Government Motors Now 50% Less Governmenty

posted at 11:22 am on November 18, 2010 by Jazz Shaw

During a post-shellacking slump where good news has been hard to come by, the Obama administration this week trotted out some rosy numbers from one of your larger taxpayer investments at General Motors. The big talking points were the unloading of quite a bit of G.M. stock, financial losses avoided and – of course – jobs saved or created.

American taxpayers’ ownership of General Motors was halved on Wednesday, and billions of dollars in bailout money was returned to the federal government, as a result of the nation’s largest initial stock offering ever.

The offering, which raised $23.1 billion, is bigger and more ambitious than had once seemed possible. But the recently bankrupt automaker will have to build on its revival for the government to recoup its entire $50 billion investment and validate the Obama administration’s decision to keep G.M. from collapsing.

As is usually the case when the administration has “good news” to share, there’s quite a bit more to this story than first meets the eye. First of all, this wasn’t just a good P.R. opportunity for the Treasury Department. It was also a chance for G.M. to rid themselves of a “business partner” which has been anything but good for business.

The stock sale follows months of sometimes tough discussions between the company and the Treasury Department, led by officials like the former investment banker Ron Bloom, over how much stock to sell and at what price. For G.M., it has long been an important goal to rid itself of the “Government Motors” moniker it insists is hurting car sales.

President Obama described this as, “our disciplined commitment to exit this investment while protecting the American taxpayer,” which sounds great on the surface. But even under the most optimistic of circumstances, former head of the U.S. Automotive Task Force Steve Rattner said the government,”may lose $5 billion to $7 billion on its rescue of t he auto industry.”

And what will be required to achieve these modest losses? First of all, the government is contractually barred from selling any more stock for the next six months. And when they do, they’d better hope that G.M’s fortunes have shown an astounding turnaround.

The new shares start trading on Thursday at $33 each. To break even, the Treasury Department will need to sell its remaining 500 million shares at an average price of $53 each in the months and years to come. And while the administration may retain great influence over the company, it may not be able to keep stoking the enthusiasm investors have shown for G.M. stock in recent days.

That may prove to be quite a feat, particularly given the performance of their cousins at Ford, whose stock has struggled to get back to $16 per share without being burdened with the Government Motors moniker. And, of course, all of this fails to take into account the fact that people without jobs don’t tend to rush out and buy new cars.

It’s good to see the government slowly extricating itself from this situation, but the pie in the sky projections being rattled off by the Obama administration this week will likely strike many as a lot more vapor and a lot less Viper.

UPDATE: We are reminded that in the midst of all the celebrating over this new IPO, if you are one of the thousands of people still holding on to the “old” GM stock, well… you can still line the bottom of your bird cage.


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I would feel a lot better if it were GUBMINT free!

belad on November 18, 2010 at 11:27 AM

Before I read the article, I must first make a slight correction to the headline …


Governmenty

Governmenty Governmentally That’s better :-)

Tony737 on November 18, 2010 at 11:27 AM

American Taxpayer’s ownership was halved? Does that mean that China bought the other half?

unclesmrgol on November 18, 2010 at 11:29 AM

. . . I bought Delphi stock, once. . . .

Skandia Recluse on November 18, 2010 at 11:29 AM

Losing $5-7 billion of taxpayer money = SAVING THE TAXPAYER.

George Orwell on line 3 for you, sir.

Good Lt on November 18, 2010 at 11:29 AM

My wife and I make well over $200K between us. We have a modest home, a 10 year old car, a 3 year old truck, and 2 kids in private school. I can’t imagine buying a new car, we barely make groceries and utilities. Who the hell can afford a $30K GM? Seriously.

Alden Pyle on November 18, 2010 at 11:29 AM

I would feel a lot better if it were GUBMINT free!

belad on November 18, 2010 at 11:27 AM

The Government took GM from its original shareholders — a bunch of retirees on Main Street — and sold a hunk of it to the UAW and is now profiting further from its theft.

I will never, ever, ever, buy a GM car again, for to do so is to reward thieves.

unclesmrgol on November 18, 2010 at 11:30 AM

F__k Government Motors. I will never willingly give them a penny of my money. They took enough of it by force.

UltimateBob on November 18, 2010 at 11:32 AM

Can’t wait to sink all my family’s savings into the company that makes the VOLT!

