Board 'Puggies need to come up with some usual b.s. spin....
http://finance.yahoo.com/news/GM-rai...36345.html?x=0
As always with these IPOs, "retail" buyers are mostly excluded. The only good news is that a slightly larger percentage of retail buyers are being allowed. Retail outfits like TD Ameritrade and Charles Schwab are excluded. iow, the saviours, the avg Joe US taxpayers, are excluded.
Setting the IPO price too low causes over-subscription which drives up the price quickly, making high percentage for the industry insiders and underwriters and their big clients.
It's a rigged game, as always.
^^ of course but bottom line is gov't gets paid back.
The Pug Obama hating squakers will have nothing to say.
As long as the government gets paid back in full, I don't mind. What bothers me is how much of the IPO sales may be going to China, and other countries, rather than US investors..
So there wasn't a govt takeover after all..
Just to point out, the entire stock sale is only going to bring in about $15b, so the government isn't getting that investment back yet.
Also, the big gain was restructuring it's debt, which it could have done without the government buying into it.
But honestly, I never really minded the government buying non-majority portions of struggling large companies. It's a better idea than loans or give-a-ways, at least.
80,000,000 x $50 = $4B
We got a ways to go before we get our money back
"The reorganization erased debt and lowered labor costs. It also removed $27 billion from the wallets of bondholders and left stockholders with nothing. Taxpayers spent more than $50 billion to save GM from ruin between December 2008 and July 2009 and are not expected to get all their money back."
http://www.huffingtonpost.com/2010/1...4.html#s182343
But I still think bailing out GM was better than letting fail. The US burns $100B every year on bull wars, and $700B every year on a corrupt, wasteful, gold-plated MIC.
They would not have been able to restructure their debt without the government buying into it. Don't forget the credit market was non-existant at the time, and GM would have been been forced to liquidate by any expert analysis that I read.
We have gotten more than half of the money back from the TARP program, if memory serves, and had a decent return on what has been paid back.
Most analysts doubt that the taxpayer will make a direct profit on the GM bailout.
Uhhhh....you realize that the common stock needs to sell in the $60 range for break-even, right?
So without Wall Street this transaction would not be possible. Wait, I thought Wall Street was bad.
This also fails to mention the 45 BILLION in tax breaks they gave GM to make it look solvent.
Are you just stupid, or not paying attention?
Honestly I haven't really crunched the numbers.
I seem to remember reading that they would have to sell the stock at $150 per share for that.
I will look into it later, probably not a hard number to independently calculate.
If you have any links ready at hand to source data, let me know.
(don't mind doing it myself, but hey, on the off chance someone else has done the legwork, I'll take that)
cost of the unseen
all for union contracts.
Source link?
I ask because it has a bearing on figuring out an appropriate "break even" calculation.
Gotta log out. See you guys later.
Barovsky report says $133.78.
http://www.autoblog.com/2010/09/23/r...k-hits-133-78/
http://chicagobreakingbusiness.com/2...5-billion.html
GM’s tax break worth as much as $45 billion
By Reuters
Posted Nov. 3 at 10:07 a.m.
General Motors can get a tax break of up to $45 billion as part of its U.S. government-financed restructuring, do ents filed with federal regulators earlier this year showed.
The Wall Street Journal earlier reported that GM would not have to pay federal taxes on up to $50 billion in profits. A later version of this story revised this figure to about $45 billion.
This figure also includes $18.88 billion of carry-forwards, according to the automaker’s annual filing from April.
Under the Troubled Asset Relief Program, losses racked up by GM before its government-funded bankruptcy can be used to offset its future tax liabilities
The tax revenue LOST in this deal is not even included in the usual "break even" calculations.
Admittedly, I haven't looked too closely into it. I forgot how dry the commercial credit market was back then.
I didn't too terribly mind the TARP program. It came at an appropriate time, helped stem the downswing, and had some pretty good stuff in there. I had a problem with them forcing some banks who didn't need or want TARP money to take it to camoflague which banks were really in trouble, though. And there should have been a few more restrictions on it, like forfeiture of executive bonuses, etc.
I wouldn't have expected anyone to believe the government would actually break even directly on that one. At least not unless the govenrment holds onto the stock for years and GM makes a killing.Most analysts doubt that the taxpayer will make a direct profit on the GM bailout.
Glad to see there's at least one person in this thread with a clue. The taxpayers are into GM to the tune of about $50 billion, this IPO is only going to raise about $15 billion, and not all of the shares being offered belong to the government.
The $15 billion the IPO raises covers roughly half of what GM's deferred pension obligations to the UAW are. Toss in the fact that bondholders getting screwed over in the bankruptcy will make it difficult, i.e. expensive, for GM to borrow money in the future and I'd say it's about a decade premature to chalk this up as a victory for the US taxpayer.
But, why let any of this get in the way of this celebration over the "success" () of our government holding taxpayers liable for business losses?
And you think the payments will stop at 15 billion paid back?
The article said GM expects to profit between 17 and 19 bill per year. So, the payments should continue.
Would i rather GM be like Ford and be business wise and not need a bailout? Yes of course. But given the economic climate that W Bushead in large part created and with the entire world economy on verge of collapse, the bailout was not a bad thing.
Uhh, no it doesn't. It says "When sells fully recover" (no guarantee, and no guarantee GM will maintain or increase upon their share of sells), it "could" make that much.
The fact that it used "could" instead of "should" or "expect to" pretty much says that's a high estimate that probably won't be reached.
Do you understand how stock works? As the US tries to "trickle" it's massive stock holding into the marketplace to try to recover it's "investment" it dilutes the value of the existing publicly traded shares (those being issued now).
GM's profits would have to rise exponentially to maintain a static stock price.
There are no payments, only stock. The stock either appreciates to the point where the government can sell it at a value that recoups the taxpayer investment or it doesn't.
IMO the odds of the stock price appreciating to that point are slim at best considering the factors I mentioned earlier. The union obligation is due starting in 2013. Once that kicks in that's a couple billion worth of earnings, per year, being siphoned off to the union instead of to shareholders and that's going to put a significant downward influence on the stock price. As I see it, the taxpayers have just over 2 years to hope that the stock price goes from $33 to $133 to have a realistic expectation of getting paid back in full. And as CC pointed out, that's not even taking into account the $45 bil in tax breaks GM is getting.
Last edited by coyotes_geek; 11-16-2010 at 11:14 AM.
That does suck. I stand corrected.
coyotes_geek and CC good points both. Wow so unless the new Volt sales really rock it's looking pretty iffy for full payback? And realistically Volt only expects to get 0.5% at best of the market, right?
The Volt is just a feel good PR gimmick. It's massively overpriced for what you get. GM's profits are still in trucks and Suburbans/Tahoes. When gas prices go back up because of the Fed printing dollars GM's profits are gonna take it right in the nuts.
If it weren't for all the tax incentives on the volt GM would probably have to be selling about two trucks/suvs per each volt just to break even.
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