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How GM scammed us on "repayment" as it asks for more of your money.

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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:30 PM
Original message
How GM scammed us on "repayment" as it asks for more of your money.
This is depressing. You remember the breathless announcements two weeks ago. GM was repaying its loan! Proof bailouts work!

Not so much. That "repayment" was nothing of the kind - and it is the first step in milking American taxpayers for even more. Read the deception and weep:

http://www.forbes.com/2010/04/23/general-motors-economy-bailout-opinions-columnists-shikha-dalmia_print.html


Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate--a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount . . . As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan.

. . .

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.


I have found nothing to dispute this version of GM's loan repayment scheme.

Every time you hear a glowing report from a corporation running around with piles of the people's money, dig. There's always, always more to it, and you can bet what they're telling you isn't within a light year of the truth.
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FSogol Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:32 PM
Response to Original message
1. Corporate bashing aside, how many people are employed directly or indirectly by GM?
:shrug:
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:35 PM
Response to Reply #1
3. Transparency isn't "corporate bashing"
A very serious false impression was spread throughout the media and here on DU about the repayment of GM's loans.

Does that not deserve some correction and clarification.
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Klukie Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:50 PM
Response to Reply #3
6. Yes it does or we all look like cheerleading fools.
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Hannah Bell Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:13 PM
Response to Reply #1
12. gm has shitcanned more people than it employs in the us.
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nc4bo Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:34 PM
Response to Original message
2. Oh lawdy. Seriously.
That commercial is something else.

Seems I've got some serious reading to do. Thanks.

:hi:
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leeloo Donating Member (153 posts) Send PM | Profile | Ignore Mon Apr-26-10 12:38 PM
Response to Original message
4. i was saying this last week but i presume because i am a newbie i
got thrashed for my comments...
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ClassWarrior Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:42 PM
Response to Original message
5. Forbes? Really? What would make me ever want to read that trash, much less believe it?
NGU.

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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:51 PM
Response to Reply #5
7. It was the best comprehensive article
I found the original story in the Economy forum here on DU, googled around looking for details, found this article that tied together everything I was reading elsewhere.

Either the facts stand for themselves or they don't. In this case, they do, messenger be damned.

Would you rather disagree with a magazine or figure out what corporations are doing with tens of billions of taxpayer dollars?

I know where my priorities are.
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Kalun D Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:52 PM
Response to Reply #5
8. It's True
I've heard it from several sources including Thom Hartman

and GM is still in the red, there's no way they've come up with $Billions, they don't have it.
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havocmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 12:55 PM
Response to Original message
9. .
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Klukie Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:00 PM
Response to Original message
10. Thanks for this.
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Marr Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:03 PM
Response to Original message
11. So they're basically getting out of the loan repayment altogether by using
money we essentially gave them? Isn't that even worse than just not having paid off the loan?
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amborin Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:14 PM
Response to Original message
13. K&R GM still owes approx $60 bill, just used Tarp funds to "repay" some loans n/t
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:26 PM
Response to Reply #13
33. No. Look up 'equity' vs. 'debt' (nt)
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greencharlie Donating Member (827 posts) Send PM | Profile | Ignore Mon Apr-26-10 01:15 PM
Response to Original message
14. yeah...
it was a PR stunt.
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Angry Dragon Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:23 PM
Response to Original message
15. K&R
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progressoid Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:29 PM
Response to Original message
16. I want a deal like that too.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:34 PM
Response to Original message
17. It gets far worse than that.
As the article indicates the majority of taxpayer money in GM is equity = stock not bonds. At least with a bond if GM remains profitable eventually taxpayers will be paid back. The equity stake will NEVER be worth what "we" paid for it.

Taxpayers gave GM $42.8 billion for a 60.8% stake in GM.

In order for those shares to be sold and taxpayer break even (0% return) that would require GM to be worth about $70.4.

If the company hypothetically at some point in the future was worth $70.4 the govt could sell their shares (this assumes selling 60.8% of company wouldn't lower value of company) and their govt shares would be worth $42.8 billion.

So how likely is that?

To put that into perspective:
Ford is worth $43 billion.
Honda is worth $63 billion
Toyota is worth $124 billion

GM would need to be worth to private investors about double what Ford is now, more than Honda and about 75% of what Toyota is.



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ieoeja Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 01:49 PM
Response to Original message
18. So what?

(1) We purchased a majority stake in GM.
(2) We loaned GM some money.
(3) GM repaid that entire loan with interest.
(4) We still own a majority stake in GM.

Are you upset about the government owning stock in a private company? Are you worried because it is just so, so, SOCIALIST!!!!