Greek Fire on November 18, 2010 at 11:32 AM

I rather walk ten miles than even test drive a GM.

darwin on November 18, 2010 at 11:33 AM

Rescuing unions is expensive.

tarpon on November 18, 2010 at 11:33 AM


For G.M., it has long been an important goal to rid itself of the “Government Motors” moniker it insists is hurting car sales.

Even with that badazz new Camaro that looks like the 1969 AND the Transformer movies?

Tony737 on November 18, 2010 at 11:34 AM

I rather walk ten miles than even test drive a GM.

darwin on November 18, 2010 at 11:33 AM

Years ago, there were bumper stickers that said, “I’d rather push a Ford than drive a Chevy.”

That is more true today than it was then.

UltimateBob on November 18, 2010 at 11:35 AM

They really do need to get out from under the Government Motors label.

IMO, the Volt is not helping.

Keep making cool rides, and everything will eventually work out, assuming that people can get jobs again and get some of those cool rides.

I like a good portion of GM’s newer offerings that aren’t oriented to please Gaia/Obama. Such as:

Corvette
Camaro
Silverado-Tahoe-GMC Trucks
Cadillac V-series
Buick Enclave

These are doing fairly well, because they are styled and engineered well.

I’m seeing examples of all those tooling around my home town, despite the bad economy some people have bought new GM cars. They aren’t Volts, though.

Brian1972 on November 18, 2010 at 11:36 AM

Jobs saved or created :

The closings will leave G.M. with 33 plants in the United States by 2012, down from 47 last year. G.M. is cutting about 21,800 hourly jobs by 2011, though it did not say how many people currently work at the plants being closed.

Skandia Recluse on November 18, 2010 at 11:36 AM

OT: 1800 like HA and counting….yeah!

cmsinaz on November 18, 2010 at 11:37 AM

I would feel a lot better if it were GUBMINT free!

belad on November 18, 2010 at 11:27 AM

It’ll never be government free. If it goes under again, it’ll be bailed out again.

lorien1973 on November 18, 2010 at 11:38 AM

That may prove to be quite a feat, particularly given the performance of their cousins at Ford, whose stock has struggled to get back to $16 per share without being burdened with the Government Motors moniker. And, of course, all of this fails to take into account the fact that people without jobs don’t tend to rush out and buy new cars.

Explain this to me. If Ford who is actually turning a profit currently has its stock selling at $16/share, how in the hell can GM who certainly have just as tough if not tougher a road ahead of them be pricing theirs at twice that amount?

Doughboy on November 18, 2010 at 11:39 AM

I’m still fuming over the shell game that is the VOLT. Rather than drop the price $7000 and eliminate the subsidy, they keep the high price which will falsely inflate the car’s profitability. And the $7000 credit from the government will not be applied to the costs of it’s involvement with GM.

Taxpayers will falsely be inflating the profitability of GM even after the government is taken out of the equation (assuming the gov eventually does sell all of it’s remaining interest.) It’s fraud, plain and simple.

redshirt on November 18, 2010 at 11:40 AM

What about the stakeholders the Obama administration screwed over are they going to be made whole?

Kjeil on November 18, 2010 at 11:42 AM

led by officials like the former investment banker SEIU THUG Ron Bloom

Fixed it for them.

American Elephant on November 18, 2010 at 11:45 AM

I accidentally got an email from a well-connected Chicago friend who is a stock broker: Got GM 2,000 shares what a surprise. I’ll be out in Am it will be all over the news. Call XXXXX if u need anything or want to sell half on pop
Same old game – big traders get access to the stock on the IPO, which the brokers pump up all day and then dump for a quick arbitrage. By the time the government gets to sell, the stock will have tanked, probably closer to $3 than $33.

motionview on November 18, 2010 at 11:45 AM

The only jobs that were actually saved in all of this were at GMAC, which would have certainly shut down without an illegal bank charter grant and federal bailout. That bailout saved about 2000 jobs, mostly white collar jobs in Charlotte and in southeastern Pennsylvania.

