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GM bankruptcy plan eyes quick sale to gov't

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posted on May, 19 2009 @ 03:23 PM
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CORRECTED - UPDATE 1-GM bankruptcy plan eyes quick sale to gov't


www.reuters.com

General Motors Corp's (GM.N) plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM

The new company is expected to honor the claims of secured lenders, possibly in full, according to the source.


(visit the link for the full news article)

edit to say that i somehow accidentally bolded that story snippet without meaning to but i don't know how to fix it. sorry about that.


[edit on 19-5-2009 by earlywatcher]



[mod edit: fixed all bold]

[edit on 20-5-2009 by 12m8keall2c]

[edit on 20 May 09 by Gools]




posted on May, 19 2009 @ 03:23 PM
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I understand the desire to save the auto industry but I don't believe the government buying GM is the way to do it. It is INSANE. Then to "forgive" all the emergency funding that supposed to have been a loan contingent on them coming up with a workable plan...who gives the president or whoever orchestrated this plan authority to be so fast and loose with taxpayer funds. Naturally the unions get a stake because they are such strong supporters of obama and he owes them still for his election. when will that debt be paid off?

this has got to stop!!!!


www.reuters.com (visit the link for the full news article)



posted on May, 19 2009 @ 03:44 PM
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Un-fing-believable. Is this even legal? You know the UAW will end up with over half of the new company if this is true. The government interfering with private interests, we all know how well that has gone in the past. Is GM even worth 15 billion anymore. I doubt it.



posted on May, 19 2009 @ 03:49 PM
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So basically this is unemployment where the employees are still granted their full salary, and the UAW its full cut of those extravagant salaries. Average US autoworker salary is three times that of the US national average salary. While in the rest of the US, if you lose your job, you get maybe 6 months at a maximum salary of $1K/month.

Hm...
How is this fair, or legal?



posted on May, 19 2009 @ 04:05 PM
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I'm spluttering with indignation. hardly know what to say. how can they do this? what is the authority? obama is acting like mugabe, that the money in the treasury (or in this case money borrowed by the US treasury) is his personal bank account.

what on earth does this goverment in the person of obama and geithner know about running a car company? if the car experts can't run this successfully, how can people with no experience at every running anything be successful? except with the bottomless pockets of borrowed money.



posted on May, 19 2009 @ 04:23 PM
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Originally posted by earlywatcher
Then to "forgive" all the emergency funding that supposed to have been a loan contingent on them coming up with a workable plan...


Their workable plan seems to be to not pay the loan back.

'Hey, can I borrow some money?'
'Sure, will you be able to pay it back?'
'Oh yeah, i've got a plan!'
'Really, so what's this plan to pay back 15 billion?'
'Well, it's quite simple, you tell us we don't need to pay it back and we don't, we can definitely make that work.'
'Um....'

This is just absurd, why the hell are taxpayers expected to cover the losses of these private companies? I can only see this going one way, the 'new' company is propped up by the government until it's turning a decent profit then it's privatised again for a fraction of it's true worth making some influential investors a ton of money.



posted on May, 19 2009 @ 04:28 PM
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reply to post by Chris McGee
 


you've got to wonder who is "running" this company owned by the government. wonder what they will be paid and how about benefits and bonuses.

like you i can't get past the forgiving of that loan. it is unbelievable. this is the unaccountability that poisons our government. you've got to wonder what china is thinking about all this. will we expect them to "forgive" the debt.

i hope to goodness even the dems are dismayed by this. they are so into the rubber stamp that there seems to be nothing they won't support if the president wants it.

surely this is out and out illegal.



posted on May, 19 2009 @ 04:31 PM
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The only reason I can think of why they would receive special consideration is their military contracts. Don't they manufacture parts for the Humvee's and parts used in some of the military armored vehicles? I can see where the government may not be able to allow those particular divisions to fail, but the rest of the company should be treated the same as any other private held organization.



posted on May, 19 2009 @ 04:42 PM
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it won't stop sadly.

I haven't seen it posted on ATS but I have read on the net that all the GM big shots sold their shares already.

that fact says enough for me.



posted on May, 19 2009 @ 04:43 PM
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Originally posted by defcon5
The only reason I can think of why they would receive special consideration is their military contracts. Don't they manufacture parts for the Humvee's and parts used in some of the military armored vehicles? I can see where the government may not be able to allow those particular divisions to fail, but the rest of the company should be treated the same as any other private held organization.


you're on shaky ground here, applying logic and even rationality to this situation. You provide a perfectly plausible reason but is that really why they do things these days? isn't it always about thinking positively and sending a message? so what's the message this time.

I'm still nattering about money. it says "the U.S. government would pay for the assets by assuming the automaker's $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM' so doesn't that add up to a price of 21.4 billion total? isn't that really the purchase price?

which bailout fund does this come from, or is it called stimulus. as for the "secured" debt, will our government now borrow that money from china to pay off this debt? who authorizes this kind of transaction.



posted on May, 19 2009 @ 04:45 PM
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reply to post by Grey Magic
 


come to think of it, i remember hearing that too. there was some talk about shouldn't they at least pretend to support their own company. I've only seen the one reuters article so far, but surely some of the follow up stuff will include these details.



posted on May, 19 2009 @ 04:47 PM
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Here you go posted here just a few days ago.