I wouldn't worry about it. THAT is the stock which will be sold first in the initial public offering of GM stock. Probably at a profit. Certainly not at a loss as it would make the administration look bad if we lost money on this investment.


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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:13 PM
Response to Reply #18
20. GM did not "repay the loan"
GM used public funds we gave them to "repay the loan" with the intention of using the PR to receive an additional $10 billion.

So, what is the more accurate statement here. "GM repays $6.7 billion." Or "GM maneuvers to receive another $3 billion in loans from the government."

Your socialist capping is a distraction (and slightly ad hominem). I'm not opposed to arguments saying we ought to nationalize this or that industry. I'm not anti-socialist out of hand. But, this isn't a public vs. private argument. What this is is deliberate misinformation widely disseminated to create a distorted image of a bailed out company repaying government funds rather than shifting public money around in order to request even more public money.

Rather than come clean about what GM is doing (and as part owners, don't we deserve the full truth?), we instead got a nice heaping helping of propaganda in the hopes that no one will notice that we're probably about to pump even more billions into it.

And I'd like to see the basis of your "probably at a profit" statement. Given the current value of GM stock, I see no justification for that rather rosy prediction.
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Klukie Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:20 PM
Response to Reply #20
21. not to mention that we look like a bunch of misinformed a-holes .....
when we spew the propaganda.
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:26 PM
Response to Reply #21
23. And it was everywhere
To be honest, if I hadn't seen a tiny thread in the Economy forum, I'd probably have continued thinking GM's status as far as bail-out funds was much better than it is in reality.
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ieoeja Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:30 PM
Response to Reply #20
24. GM stock currently has no value.

It is not being traded publicly. The "old" GM stock is pretty worthless. But that doesn't matter since that stock holds pretty much nothing but debt (I don't really understand how it has *any* value to tell you the truth).

I saw another (yours?) post listing value of the publicly traded car manufacturers. Since GM is the 2nd largest manufacturer, their total value should be a lot closer to Toyota's, or possibly greater after Toyota's recent problems, than to Ford's once GM goes IPO.


The USA/GM books will not be cleared until those shares are sold. Until then, GM will have government money (and we will have GM shares) which makes it possible to paint this picture as negatively as you desire. Or you can simply look at GM's improvement and paint it in a positive manner.

I have a business on which I spend more money than I earn. But once I pay off the mortgage in the distant future, I will earn a *lot* more money than I spend. So I am losing money and making equity. The smart businessman tells the IRS** the former and himself the latter.

The desire, definition, and view are yours.


**Actually, according to what I tell the IRS I am making money because mortgage principal doesn't count as an expense. But according to those same rules, the building is depreciating which means I am losing money. So oddly, I'm losing money according to the IRS for theoretical equity losses, not the fact that I actually spend more actual cash than I take in! Complete opposite of reality. Accounting is so much fun.

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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:44 PM
Response to Reply #24
25. Let me ask you this
Edited on Mon Apr-26-10 02:45 PM by Prism
And I'll use an example.

Say I float a friend a $100 loan. At the end of the month, he asks me for $200 to help make ends meet, and I give it to him. He then uses $100 of that money to repay the original loan.

He then runs around telling everyone we know that he's paid me back, deliberately allowing people to assume by his statement that he is either earning more money or no longer owes me any.

Wouldn't you say my friend's characterization of the situation is a fairly inaccurate, if not outright dishonest one?

Whether or not the government turns a profit remains to be seen. It's a giant question mark, and I don't think anyone can claim the likelihood of either with any certainty. I lean towards the idea that we'll lose money, but recognize I could be wrong. However, my concern isn't about government profit. If we need to nationalize, even temporarily, to save a million manufacturing jobs, that isn't the worst thing in the world in my mind.

It's the deliberate dishonesty that gets to me, and I want to know why they're engaging in it. As majority holders, we have a right to know that the company is angling to receive a $10 billion loan. Yet, mysteriously, that was unmentioned and the mischaracterization was allowed to stand.

I don't think GM should be engaging in this when it's supported by taxpayer money. I think any sick company that we're keeping afloat with our money is morally and ethically bound to provide accurate pictures of its condition, plans, and methods.

It shouldn't be engaging in misinforming propaganda, IMO.
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ieoeja Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:57 PM
Response to Reply #25
27. Your friend would be lying.

But since it was a bad analogy, let's try this one.

Your friend needs $600. His car is worth $500. You buy the car for $500 then loan him another $100. Since you didn't really want the car, he says he'll help you find a buyer.

A month later he repays you $100 and goes around telling everyone he repaid his loan. He is also still working on helping you sell the car, but he omits that when telling everyone he repaid his loan to you.

