. No one files a plan to be robbed with the SEC.

[Ignignokt]

theft lol

I get it. It's not theft if the govt does it. That's why the Peoples State of Ireland has been a dreamy country.

[ChumpDumper]

because they were taking away from you without consent, theft.We've been over this. There was consent. Sorry you missed that. You should probably go back a few pages.

[Ignignokt]

No shit. No one files a plan to be robbed with the SEC.

They don't have to now, the govt can do it all by themselves. They're big boys you know.

[ChumpDumper]

I get it. It's not theft if the govt does it.It's not theft if there is consent. Now if you want to fight for minority bondholder's rights as you see them, feel free to do so.

[Ignignokt]

We've been over this. There was consent. Sorry you missed that. You should probably go back a few pages.

You weren't convincing, Sorry.

[clambake]

iggy talks ireland lol

[ChumpDumper]

They don't have to now, the govt can do it all by themselves. They're big boys you know.Consent was given by the bondholders.

You should really catch up on this.

[ChumpDumper]

You weren't convincing, Sorry.Take it up with the Wall Street Journal.

What is your counter argument to their article?

[ChumpDumper]

iggy talks ireland lollol Ireland

[Ignignokt]

Take it up with the Wall Street Journal.

What is your counter argument to their article?

The minority bond owners which was like 40 percent got fucked, and this sets a bad precedent for bond holders becuase of the banks.

The govt basically did fuck individual bond holders by forcing them into this bullshit with the banks and the unions.

Don't worry, you think it's a great plan, maybe the govt can use the same stellar plan to bail them out once more.

[ChumpDumper]

minorityI said you were free to bitch about that.

I never said it was a great plan, just that the hyperbole from the more ignorant posters such as yourself was misleading.

Maybe you can tell me what the bondholders were going to get from a regular bankruptcy so we can compare it to what they got. No one has been able to do that so far.

Thanks in advance.

[coyotes_geek]

Perhaps there was no chance the assets could have been sold at anywhere near their perceived value, if sold at all. Given the state of those assets set for liquidation, that's a fair assumption. But that isn't the old bondholder/new owners' problem anymore.

Perhaps, if GM was headed towards liquidation. But everyone knew that wasn't going to happen.

[ChumpDumper]

Perhaps, if GM was headed towards liquidation. But everyone knew that wasn't going to happen.Then why bring up assets that you say were never going to be liquidated?

I believe at liquidation of many assets was going to be at least attempted regardless since GM was going to be a smaller company in any case. If you can tell me why not, I'd be happy to hear your reasoning.

[Ignignokt]

I said you were free to bitch about that.

I never said it was a great plan, just that the hyperbole from the more ignorant posters such as yourself was misleading.

Maybe you can tell me what the bondholders were going to get from a regular bankruptcy so we can compare it to what they got. No one has been able to do that so far.

Thanks in advance.

They would have gotten a better deal in the longterm because they could restructure all contracts at their disposal instead of the govt forcing them to accept the bad buisiness model.

Just because the govt can get away with it doesn't make it hyperbole. It is what it is.

So you'd rather the bondholders get atleast something but be stuck with a shitty buisiness model than have a better longterm buisiness model with the ability to decide and feel free.

[ChumpDumper]

They would have gotten a better dealNumbers, please.

[Ignignokt]

Bankruptcy is there as a protection and for a good reason.

[Ignignokt]

Numbers, please.

Why? NM, it's not even an honest question. You wouldn't even have the tools to judge them anyway.

[ChumpDumper]

Why?For comparison.

Thanks.

If you can't provide any, just say so.

[clambake]

remember when bankruptcy used to be a dirty word?

[Ignignokt]

For comparison.

Thanks.

If you can't provide any, just say so.

That's no big deal because nobody can accurately predict such things. But what they have right now is shit, and a shit company. Regardless the oppurtunity to have a better company and better contract is a right which those bondholders deserve.

[ChumpDumper]

That's no big deal because nobody can accurately predict such things.You just claimed you could.

Why are you backtracking now?

[Ignignokt]

You just claimed you could.

Why are you backtracking now?

Don't lie, I didn't specify numbers.

