Skip to comments.General Motors Is Headed For Bankruptcy -- Again
Posted on 08/16/2012 7:28:35 AM PDT by SeekAndFind
President Obama is proud of his bailout of General Motors. Thats good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.
Right now, the governments GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.
Its doubtful that the Obama administration would attempt to sell off the governments massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero.
GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term.
(Excerpt) Read more at forbes.com ...
but, but, but, but, he fixed it...this is totally “unexpected”. The little boy king don’t care, he’ll avoid GM like a birth certificate.
Let it die!
Buying GM stock is like tossing your money down the toilet.
Naxt time they get in a bind they will screw the stockholders again.
“Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.” - Barack Hussein Obama
Since the UAW now”owns” GM, does that mean its assets, including the pension fund and all the resorts, will be open to seizure to pay debts?
Excellent article. Thanks for the post!
Buffett will buy more shares in GM. He still owes the Govt for the bailout of Goldman and getting him on board just before it happened.
It was always assumed GM would go bankrupt again.
The first bankruptcy was to stongarm the bond holders and give the unions a “pump and dump” equity to pull cash out of the dead corporate body.
Now it will HOPEFULLY be an unvanished bankrupcy where the union contracts are dumped as they should have been in the first place.
BOHICA and FUBO!
I assume that will depend on who the president is.
Wonder if he has any now.
Da scheppert nix
My Mom traded in her Buick for a Nissan. My sister traded in her Pontiac for a Toyota. I traded in my Buick for a Subaru. My neice traded in her Chevy for a Kia. We used to be a GM family. We believe in the right to organize and have collective bargaining. Unions electing Democrats to plunder the public treasury to give money to the unions is criminal.
Forget that the 2013 Malibu is a step backward for GM. The reality is that leftists overwhelmingly buy foreign-branded vehicles. Add to that all the newly minted anything-but-GM crowd and you have a perfect storm. I hope the UAW is happy.
I'd like to think it might matter, but perhaps the Etch-A-Sketch will fall on the side of the taxpayers.
Obumo may be a dope touting his saviourship of GM BUT
both Rinos and Dems went along with the initial paniced stupidity.
Therefore, this particular foulup isn’t going to get much exposure. It is, however, an excellent example of elite,
ill-informed, top-down gov’t management. Obumo’s solution to GM’s “problem” was politically inspired - not the way successful businesses operate.
Wait one darn minute. A year ago GM had an advertisement saying they paid off all the Government Loans.
If you can’t believe Commercials, what can you believe?
I have a 2001 GMC Sierra C2500 Crew Cab Pickup.
Bought it new in OCT 2001 after the SEP 11 attacks.
I’m through with GM completely, mostly due to the bailouts, but also because this current truck isn’t near as well made as the 89 Super Cab that preceded it.
Its Ford or Foreign from now on.
You are right on the money. I travel pretty much every week and about half the time my rental car is a Chevy. Truthfully they’re nice enough cars. They can be competitive car vs car.
The problem is not the product; the problem is what ‘they’ have done to the GM BRAND.
To your point about the “newly minted anything-but-GM crowd” too many in the market would buy anything BUT a GM, and the Progressives all want to drive their foreign marques. Who’s left? A much smaller available market.
GM and the gummint have ruined the stature of the GM brand. THAT is a HUGE loss in value/goodwill. The stock NEEDS to be lower.
Just in time for the RNC Convention and the preezy debates...
How right you are, my friend, how right you are.
More taxpayer $$$$ money down a rathole ping!
Any chance that Romney/Ryan will make this an issue?
well good. I am fed up with them. Unions fail companies all the time. why do you think our auto parts come from other countries.UNIONS. Obama is a UNION prez. That makes him a fail to start with. Union member better realize evenually Unions will cause their jobs to end.
Mitt Romney says yes. And he wants President Obama to do it now...
...GM shares currently sit at $25.40, far below the $51 per share price necessary for taxpayers to break even...
The administration is trying to pretend that GM was “rescued” and they have criticized Romney for saying that they should have been allowed to go into bankruptcy. Despite the attempts to hide the fact, they did indeed go into bankruptcy but it was a politically driven process with little attention given to the structural problems which caused the initial failure. A traditional bankruptcy as advocated by Romney would have had a good chance of saving GM as a viable company. It is quite likely that GM will have to go through a legitimate bankruptcy but will never recover what was lost through the bastardized process forced on them by Oboma.
“Any chance that Romney/Ryan will make this an issue?”
Well, it sure won’t stop Obamy from lying and telling us what a success he made of GM, will it?
It would be nice to have a party that actually believes that this is wrong.
” More taxpayer $$$$ money down a rathole ping! (GM)
Any chance that Romney/Ryan will make this an issue? “
Too early to tell.
Maybe they’d get somewhere if they weren’t forced to sell Volts and other such nonsense. No one, or very few people, can afford those designer cars that the gov’t is forcing on the corporations and customers.
A quick glance at Yahoo Finance shows analysts rate GM Strong Buy (6), Buy (9) or Hold (4). EPS estimates for 2013 exceed 2012. Cash and marketable securities are up from year end. I haven’t delved in to the term structure of their LT debt, but at first glance levels appear reasonable. All the OEMs have gotten better at managing production and inventories, and that is contributing to improved pricing. As a result of the recession, they all have also significantly reduced cost structure. Lastly, there remains significant pent-up demand for autos that should boost industry sales levels next year. Lastly, basing a bk foercast on the sales of a car that has yet to show up in showrooms for a company of this size seems pretty weak. I’m guessing any GM bankruptcy is a long ways off.
At what level do you plan on buying stocks?
>>>At what level do you plan on buying stocks?
I don’t buy individual company stocks. I am invested in mutual funds. But keep in mind that the stock price is a refelection of expected future earnings, not necessarily credit events. While earnings expectations may have be lower than they were ealier in the year, they are still positive. Assuming there isn’t a large maturity due in the near future that GM will be unable to re-finance in what is a very issuer friendly environment, there is no reason to think that bankruptcy is imminent.
The problem here is not specific to General Motors although I OPPOSED all BAILOUTS because I never bought the elitist bull crap about too big to fail and I believe that Gubmint should not declare Lehman Bros. a loser and heavily Saudi invested Citibank a winner through the use of selective bailouts.
The problem with GM is very basic. The work force is SHRINKING and the population is growing both through rightful birth and wrongful illegal immigration.
Few business will prosper when the population is growing and the workforce is diminishing.
Of course that is a classic definition of socialism, increasing consumers and diminishing producers.
The little boy king dont care, hell avoid GM like a birth certificate.
BUMP and thread BUMP!
I know two of obama’s biggest worshippers who BELIEVE GM paid the loan back. I don’t think they understand that GM took out another loan to pay off the first one. Neither of them has ever owned a home. Therefore they have no idea how a refinance works.
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