GM would have declared bankruptcy, but would have kept making cars and would have done so more cheaply because it could have used bankruptcy to get out of its ruinous UAW contracts and pension obligations. In fact, given that GM shut down Pontiac and Saturn and sold Saab and Hummer anyway, and killed hundreds of dealerships, and these steps might not have been taken by a bankrupt-but-still-provately-owned GM, it’s arguable that the government takeover was a net job loser as well as money loser.

Only the UAW, and indirectly of course, the Democratic Party benefited from this takeover of GM. Never, ever forget that.

rockmom on November 18, 2010 at 11:46 AM

I will never buy another GM car. Period.

glockomatic on November 18, 2010 at 11:46 AM

former head of the U.S. Automotive Task Force Steve Rattner said the government,”may lose $5 billion to $7 billion on its rescue of the auto industry.”

Try twice that number, and that assumes no losses on union pensions.

Vashta.Nerada on November 18, 2010 at 11:47 AM

I will never again buy a GM or Chrysler vehicle.

Over50 on November 18, 2010 at 11:47 AM

For G.M., it has long been an important goal to rid itself of the “Government Motors” moniker it insists is hurting car sales.

That’s because too many Americans (myself included) who refuse to buy GM products as long as the government owns one share of the company.

By allowing the government and unions to essentially take over the company, GM has damaged its brand and reputation far more than a bankruptcy reorganization ever would.

RadClown on November 18, 2010 at 11:48 AM

I’m seeing examples of all those tooling around my home town, despite the bad economy some people have bought new GM cars. They aren’t Volts, though.

Brian1972 on November 18, 2010 at 11:36 AM

I was a little surprised that the government didn’t kill the Corvette, which is made in Kentucky. A red-state car that liberals generally do not drive. (Though it isn’t really a gas guzzler, the regular models actually get better than 22 mpg now.)

rockmom on November 18, 2010 at 11:49 AM

Arent Initial Public Offerings supposed to be — oh, I dunno — PUBLIC?

fusionaddict on November 18, 2010 at 11:50 AM

“It’s good to see the government slowly extricating itself from this situation”

The board is still 100% Obama administration picked and running the company, so it is going to be a while before we get new board members to replace them and they actually extricate themselves.

JeffinSac on November 18, 2010 at 11:51 AM

Why is it necessary for the federal government to exempt GM from rules concerning fraud when issuing public stock?

Skandia Recluse on November 18, 2010 at 11:28 AM

Because they are committing it as we speak. I predict also that you will see a record number of executive pardons in December 2012.

Vashta.Nerada on November 18, 2010 at 11:52 AM

Now GM says it’s not sure if the company will pay off its bailout.

General Motors’ new stock got a good start out of the gate Thursday, opening up 6% to $35 from its offer price in its first trade…

…New CEO Dan Akerson said this was the right time for the company to go public again, but stopped short of promising that taxpayers would be paid back with future stock sales.

In January, then-CEO Ed Whitacre promised that taxpayers would be repaid and might even make money on the bailout.

“I think the government’s investment is well placed and I think they’ll make a lot of money,” Whitacre told CNNMoney on the floor of the annual auto show in Detroit. “It won’t be too long.”

But Thursday, Akerson, who succeeded Whitacre as CEO in September, was more cautious when speaking to CNNMoney on the floor of the New York Stock Exchange Thursday before the start of trading.

“I don’t know where the market is going to be a year or two down the road, so I can’t make such a bold statement,” he said. “Sure, I’m hopeful, and I’m not saying it can’t happen. I think the company is well positioned … so things look good for General Motors.”

Gateway Pundit

Jason58 on November 18, 2010 at 11:53 AM

I will never again buy a GM or Chrysler vehicle.

Over50 on November 18, 2010 at 11:47 AM

You shouldn’t. Just because the government doesn’t own as many shares; doesn’t mean the government is out of it. It’s a permanent shareholder, when it actually holds shares or not.

GM is and always will be government motors.

lorien1973 on November 18, 2010 at 11:53 AM

I’ll avoid any vehicle I can that’s built with UAW labor.

BowHuntingTexas on November 18, 2010 at 11:57 AM

Mr. Barnum was right beyond his wildest imaginations

tmitsss on November 18, 2010 at 11:57 AM

Instead of calling it “The New GM”….they should just rename the entire company “UAW”.

search4truth on November 18, 2010 at 11:59 AM

The new shares start trading on Thursday at $33 each.