Why do feel the need to be dishonest?

[ChumpDumper]

Don't lie, I didn't specify numbers.You said it would be better than anything they have now.

A number can be attributed to what they have now. You claim your way is better. You claimed your way would have a greater value than what they have now or could potentially have after an IPO. Then you quickly ran away from that saying you couldn't accurately predict anything.


Why do feel the need to be dishonest?I don't think you feel the need to be dishonest; it's just the way you are.

[Ignignokt]

You said it would be better than anything they have now.

A number can be attributed to what they have now. You claim your way is better. You claimed your way would have a greater value than what they have now or could potentially have after an IPO.

I don't think you feel the need to be dishonest; it's just the way you are.

I said that they could restructure their labor contracts and other contracts for longterm success.

All this deal did was reward the banks with TARP and gave the unions shares.

Insert nanny nanny poo poo putdown here.

[ChumpDumper]

I said that they could restructure their labor contracts and other contracts for longterm success.So that is just a given to you, but you have no proof it could be done and have admitted you can't prove anything.


All this deal did was reward the banks with TARP and gave the unions shares.Are you saying the bondholders got nothing?

[Ignignokt]

So that is just a given to you, but you have no proof it could be done and have admitted you can't prove anything.

Are you saying the bondholders got nothing?

There's definately no guarantee of any thing. But they would have had the chance to better structure the company and sell of bad assets.

And the bondholders got screwed by getting shafted, it's not nothing, but that doesn't make it good or just.

By that logic, if blacks got free justin bieber tickets for reperations, i guess that's better than nothing. :blah

[Ignignokt]

But atleast they got something! I win!/chumpdumper

[ChumpDumper]

There's definately no guarantee of any thing.Thanks for finally sticking with the position you walked back to.

Until you try to change it again, I guess.

[ChumpDumper]

They got something and I admit I can't prove any other process would have been better after claiming another process would definately [sic] have been better. I win!

[Ignignokt]

Thanks for finally sticking with the position you walked back to.

Until you try to change it again, I guess.

I can't stop you from self congradulating yourself, nor from putting words or speaking on behalf of me.

Until you stop, we'll continue.

[ChumpDumper]

I can't stop you from self congradulating yourself, nor from putting words or speaking on behalf of me.

Until you stop, we'll continue.I was thanking you.

And you flip-flopped all on your own. I don't think you feel the need to; it's just the way you are.

Unless you stop whining about it, we'll continue.

[Marcus Bryant]

I agree, it was too easy to say having $85 is better than $0.

Right, of course that was all that was at issue. Naturally a limited intellect such as yourself would seize the easy chips.

[ChumpDumper]

Right, of course that was all that was at issue. Naturally a limited intellect such as yourself would seize the easy chips.:lol I know there are other issues. I was specifically referring to the initial price that was reported compared to what it will actually end up costing. I'm guessing the former number will still be bandied about much more than the latter.

You are free to talk about any of the other issues as you see fit.

Do you want to discuss the other issues?

[CosmicCowboy]

Ahhh...I had to make a run to the ranch. Glad to see the progressives are still blowing each other and congratulating themselves on how smart they are. Chump, your little intellectual lightweight minions are quite humorous.

The big bank arbitrage guys wrote the buyout with the help of the GS guys that were running the show.

They scooped up bonds in the panic at pennies on the dollar till they had 54% and then fucked the rest of the mom and pop bondholders.

I find it quite humorous that you progressives are condoning the major fucking that the "real" salt of the earth investors in GM took.

[ChumpDumper]

Ahhh...I had to make a run to the ranch. Glad to see the progressives are still blowing each other and congratulating themselves on how smart they are. Chump, your little intellectual lightweight minions are quite humorous.

The big bank arbitrage guys wrote the buyout with the help of the GS guys that were running the show.

They scooped up bonds in the panic at pennies on the dollar till they had 54% and then fucked the rest of the mom and pop bondholders.

I find it quite humorous that you progressives are condoning the major fucking that the "real" salt of the earth investors in GM took.Not really condoning -- it's just that no one including you has proved they would have made much more money any other way.