Six GM executives sell more than 200,000 shares



Originally posted by finemanm

DETROIT (AP) -- Six General Motors Corp. executives recently sold more than 200,000 shares of the automaker as GM moves toward issuing new equity to give large stakes to the U.S. government and a United Auto Workers retiree health care trust fund.

Four group vice presidents and two vice chairmen sold nearly 205,000 shares Friday and Monday at prices ranging from $1.45 to $1.61 per share. GM shares closed Monday down 17 cents at $1.44.

Spokeswoman Julie Gibson says the sales don't show a lack of faith in the company. She says GM has disclosed publicly that shareholders run the risk of significant dilution or possibly losing their investments in a potential bankruptcy filing.
finance.yahoo.com...



posted on May, 19 2009 @ 05:02 PM
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Maybe I'm missing something, but the government is going to buy the good assets, let GM declare the remaining assets bankrupt and sell them for what they can get.

Then it sound to me like GM is going to buy back the good assets. How are they going to do this;? With what money?

Wouldn't it be better for GM to keep there assets and sell whatever they need to, to keep them solvent?

I understand the military need logic, but I'm 100% sure that is not being considered here by anyone in the administration. If we were to believe them they want to cut Military spending whch would only hurt GM greater in the long run.



posted on May, 19 2009 @ 05:15 PM
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Sorry.
I guess Humvee is now owned by Chrysler, not GM. It used to be AMG, hence the mix-up.
Actually thanks to a bit of research, I guess that they sold of all their military lines to General Dynamics:

GM Defence
GM Defense was the military products division of General Motors founded in 1950. It was acquired by General Dynamics in 2003 and now part of the General Dynamics Land Systems division.

Hey, you learn something everyday...


[edit on 5/19/2009 by defcon5]



posted on May, 19 2009 @ 05:33 PM
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Ahhh.......Facism or Socialism?


Can't decide which is the better road to hell!



posted on May, 19 2009 @ 07:23 PM
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Before I start, trust me in that I am no stranger to the concept of stock ownership and its risks. Further, I own no shares of GM, as I have stated in another thread. I will be an owner on the day it opens below 10 cents and play the swing trade.

With that out of the way let me state that this is one BK plan that truly does disgust me. The government is going to effectively nationalize GM and the individual shareholder will get shafted. Since stock is unsecured debt, this plan virtually eliminates shareholder equity overnight, like any other BK does. So once again, the little guys, the people who bought shares of GM at these penny stock levels, will be rushing to not be the last one standing.

I thought Obama was elected to help the little people?



posted on May, 19 2009 @ 07:46 PM
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reply to post by titian
 


sounds like you know the ins and outs of this stuff. how is it possible for obama to do this? to blatantly interfere in this process. it was bad enough when non-TARP investors in Chrysler got bullied for trying to get a fair price, but it sounds like he's eliminated them completely this time. by what rule or law or custom or authority is he doing this?



posted on May, 19 2009 @ 09:54 PM
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Congratulations America! You now own another worthless company, that you'll be paying for, for decades. We can call the new models they create Obamabiles.



posted on May, 20 2009 @ 09:10 AM
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Originally posted by earlywatcher
reply to post by titian
 
how is it possible for obama to do this? to blatantly interfere in this process. it was bad enough when non-TARP investors in Chrysler got bullied for trying to get a fair price, but it sounds like he's eliminated them completely this time. by what rule or law or custom or authority is he doing this?


Obama knows no law but his own. He's counting on union support and specific constituencies to cement his hold on gov't and policy. That's why he forced CA to back down on cutting $1.50/hr. of their contribution to unionized home health care workers' $22.00/salaries (ALL gov't funded), he's supporting amnesty for illegal aliens and redistribution of income to people who don't contribute to the economy.

This economic fascism (gov't control of business - banking, autos, energy, and health, so far) is one step toward a realignment of the U.S. to collective support for the communal good (socialism).

Isn't It Becoming Obvious That Obama Is an Economic Fascist?
www.abovetopsecret.com...

deny ignorance.

jw



posted on May, 20 2009 @ 09:18 AM
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Originally posted by bismarcksea
Ahhh.......Facism or Socialism?


You start with economic fascism to control private enterprise and garner union support at the expense of creditors and shareholders. He's got autos, banks, energy and health care under way, now.

"Isn't it beecoming clear Obama is an economic fascist?"
www.abovetopsecret.com...

Once the country is in control of the means of production and finance, you begin redistribution of wealth and locking-in constituencies. Amnesty for illegal aliens, tax reform that eliminates taxes - even grants 'rebates' - for at least 50% of the population, federal control of education and health care, and elimination of "States Rights."

Then, you've got the core socialist agenda in place, a constituent base to keep you in power, and 6 years to remodel America in his own image.

deny ignorance

jw



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