This annoys you because you're stuck with a piece of shit car you don't really want. Your friend is not being dishonest. But you feel taken advantage of.

Noone can tell you if your feelings are valid or not. You must decide that for yourself.


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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 03:06 PM
Response to Reply #27
28. The car isn't part of the calculation
This loan repayment has nothing to do with stock or equity. It was "repaid" wholly with TARP funds. As I said, it's as if I gave my friend $200 to make ends meet, and he used it to pay the $100 back. And then, to cap it off, when telling everyone about how he paid it back, he neglected to mention he already knew he was going to ask me for another $150 loan next month.

Leaving equity entirely out of the equation, he's still knowingly in a cash hole while deliberately giving the impression that he is not.

That's dishonesty no matter how you slice it.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 03:11 PM
Response to Reply #27
29. That is a bad analogy.
Ignore the $44 billion in worthless stock.

GM was loaned $6.7 billion. They "paid that back" by borrowing ANOTHER $10 billion from DOE.

Starting to see the picture.

Before GM "paid the loan off" the "only" owed taxpayers $6.7 billion.

Now that they have paid it off they owe taxpayers $10 billion. The net result in GM borrowed an additional $3.4 billion by "paying off the loan".



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quickesst Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:04 PM
Response to Reply #25
48. This....
...."Whether or not the government turns a profit remains to be seen. It's a giant question mark, and I don't think anyone can claim the likelihood of either with any certainty. I lean towards the idea that we'll lose money, but recognize I could be wrong."

..should have been the first line in your op.
"He could have done this, and this seems wrong, and he did this when we thought he would do that, and it doesn't seem to be good, and I don't think it might be good in the future, "BUT, I COULD BE WRONG".

What can I do about this now? What can you do about this now? Well, other than post on this board an opinion that is exactly that, an opinion. Why not wait until we see if this administrations actions actually play out in favor of the taxpayers, or if it's a boondoggle? I'll wait and see. Thanks.
quickesst

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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:29 PM
Response to Reply #20
34. Huh? 'Given the current value of GM stock'? WTF?
Do you KNOW the "current value of GM stock"? Of course you don't. Nobody does. GM is currently not a public company. Its stock does not trade. When GM does its initial public offeriing (and ONLY then) you will know something about "the current value of GM stock."

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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:44 PM
Response to Reply #34
42. Replace it with "estimated value"
When compared to currently publicly traded companies and the company's current health.
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:49 PM
Response to Reply #42
45. Well, guess what...
... the IPO isn't happening today... so...
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:04 PM
Response to Reply #45
47. And it's beside the point
Since the real problem with GM's repayment story has nothing to do with the stock.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 03:16 PM
Response to Reply #18
30. The stock won't be sold at a profit (not unless the govt waits a decade).
Edited on Mon Apr-26-10 03:17 PM by Statistical
Market-share doesn't equal stock price.

GM is risky company and margins are thinner than Ford.

Today Ford, GM, Toyota has roughly same marketshare.



Marketshare doesn't determine stock price.

You take GM slimmer profit margins its existing debt ($10 billion after "repaying $6.7 billion) and risk premium the company isn't going to be worth as much as Toyota. Hell it won't be worth as much as Ford.

If right now you had to put your lifesaving into GM or Ford you honestly would say GM is the better, safer company? Really.


The idea that GM will be worth $70 billion + at IPO is funny :rofl: (except it is taxpayer money so it isn't funny).

Of course selling at break even is still a loss. The money was borrwed thus the "break even price" would be govt initial equity stack plus compounded interest from time money was given until when stock was sold. Taxpayers will never see a profit on GM. At best they only see a small (15%-20% on $50 billion) loss. Then again that is still better than AIG.
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:36 PM
Response to Reply #30
38. So, the government sells it off over time...
... and THEN makes a profit.

Equity is always supposed to be a long-term kind of investment. The idea that the government took the equity stake with the intention of "flipping" GM for a quick profit is not supported by evidence. Nobody ever said that was the intention. So, I won't judge the GM rescue harshly if the government does not do that.

Over time, the stock will rise. And even if the 60% stake IS sold at a loss, the government could still come out ahead. Why? The government has an advantage that other investors don't have: It stands to gain from the taxes paid by GM employees and employees of GM suppliers, dealers, etc.

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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:31 PM
Response to Reply #38
54. Unlikely.
One the govt borrowed money to make that "investment" that combined with massively overpaying for GM means that even a decade from now it is unlikely the govt investment will be profitable.

Govt stake in GM is roughly $42 billion.