I see you folks congratulating yourselves on your complete ability to back up anything you said. I find it humorous. It didn't take much in the way of smarts to stump all of you, although that really wasn't my intention. I figured at least one of you could actually come up with some realistic numbers.

[CosmicCowboy]

Chump, you just surprised me.

I would have expected a knee jerk defense like that from Manny and Parker. I'm sure they jerk off to thoughts of Arriana Huffington every night. Boutons just needs to stay on his meds.

That's your pathetic posse.

Seriously, do you really condone the Federal Government just stepping in and re-writing 200 years of civil law because it was convenient? Because one should never let a good crisis go to waste?

I know that you enjoy the literal parry and thrust of the forum and you sometimes just take a position to stir shit up...I do it all the time.

But do you REALLY think that was right? You are basically the only real critical thinker in this forum that automatically assumes the liberal/progressive position.

Do you REALLY want your government to be able to rewrite civil law just because it is temporarily expedient to the alleged common good?

This is a serious question.

If you give me some swarmy Manny knee jerk flip response I will have to re-evaluate my perception of the ChumpDumper.

[clambake]

why don't you post some numbers to support your position?

[ElNono]

The taxpayer was going to be on the hook with or without the bailout. This is something people don't seem to understand:

People who lose their jobs in recessions are a severe burden upon a society financially.


Unemployment benefits, loss of tax revenue, domino economic effects are all something to be considered (among other factors) when determining how much money the taxpayer was going to lose in either scenario.


False dichotomy.

GM doesn't have to go out of buisiness together. IT's not like their assets were going to get burnt.

IF GM would have filed for bankruptcy, then who ever the new owners and inverstors were could have restructured the labor contract and set those same people back to work.

GM still had huge assets and infrastructure, you just had to let the corporation restructure thru bankruptcy.

Bankruptcy would have put the power back to the company instead of the govt and the unions.

What restructuring/bankruptcy on a company that size you ever seen that didn't include layoffs?

[Mikesatx]

I gave you a think tank undergoing such a study and yet the only thing you can say is that they're located in Ann Arbor and then have a conflict of interest. Perhaps you can provide us with specifics on how that CoI affected the study and where it skewed the figures.


I couldn't tell you if the study is legit or not. To be honest it doesn't make a difference. When 50 bil is the price tag I think the government can assure that there are no conflicts of interest. You and I as the taxpayer should demand it. Do you remember the corporate scandels of Enron and Worldcom? Firms were double dipping their audit and consulting services. If you are bidding for the business of a multi-billion dollar client and you land the audit gig there is big incentive to also get the consulting work. Thus the conflict of interest and regulatory change separating the two lines of business.

Do you really follow our government this blindly?

[clambake]

are you saying the bondholders/shareholders should have demanded it?

or are you in the pool of those who claim theft?

[clambake]

I'm sure they jerk off to thoughts of Arriana Huffington every night.

have you ever considered taking you and your "Posse" to some kind of group therapy for this constant, closeted train of thought?

[Mikesatx]

are you saying the bondholders/shareholders should have demanded it?

or are you in the pool of those who claim theft?


The bondholders got screwed the shareholders suffered the fate of any other shareholder of a bankrupt company. That wasn't my point with the post. The government should have demanded and provided to the taxpayer an unbiased audit of GM and their plans to use our tax dollars. Whether lib or repug if you are asked to fit a bill of that size you should expect the government to do their due dilligence and act in the best interest of us the taxpayer.

[Winehole23]

. Whether lib or repug if you are asked to fit a bill of that size you should expect the government to do their due dilligence and act in the best interest of us the taxpayer.Due diligence is in the eye of the beholder. Larry Lindsey got fired for saying the Iraq war could cost $200 billion dollars. Sec'y Rumsfeld said that was way off base.

Rummy was right: Lindsey underestimated the cost by a factor of four or five, and the clock is still running.

Have prolonged low interest rates been in the interest of taxpayers, or have they been more a political expediency to keep credit churning and delay more or less inevitable corrections, such as the one we should have had in 2001? Where was the unbiased study on that?