If they broke up Government Motors and sold off all the assets, the liquidation value would be $50 per share.

Such a bargain.

bgoldman on November 18, 2010 at 12:03 PM

Among the very last items in 16 pages of “risk factors” is a small disclaimer containing a bombshell. This IPO is largely exempt from from federal and state anti-fraud laws and corresponding lawsuits.

Why is it necessary for the federal government to exempt GM from rules concerning fraud when issuing public stock?

Skandia Recluse on November 18, 2010 at 11:28 AM

That’s the ticking time bomb, post-’bankruptcy’, GM was not publicly traded so they don’t have to comply with SEC disclosure laws. It’s outrageous that they are still given that benefit, and it means the buyers of the stock don’t know what they are buying. That fact allowed them to sell the lie that they have already made a profit. There’s also the little IRS gift that they have been given: GM Benefits From IRS Ruling

Let’s not forget, Obamacare also gave the UAW a nice little present. All these facts demonstrate the fiction of ‘GM paying back the government’; that’s never going to happen. It’s just more of Bammie’s pro-thug-union propaganda.

There’s also the UAW problem: UAW -The Curse That Keeps on Giving

I too will not do business with any UAW company. Unions are a cancer in our nation and we cannot recover until unions are excised.

slickwillie2001 on November 18, 2010 at 12:07 PM

Jazz Shaw, you need to talk to Allah and Ed about your advertising. I find it pretty hypocritical that we are being critical of GM (and rightfully so), while at the top of the comments is an internet ad for Motor Trend’s 2011 Car of the Year, the Chevy Volt.

ICBMMan on November 18, 2010 at 12:14 PM

So the fraud and theft against original owners continues apace. Wonderful.

So who’s buying GM, here’s some obvious news from the first purchases. It’s not individual American investors.

So far it looks like the largest purchases are being made by banks, and almost exclusively by banks who took bailout money.

Public sector pension funds seem to be another large purchaser.

It’ll be a helluva mess to figure out everyone who propped it up in this initial week, but this sure doesn’t seem like a natural opening pattern for an IPO so troubled.

Jason Coleman on November 18, 2010 at 12:14 PM

No longer government moters? What a joke!

Painting black and white stripes on a sturgeon doesn’t make it a zebra

Is the new corp going to disown it’s theft from the rightful owners and forced union control?

I thought not.

Don L on November 18, 2010 at 12:18 PM

This news is kind of going under the radar but: Feds to recoup $36 billion in bailout money, fail to mention GM receiving $45 billion tax furlough

Once again, this is a shell game where money (OUR money) is going from one government pocket to the other and somehow that’s a value added for us.

theblogprof on November 18, 2010 at 12:21 PM

The Assoc. Press this morning “…GM shares up, good for the taxpayers and glory to Obama”, in different words.

It escapes the AP pigs that the taxpayers were not allowed to buy stocks…only institutions, incl. unions. This is a big scam.

May the shares plunge into oblivion. Boycott GM!

Schadenfreude on November 18, 2010 at 12:23 PM

For G.M., it has long been an important goal to rid itself of the “Government Motors” moniker it insists is hurting car sales.

Too late. Never in my life will I buy anything domestic but Ford.

ReformedAndDangerous on November 18, 2010 at 12:26 PM

So the fraud and theft against original owners continues apace. Wonderful.

So who’s buying GM, here’s some obvious news from the first purchases. It’s not individual American investors.

So far it looks like the largest purchases are being made by banks, and almost exclusively by banks who took bailout money.

Public sector pension funds seem to be another large purchaser.

It’ll be a helluva mess to figure out everyone who propped it up in this initial week, but this sure doesn’t seem like a natural opening pattern for an IPO so troubled.

Jason Coleman on November 18, 2010 at 12:14 PM

That’s my suspicion as well. Someone in Bammie’s White House called the banks and brokerage houses and said -”nice little financial organization you have there, it would be a shame if you didn’t buy any GM IPO.”

Something else to put on Issa’s list.

slickwillie2001 on November 18, 2010 at 12:27 PM

if you are one of the thousands of people still holding on to the “old” GM stock, well… you can still line the bottom of your bird cage.

Hold on to your shares of Old GM for about 50 years, and they’ll have some value as an hisortical artifact.