However the money was given to GM over a year ago and any potential sale may not occur for another year. So while the govt invested $42 billion the current "cost" of that investment is about $45 billion. To break even at IPO the company would need to be worth about $75 billion (almost double the value of Ford which is far healthier). Lets say that GM is actually going to be worth $45 billion at time of IPO. Now lets say govt hangs onto GM stake for a decade and GM share price grows by 8% annually. In 2021 GM will be worth around $97 billion however the value of the money loaned to GM (accounting for interest on the debt) will be $117 billion. The taxpayer is still behind.

It is even worse when you consider inflation.
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OHdem10 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:07 PM
Response to Original message
19. We own stock. Hopefully whomever is in charge of transactions
will sell the stock off at profit. We can still come
out ahead.
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:23 PM
Response to Reply #19
22. It isn't really about "coming out ahead"
I don't think government should really be in the for-profit business to begin with, and I'm receptive to arguments about nationalizing industries - even at a loss.

What bothers me is the misinformation campaign about GM's actions. This is a company we own a majority stake in. We deserve, at the very least, being leveled with in a forthright manner. Do we need to float them $3.3 billion more in loans? Ok, let's discuss that. Instead, we got a PR campaign that seems intentionally engineered to leave an inaccurate impression in citizen's minds.

That's troubling, IMO. A company that has received so much taxpayer money and that the government now owns should not be playing these games with the electorate.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 03:20 PM
Response to Reply #19
31. The govt so overpaid for the stock that it is virtually impossible for us to "come out ahead".
GM would need to be worth $70 billion at IPO for taxpayers to break even.

Ford is worth about half that.

Today GM has same marketshare as Ford, lower margins, and far more risk to an investor. GM won't be worth anywhere near $70 billion at IPO.

The again even $70 billion market cap would still be a loss. The govt borrowed the money to buy a stake in GM so the break even point grows continually due to interest on that loan.
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:46 PM
Response to Reply #31
43. Well -- kinda sorta... but you don't understand long-term investing
Maybe it's true that "GM would need to be worth $70 billion at IPO for taxpayers to break even."

But that is ONLY true if the government needs to break AT THE IPO STAGE. It doesn't. The government could hang on to some -- or most-- of its shares longer. If it does that, there is a good chance most of the money will be made back. The government might even make a pretty decent return.

The government did not buy into GM as speculation. The goal here should not be to quickly "flip" GM. If the Treasury looks at GM as a long-term investment and is patient, it can and should make a decent return on its investment.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:20 PM
Response to Reply #43
52. Except the govt BORROWED money to invest in GM.
Thus the true return is final sales price - amount lent - accumulated interest.

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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 06:10 PM
Response to Reply #52
57. Remember buying stocks on margin?
Good times.
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Statistical Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 07:10 PM
Response to Reply #57
58. Yup just like that except in this case it was 100% margin (no wimpy 50% margin)
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truebrit71 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:34 PM
Response to Reply #19
37. GM has no stock. They went bankrupt.
Or do you mean the "new" stock that will eventually be issued?
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:39 PM
Response to Reply #37
39. Ummm... nope
The new GM does indeed have stock. The government owns 60% or so of it. The stock is not publicly traded so far. But it will be -- probably later this year. When the stock starts trading, we'll get an idea of the market value.
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truebrit71 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Apr-27-10 08:56 AM
Response to Reply #39
61. The GM stock ceased to have value when the company filed for bankruptcy.
Before new shares are issued the other ones have to be deemed worthless, which they are now.

So no, GM has no stock that has any public value whatsoever.

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DainBramaged Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 02:49 PM
Response to Original message
26. Wow, here come the clowns........
But it's OK for DU to laugh at banking reform......
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LuckyTheDog Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:25 PM
Response to Original message
32. Ummmm ... equity is not a loan
The company cannot "repay" the equity investment. The government needs to SELL THE STOCK. And it will. If the government sells the stock over time (instead of all at once) it is likely to make a profit on it.
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Lone_Star_Dem Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:30 PM
Response to Reply #32
35. Yep. That's the theory
Had quite a funny conversation this past weekend when I smacked a winger/bagger upside their hateful head with that one. The had no idea what equity was and argued it translated to gift.
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:42 PM
Response to Reply #32
40. We're not talking about the equity.
We're talking about the $6.7 billion pure loan being "repaid" with government TARP money so they can then apply for a $10 billion loan.

In essence the GM "repayment" is actually the company looking for an additional $3.3 billion from the government.
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JNelson6563 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:30 PM
Response to Original message
36. Seems to me things are looking up for GM
so it goes to follow that the stock will increase in value. The government can sell off it's interest in the company at a higher value than what it paid and get some return on investment, no?