Was there any due diligence on behalf of the US taxpayer for TARP or the emergency facilities of the US Federal Reserve in 2008-9, or again, wasn't all that more intended to benefit banks, bank receivers and the likes of AIG? All our government did by way of restraint was to keep the bailout approriation under $1Trillion. That's not counting QE or any of the Fed pawnshops that gave out cash loans in exchange for financial dreck. (All in all, the bailout comes to $13-14 trillion so farI think.)

And speaking of the TARP, isn't the FDIC required by law to take action BEFORE an insured bank poses any substantial risk to the US taxpayer?

Medicare part D? Estimates way low again...

Don't get me wrong, mikesatx, I don't think your emphasis on protecting the US taxpayer is wrong. I just don't think our government, Red or Blue, respects that anymore. Spending is power. If you think otherwise, I'd be very interested to know why.

[ChumpDumper]

Chump, you just surprised me.

I would have expected a knee jerk defense like that from Manny and Parker. I'm sure they jerk off to thoughts of Arriana Huffington every night. Boutons just needs to stay on his meds.

That's your pathetic posse.

Seriously, do you really condone the Federal Government just stepping in and re-writing 200 years of civil law because it was convenient? Because one should never let a good crisis go to waste?

I know that you enjoy the literal parry and thrust of the forum and you sometimes just take a position to stir shit up...I do it all the time.

But do you REALLY think that was right? You are basically the only real critical thinker in this forum that automatically assumes the liberal/progressive position.

Do you REALLY want your government to be able to rewrite civil law just because it is temporarily expedient to the alleged common good?

This is a serious question.

If you give me some swarmy Manny knee jerk flip response I will have to re-evaluate my perception of the ChumpDumper.They didn't rewrite civil law. All the parties agreed to the process in lieu of a traditional bankruptcy.

I can see why it was done that way. If a real majority of any of the parties involved actually opposed the agreement and it was indeed forced upon them, this would still be in the courts and rightly so. However, all the parties wanted the federal government involved because that's where the $43 billion was coming from. Like it or not, that made the government a player in the negotiations.

Now I'm fine with folks insisting the government should never bail out any industry under any circumstance, but I feel that kind of thinking needs to be applied to any government intervention on any level in order to really be credible. As far as my feelings are concerned, we slipped of that slope far too long ago to really find a place to draw a line between what intervention can be considered kosher and what cannot.

I see the GM bailout as another out of court settlement, with the federal government as the primary new investor with admittedly too much negotiating power. That part sucked because of all the politics that were actually injected into the process or inferred by critics, but again, that is what the parties agreed to because they wanted the money.

I really just got into some of the details of this because of this thread, so I'm learning as I go. As far as I can tell, it looks like the bondholders still hold those bonds and will see some kind of return on those in the future in addition to any potential gains from their new stock ownership. I've seen reports of some bonds recently valued as high as 40 cents on the dollar. It just seems like the process for the bonds is going to take a very long time as MLC is sitting on a ton of assets that no one really wants to buy.

[MannyIsGod]

CC, do you enjoy thinking about me jacking off?

[MannyIsGod]

that think tank study takes into account all three filing bankruptcy. Ford didn't need a bailout. They were doing fine. That study is not pertinent to this situation because we are only talking about letting one Giant fail instead of three like the article and the think tank state.

So that scenario doesn't say much.

Also it's silly not to think that Toyota, or any other foreign car maker wouldn't have bought the assets of GM.

No it also takes into account a 50% reduction across the board and only gives you lost tax revenue. It's not meant to be taken as an exact prediction of what will come only to show that the cost of a bailout is likely going to be borne by US government in one manner or another. It doesn't even go into the increased costs to the Federal and State governments just the loss of tax revenue.

Toyota may have purchased the assets but considering they weren't fully operating (I'm not sure if they are now) all of their own plants its really crazy to assume they'd be able to continue any measured production at the GM plants. I can see them purchasing the brand names and keep some of the production open but we would no doubt see a large scale reduction and huge ramifications in the US economy.

The main point to take from this is that while bailouts cost money, not bailing out ALSO costs money. At what point does the smart fiscal pragmatic move matter more than principle?