My wife’s grandfather owned shares in the Baltimore baseball club in the Federal League, circa 1914. The antitrust suit the team brought against baseball led to the so-called antitrust exemption for baseball. The stock certificates are pretty valuable now.

Attila (Pillage Idiot) on November 18, 2010 at 12:29 PM

GM will now always be known as “Government Motors”. That ship has sailed. They only way it’ll go away is when the company is broken up and sold. Which is what should’ve happened in the first place.

Iblis on November 18, 2010 at 12:32 PM

I’m still not buying one. Just bought a Ford and am very happy with the quality.

flyoverland on November 18, 2010 at 12:36 PM

F__k Government Motors. I will never willingly give them a penny of my money. They took enough of it by force.

UltimateBob on November 18, 2010 at 11:32 AM

-
I think I’ll put that one on my Honda’s rear bumper. It’s so vague only people who read english will get it./heh
-

RalphyBoy on November 18, 2010 at 12:47 PM

Explain this to me. If Ford who is actually turning a profit currently has its stock selling at $16/share, how in the hell can GM who certainly have just as tough if not tougher a road ahead of them be pricing theirs at twice that amount?

Doughboy on November 18, 2010 at 11:39 AM

They don’t have the same number of shares… Ford has 3.47 billion shares and a $57B market cap. GM has 610M shares and a $21B market cap. Individual share prices have nothing to do with how much a company makes or is worth, the magic is all in how many shares there are.

jonknee on November 18, 2010 at 1:04 PM

To break even, the Treasury Department will need to sell its remaining 500 million shares at an average price of $53 each in the months and years to come.

When pigs fly.

Things I wouldn’t touch with a ten-foot pole:
~ GM stock
~ a GM vehicle

petefrt on November 18, 2010 at 1:06 PM

So far it looks like the largest purchases are being made by banks, and almost exclusively by banks who took bailout money.

Public sector pension funds seem to be another large purchaser.

It’ll be a helluva mess to figure out everyone who propped it up in this initial week, but this sure doesn’t seem like a natural opening pattern for an IPO so troubled.

Jason Coleman on November 18, 2010 at 12:14 PM

You’ve nailed it. The major IPO sales were to entities subject to gubmit influence. Imagine the arm-twisting secret side deals, thuggery, and corruption.

petefrt on November 18, 2010 at 1:12 PM

It’ll be a helluva mess to figure out everyone who propped it up in this initial week, but this sure doesn’t seem like a natural opening pattern for an IPO so troubled.

Jason Coleman on November 18, 2010 at 12:14 PM

-
Or how much the Obama team propped up GM in general (or any of their other protected buds). Trillions are being poured onto the floor and the unaccounted for scraps could will be used to do Obama’s and the Marxist agenda’s bidding out of everyone’s sight. Transparency my a**.
-

RalphyBoy on November 18, 2010 at 1:23 PM

But the recently bankrupt automaker will have to build on its revival for the government to recoup its entire $50 billion investment and validate the Obama administration’s decision to keep G.M. from collapsing.

They still collapsed. They still declared bankruptcy.

That’s what I don’t understand about the whole “government saved GM” argument. We were told we needed to provide them bailout money so they wouldn’t go bankrupt. That was the initial argument.

So, we gave them the money. Then they turned around and declared bankruptcy.

So, what would have been different if they had just declared bankruptcy without the bailout money? The only difference I can see is that the union wouldn’t own a large stake of GM and the previous stockholders wouldn’t have been fleeced.

It was all a dog and pony show to pay off the unions for elected Obama. Nothing more.

ButterflyDragon on November 18, 2010 at 1:27 PM

Somewhere in the white house, there’s a group of Obama staffers looking at the stock’s trendline. Lots of activity early on as everyone did their duty and bought in, but no one else is interested.

Those who were forced to, bought what they were going to buy and now we see that sad, downward trend line for most of the day.

No doubt they either have someone already on the hook to buy in late, late in the day to guarantee a spike, but that mid-day line is what the new GM is going to be about.

If they don’t have someone on the hook already, you betcha there’s a mad dash to to the sugar daddies to see if they’ll ride in and save the day. . . with appropriate promises of payback of course.

It’s become sickening.