Am I missing something? It doesn't look particularly nefarious to me. :shrug:

Julie

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RoyGBiv Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:43 PM
Response to Original message
41. I don't understand your complaint ...

I knew every detail in this piece.

A summary of these details (loan vs. equity) was reported in the one and only story I even read about the "repayment" that had everyone all aflutter.

If you want to complain about how the deal was done, fine, but don't act like this is news or the revelation of some great secret.
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:48 PM
Response to Reply #41
44. My complaint is with the dishonesty
I did a search on GM loan threads on DU, and of the dozens of results, none of them included conversations about how this loan repayment was really a disguised request of an additional $3.3 billion from the government.

Instead, the over-arching sentiment was that GM was on a surprising uptick that vindicated the corporate bail-out model.

Now, how a process leading to a $3.3 billion request in further loans is considered a sign of health is beyond me. But because of how the story was severely spun, that's the impression people came away with. They read it as GM returning funds instead of GM ultimately requesting additional funds.

That spin was intentional on the part of GM, it intentionally left a false impression with people, and I'd like to know why.
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DainBramaged Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 04:52 PM
Response to Reply #44
46. Gee I'd like to know why Toyota hid the facts on unintended acceleration that killed over 50 people
that pisses me off way more than your supposed money manipulation....
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:07 PM
Response to Reply #46
49. That's the beauty of it. You can be pissed off at both,
I didn't realize this was an either/or proposition. When did it become one?

Don't forget, it's the blase attitude towards corporations playing with their books that had a heavy hand in getting us into this economic mess to begin with. Shouldn't a company kept afloat with public funds be forthright with the electorate, or do we not care now because of which party sponsored the bail-out?

Maybe we need another game of What If Republicans Did It.
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DainBramaged Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 07:59 PM
Response to Reply #49
59. You don't post bullshit, I know that, and I appreciate your righteous indignation
There are a lot more things to get pissed off about that mean the difference between living dying and civil rights. This in my GM loving opinion is not one of them.


Be well.
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RoyGBiv Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:28 PM
Response to Reply #44
53. Your complaint is with DU ...

... for the most part. With a few notable exceptions, DU is not the place to find substantive commentary, much less discussion, on economics issues.

Again, the original story on the "repayment" included the fact that the loan was only part of the deal worked between the governments of the US and Canada and GM. That people choose to ignore that is not the fault of GM. It was mention repeatedly that day by several individuals, most of whom were largely ignored and who eventually gave up. Regardless, the loan repayment is factually true and is in fact a rather big deal. The loan portion of the deal was not expected to repaid for few years, and its repayment is a requirement prior to dealing with the equity portion.

The stories on this when the original deal was made also included this information in mind-numbing detail, which is what led to the notion of referring to GM as "Government Motors" in the first place.
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Prism Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 06:08 PM
Response to Reply #53
56. But see, that's the sleight of hand
The loan wasn't expected to be repaid, so when it was a lot of people read a lot of things into that. However, the fine print about it being paid via government-provided escrow funds and as a precursor to a further $10 billion request was not much a part of the original story. When you realize a $10 billion, 5% interest loan request is following a $6.7 billion, 7% interest repayment using government capital, suddenly the story is quite a bit different.

We're not only shelling out more, we would be doing so at a lower interest rate.

Every permutation of the facts shows GM requesting more money - not returning any.

But the story, the headlines in the media, the threads generally worked under the assumption that GM was returning something. They're not. They're just moving paperwork around on the way to an additional $3.3 billion and a lower interest rate for themselves.

I know discussing economic issues isn't the easiest thing on DU - I largely gave up on that front ages ago. But on this story, the reality and the headline seemed much further apart than usual - even by this board's standards. Given it was such a widely disseminated headline at that, I felt a clarification worth posting.

I still want to know why Whitacre was allowed to toss out such a deeply distorted story about a company the American people effectively own.
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dionysus Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 08:50 PM
Response to Reply #41
60. give the kid a break. he's probably a KIA salesman.
;)
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ecstatic Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:09 PM
Response to Original message
50. We should all go out and buy Toyotas!!1
That will teach GM and the government a lesson they'll never forget!!1
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Obamanaut Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:11 PM
Response to Original message
51. I guess the important thing to take away from this is that we are
Edited on Mon Apr-26-10 05:12 PM by Obamanaut
being screwed by an American automaker rather than some offshore out of country entity.
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high density Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-26-10 05:38 PM
Response to Original message
55. Do people want higher CAFE standards or not?
This simply isn't going to happen without government money given the pain the autos are currently in.
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