[MannyIsGod]

I couldn't tell you if the study is legit or not. To be honest it doesn't make a difference. When 50 bil is the price tag I think the government can assure that there are no conflicts of interest. You and I as the taxpayer should demand it. Do you remember the corporate scandels of Enron and Worldcom? Firms were double dipping their audit and consulting services. If you are bidding for the business of a multi-billion dollar client and you land the audit gig there is big incentive to also get the consulting work. Thus the conflict of interest and regulatory change separating the two lines of business.

Do you really follow our government this blindly?

Wait, are you really asking me if I follow the government blindly while at the same time dismissing something from a source outside the government and asking for the government to provide proof itself?

You point to Enron and Worldcom scandals but act as if the federal government is somehow immune to this?

You're upset that I can't provide you a study by the CBO but completely dismiss a study that you have no idea if its biased or not just because you assume the CBO would do a better job when the CBO doesn't have experts in that field and would likely use the same type of information the CAR used?

So, maybe you should ask yourself why you want to follow the government so blindly before you ask others who provide you with outside sources that question. Thats pretty damn amazing.

[Marcus Bryant]

Have prolonged low interest rates been in the interest of taxpayers, or have they been more a political expediency to keep credit churning and delay more or less inevitable corrections, such as the one we should have had in 2001?

Obviously a benefit for the consumer, but not the saver. Which speaks well to America as it stands in the 21st Century. A grand country if you can afford to buy shit.

[Mikesatx]

Due diligence is in the eye of the beholder. Larry Lindsey got fired for saying the Iraq war could cost $200 billion dollars. Sec'y Rumsfeld said that was way off base.

Rummy was right: Lindsey underestimated the cost by a factor of four or five, and the clock is still running.

Have prolonged low interest rates been in the interest of taxpayers, or have they been more a political expediency to keep credit churning and delay more or less inevitable corrections, such as the one we should have had in 2001? Where was the unbiased study on that?

Was there any due diligence on behalf of the US taxpayer for TARP or the emergency facilities of the US Federal Reserve in 2008-9, or again, wasn't all that more intended to benefit banks, bank receivers and the likes of AIG? All our government did by way of restraint was to keep the bailout approriation under $1Trillion. That's not counting QE or any of the Fed pawnshops that gave out cash loans in exchange for financial dreck. (All in all, the bailout comes to $13-14 trillion so farI think.)

And speaking of the TARP, isn't the FDIC required by law to take action BEFORE an insured bank poses any substantial risk to the US taxpayer?

Medicare part D? Estimates way low again...

Don't get me wrong, mikesatx, I don't think your emphasis on protecting the US taxpayer is wrong. I just don't think our government, Red or Blue, respects that anymore. Spending is power. If you think otherwise, I'd be very interested to know why.

You covered a lot in your post. I spent 45 min replying to it earlier and by the time I finished I was logged out and lost the reply. I'll try and be brief.

There is a big difference between corporate bankruptcy and going to war. If the decision is made that war is the best option you are not going to worry about a budget. You are going to try and win and limit the loss of our soldiers as much as possible. We have been involved in the middle east long enough to do cost analysis. It wouldn't hurt and I welcome it.

You may think the federal reserve is a political body and in some ways it may act like it. I look at Greenspan and Bernanke who have been the only fed chairmen since 87 and both have served for both dems and repugs. Their rate decisions in a normal environment are based on inflation. If the markets start to heat up and the economy is running great they push rates up to cool things down. If the market cycle is on the decline rates are lower to stimulate the economy. 2008 was not a normal environment so they stepped in and did things they normally don't do.

FDIC is supposed to step in if it becomes clear the financial institution isn't going to make it. AIG's failure would have had a far more significant economic impact than letting GM go. doesn't justify their actions. They should be held accountable. We should also be asking our government where was the oversight we pay for as taxpayers? There was a failure there as well.

Medicare is simply a disaster. I agree completely an unbiased third party should come in and audit Medicare. Common sense tells me a horribly off forecast in year one would be closer in year two and so on.

Your last statement I agree with. Both sides are irresponsible. What I would like to see is more people from both sides get off their asses and get involved and the very least get informed. Ask tough questions and not be afraid to say there needs to be a change even it means a change from the guy you thought was originally the answer.