Jason Coleman on November 18, 2010 at 1:29 PM

First of all, this wasn’t just a good P.R. opportunity for the Treasury Department. It was also a chance for G.M. to rid themselves of a “business partner” which has been anything but good for business.

Depending on whether JP Morgan, Goldman Sachs, and the other underwriters exercise their over-alottment option, the US government will still have somewhere between 33.3% and 36.9%, still the single largest shareholder. They supposedly won’t be able to nominate directors anymore.

As for the ability to repay the TARP money, there’s some bad news; the Treasury and GM settled on a plan for GM to buy back the $2.1 billion in preferred stock the government owns 4 years early for a 2% premium. Instead of getting $755 million in dividends over the next 4 until GM could othewise buy back the stock in 2014, the Treasury is getting $41 million in a “early-retirement” premium.

steveegg on November 18, 2010 at 1:35 PM

I read that as ’50% Less Governminty’ and started wondering if that was an air freshener that they wouldn’t be using in the cars or packets of stale gum…

ajacksonian on November 18, 2010 at 1:45 PM

For G.M., it has long been an important goal to rid itself of the “Government Motors” moniker it insists is hurting car sales.

Just because you have to ask for a favor doesn’t mean that you’re enjoying the circumstances. I write about cars and the car biz professionally, live in the Detroit area, and haven’t met a single GM employee who doesn’t want the gov’t to divest its shares as soon as possible. They are grateful for the help from taxpayers but it’s very hard to run a business when you’re under the microscope. Every decision, from product planning to ad buys, is second guessed by people who know nothing about the auto industry but because they believe themselves to be stakeholders via the gov’t equity in GM, they think they have the standing to criticize.

I was in favor of some kind of bailout for GM and Chrysler but how the Obama team restructured the company, or rather how they screwed the bondholders and favored the UAW stunk. Still, it would not be a good thing for the US for GM to disappear. The actual restructuring was along the lines many GM critics had recommended – GM’s profitability in the 3rd quarter demonstrates that their cost structure has dramatically improved.

On the product side, GM styling and engineering have had a string of successes. Under Bob Lutz’ direction they’ve drastically improved interior design and features. The product side of GM has been turned around (actually most of that work was done under “bad” old GM).

For consumers to deliberately pass on GM products because of the Gov’t Motors stigma is to not make a rational economic decision.

I’m no fan of Obama but we’d be cutting off our noses to spite our faces if we wanted to see GM fail.

Most of the people who have lately been critical of GM know very little about the car industry. In this thread there are attacks on the Chevy Volt by people who haven’t been within a mile of one. Economics aside it’s a very impressive piece of engineering.

But go ahead and vow to never buy a GM product if that makes you feel better. Let the taxpayers lose even more money and let the profits on your next new car purchase flow to Toyota City or Seoul.

That may prove to be quite a feat, particularly given the performance of their cousins at Ford, whose stock has struggled to get back to $16 per share without being burdened with the Government Motors moniker.

To begin with, Ford’s stock price is somewhat depressed by the company’s large debt load. They’re paying it off in multi-billion dollar chunks but they still owe at least $10 billion of the $26 billion they borrowed mortgaging the company (including the blue oval) presciently before the credit markets froze in ’08.

Still, Ford common stock is trading at 8 to 10 times what it was worth in late 2008, $1-$2 a share. I don’t know a single Ford shareholder who is unhappy with the company’s performance. They’re making money, have an outstanding product lineup, and they’re paying off their debt.

rokemronnie on November 18, 2010 at 1:49 PM

For consumers to deliberately pass on GM products because of the Gov’t Motors stigma is to not make a rational economic decision.

rokemronnie on November 18, 2010 at 1:49 PM

I pass on GM products because they are a thug-UAW-unionized operation, and the sooner that they go through a real bankruptcy, the sooner they can break the shackles of unionism. That will also assist in the general destruction of unionism which will help the USA become a manufacturing nation once again.

I put my country before any union or corporation. I will only do business with non-UAW companies, and hopefully US-manufactured but non-union auto companies, and there are many to choose from.

slickwillie2001 on November 18, 2010 at 2:11 PM

Ed,

It really makes little sense to compare stock prices of GM and Ford. Ford has more outstanding shares. The IPO of GM gave it a Market Cap(Sum of price of all stock outstanding) of about $50B. Ford is currently about $58B.

The issue facing Ford and its stock is that it didn’t get to screw its bondholders in bankruptcy the way GM did. It it has a rather heavy debt load.

It also faces bargaining with the UAW who is now there chief competitor and who now have a great example of how to drive your employer into the dust and still make a profit.

OBQuiet on November 18, 2010 at 2:14 PM

From the NY Times article:

Largely seen as bloated and incapable of competing with nimbler foreign competitors as recently as last year, automakers like G.M. and Ford have turned around their operations by wringing greater efficiency and lower costs out of their work forces and operations.

One of them did it without sticking the taxpayers with a $5 billion bill and defrauding their stock and bond investors. Which one would I rather own stock in?

hawksruleva on November 18, 2010 at 2:50 PM

For consumers to deliberately pass on GM products because of the Gov’t Motors stigma is to not make a rational economic decision.

rokemronnie on November 18, 2010 at 1:49 PM

Quality is not Job 1 for the government. Thus, I avoid Government Motors. Further, GM stole the assets of thousands of bondholders. I won’t support thieves if I can help it.

hawksruleva on November 18, 2010 at 2:51 PM

My wife and I make well over $200K between us. We have a modest home, a 10 year old car, a 3 year old truck, and 2 kids in private school. I can’t imagine buying a new car, we barely make groceries and utilities. Who the hell can afford a $30K GM? Seriously.

Alden Pyle on November 18, 2010 at 11:29 AM

$30K for a GM is one thing. I was looking at new minivan costs, that’s right, minivans. A fully loaded Sienna is almost $50K. I thought I must have read that wrong. But no, a freaking minivan is $50K these days.

And people are buying them, because every second vehicle I see on the road is a Sienna or Odyseey which is also pushing $45K fully loaded.

I have no idea how people can afford it, but they’re on to something. I, like you, make 6 figures and I there is no way in HELL I would fork out $40K+ for a car.

angryed on November 18, 2010 at 3:24 PM

hawksruleva on November 18, 2010 at 2:50 PM

And one of them did it with large concessions from the UAW, and the other did it without any of those concessions.

unclesmrgol on November 18, 2010 at 3:54 PM

Dave Ramsey says that only millionaires should buy new cars.

slickwillie2001 on November 18, 2010 at 3:55 PM

Quality is not Job 1 for the government. Thus, I avoid Government Motors. Further, GM stole the assets of thousands of bondholders. I won’t support thieves if I can help it.

The bondholders were abused, no doubt, there were ample criticisms of how creditors were screwed from a number of respected bankruptcy law profs. However, the bondholders may come out more whole than earlier suspected. As I understand it, the bondholders can exchange their bonds for shares of GM sometime in 2011. Assigned a value of about 33 cents on the dollar in the bankruptcy, as the IPO approached, trading in GM bonds has increased, as have their value. If the IPO and GM stock does well, the bondholders won’t end up taking a balding haircut.

It wasn’t the people who run GM that screwed the bondholders. It was the Obama administration working to favor the UAW.

As for those of you who keep calling the UAW thugs, their current president is an idiot, but the UAW is actually one of the more progressive unions in the country. More than many other unions (certainly more than the public sector unions) the UAW understands that it’s in partnership with the car companies, they’re in it together.

Yes, it would have been great if GM & Chrysler and Ford didn’t have to deal with the UAW’s counter-productive work rules, but more than just about any other union, the UAW has made concessions.

Labor unions, like venture capitalists, are necessary evils. They are the only way that non-key personnel can have any economic leverage with their employer. Most fundamentally, they prevent employees from getting fired at will.

My best friend is a labor attorney, working for management. He’s very well paid, but he’d love to have a union just for job security reasons. Of course the problem is that unions protect the jobs of incompetents and the competent alike. Like I said, a necessary evil.

rokemronnie on November 18, 2010 at 4:06 PM

ha ha ha such predictable Hotair sour pi*s in the cornflakes crybabying

Dave Rywall on November 18, 2010 at 4:14 PM

In the market for a new truck. We will not even bother looking at a GM or Dodge. Ford, maybe. But will likely go with a Toyota – built in Texas, no Union involved.

humdinger on November 18, 2010 at 4:18 PM

In the market for a new truck. We will not even bother looking at a GM or Dodge. Ford, maybe. But will likely go with a Toyota – built in Texas, no Union involved.

humdinger on November 18, 2010 at 4:18 PM
——
yeah all unions are bad
f them
can we assume you don’t buy/use any union-made products/services?
how do you drive your vehicle?
did you find a non-union petroleum company?

Dave Rywall on November 18, 2010 at 4:21 PM

He’s very well paid, but he’d love to have a union just for job security reasons.

Uhh, how’s that job security thing working out for those 21,800 hourly workers about to get the pink slip?

The closings will leave G.M. with 33 plants in the United States by 2012, down from 47 last year. G.M. is cutting about 21,800 hourly jobs by 2011, though it did not say how many people currently work at the plants being closed.

humdinger on November 18, 2010 at 4:22 PM

Sorry dude, I don’t feed the trolls.

humdinger on November 18, 2010 at 4:23 PM

I rather walk ten miles than even test drive a GM.

darwin on November 18, 2010 at 11:33 AM

I’ll carry a ford hubcap before I own a GM product.

Mini-14 on November 18, 2010 at 4:29 PM

He’s very well paid, but he’d love to have a union just for job security reasons.

Uhh, how’s that job security thing working out for those 21,800 hourly workers about to get the pink slip?

The closings will leave G.M. with 33 plants in the United States by 2012, down from 47 last year. G.M. is cutting about 21,800 hourly jobs by 2011, though it did not say how many people currently work at the plants being closed.

humdinger on November 18, 2010 at 4:22 PM
——-
As long as you keep spitting that the largest stock offering in US history is somehow bad news, you’ll be okay.

Dave Rywall on November 18, 2010 at 4:29 PM

Every decision, from product planning to ad buys, is second guessed by people who know nothing about the auto industry but because they believe themselves to be stakeholders via the gov’t equity in GM, they think they have the standing to criticize.

With all due respect, I find it just as easy to believe there are people running GM who know nothing about the auto industry.

Yes, bad times happen, but GM’s auto division has been horrible for years upon years. If it wasn’t for the finance division holding it up, it would have been long gone.

ButterflyDragon on November 18, 2010 at 4:34 PM

I am done knowingly buying any product union made.

Wade on November 18, 2010 at 5:37 PM

In the market for a new truck. We will not even bother looking at a GM or Dodge. Ford, maybe. But will likely go with a Toyota – built in Texas, no Union involved.

humdinger

There’s a good reason why Toyota has not really made a dent with the Tundra – GM, Ford & Chrysler are the world’s experts at building fullsize pickups. Toyota’s had a series of problems (the prior generation Tundra rusted so badly that Toyota had to agree to buy them back) breaking into the US pickup market and I don’t think they’ll ever exceed 10% of that market. Nissan also failed with the Titan and made a deal with Chrysler to start buying trucks from them.

The simple truth is that UAW or not, the American car makers know how to build trucks.

rokemronnie on November 18, 2010 at 7:29 PM

Just wondering if you folks who won’t patronize unionized businesses take the same attitude with public employee unions? Do you refuse to pay a license fee because the clerk behind the desk is a member of AFSCME? Do you not pay your property taxes because your city has a contract with SEIU?

At least with car companies I have a choice of unionized or not. With government bureaucracy, the public employee unions have a monopoly.

The problems with today’s labor movement are not industrial or business unions like the UAW. The problem with today’s labor movement is that a majority of union members in the US today are public employees. The labor movement dances to the tune of the public employee unions. Meanwhile, to maintain some semblance of political power, the few remaining industrial or trade unions like the UAW line up with public employee unions, even though they know that the interests of public employees and private sector employees diverge and conflict with each other.

rokemronnie on November 18, 2010 at 7:38 PM

rokemronnie on November 18, 2010 at 7:38 PM

If only I had a choice in dealing with government. It’s not like buying a product that you can do without. I’d like to see state governments contract out services like the DMV to private companies.

Both sides of the union movement are corrupt and politically subversive. One more than the other? Not by any significant degree.

This will come to a head in a year or two when the UAW thugs try to negotiate with Ford for a new contract, while owning GM.

slickwillie2001 on November 18, 2010 at 8:18 PM