Let GM go Bankrupt

The new shareholders are going to be eager to be wiped out like the old shareholders and will allow the new GM management to do a repeat perform? Or, the new GM management is going to be eager to re-bankrupt the company in the hope of walking away with 8 millions?

OK we should had allow the whole ability to manufacture cars to go belly up because of your thinking that all the new stakeholders from the shareholders to the bond holders are going to be eager to allow a new management team to throw money around blindly and either wipe them out or harm them greatly

It is taxpayer money that they are all playing with, those who buy stock know a good scam when they see one, and are trying to get in on the action. Perception is reality, so long as they can convince us that GM is a good company they win. It worked for Bernie Madoff for a lot of years.

We shall know in a couple of years if there is any truth to the claims...we sure cant tell for sure now, as there is little transparency.

GM being a public company have open books like any other public company.

Enron, Bear-Stearns, Lehman Bros, Fannie Mae, AIG, Tyco, WorldCom, the old GM..........all open books.

Why Can’t You Trust General Motors’ Financials? Because GM Says You Can’t.
Aug. 20 2010 - 1:46 pm | 943 views | 3 recommendations | 17 comments
By JOANN MULLER

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With two profitable quarters under its belt, the “new” General Motors is preparing to seek new investors, the first step toward cutting its ties to the U.S. government.

The $3.8 billion it earned before interest and taxes in the first half of 2010 sounds OK, but you can’t trust the numbers. Why?

Because GM said so.

The most glaring of many disclosures contained in the 734-page IPO document is this warning on page 25:

“We have determined that our disclosure controls and procedures and our internal control over financial reporting are currently not effective. The lack of effective internal controls could materially adversely affect our financial condition and ability to carry out our business plan.”

The company goes on to say:

“Until we have been able to test the operating effectiveness of remediated internal controls and ensure the effectiveness of our disclosure controls and procedures, any material weaknesses may materially adversely affect our ability to report accurately our financial condition and results of operations in the future in a timely and reliable manner. In addition, although we continually review and evaluate internal control systems to allow management to report on the sufficiency of our internal controls, we cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting.”

Say what?

That’s a bunch of legalese, but basically, GM is saying it can’t guarantee its reported results are accurate. And its auditor, Deloitte & Touche, agrees. But GM wants you to invest in the company anyway.

In recent years, GM—a company traditionally run by bean counters— had a habit of restating its quarterly results long after the quarter had closed. In January 2009, GM settled a case filed by the Securities and Exchange Commission over the way it accounted for pensions and other issues. The company identified problems with its bookkeeping and put in a number of remedies that year.

GM said it had reason to believe the fixes were sufficient, but then it filed for bankruptcy in mid-2009, and that created a whole new set of financial problems. When it emerged 40 days later, the company once again had to restate earnings under what’s known as “fresh start accounting.”

All of which is to say GM’s finance department was very, very busy over the past year and a half. As a result, it really hasn’t been able to fully test the new policies and procedures to see if they are effective.

Now, of course, GM goes on to say “we believe that there are no material inaccuracies or omissions of material fact and, to the best of our knowledge” the figures for 2009, both before and after bankruptcy, and for the first half of 2010 are accurate.

But should we trust them?

Executives at other companies are scratching their heads, too, especially since GM has a new chief executive, Daniel Akerson, who won’t even take over until September 1. He’s a telecommunications executive who, like chief financial officer Christopher Liddell, has no experience with the auto industry.

What’s the rush in going public? It might be politically expedient for the Obama administration, but America needs GM to be successful, and it only gets one chance to go public. If there are lingering doubts about the company’s chances for success, GM stock won’t fetch a good price, and taxpayers won’t be fully repaid.

Why not give Akerson and Liddell a chance to get up to speed on the auto business, and to make sure GM’s finances are in order?

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Some credible journalists need to be delving into the relationship any of the GM management has and continues to have with the Democratic Party and with Obama. This whole thing smells to high heaven, in my opinion.

What gets me is the organized propaganda machine, combined with the back room arm twisting, combined with the extra legal procedures put in place for this company only all leave me feeling too much like a Soviet Citizen.

I dont like it.

In this area you are dead wrong on several points. The Bust Administration tried hard to persuade a Democrat Congress to restrain and increase regulatory restraint with respect to Fannie and Freddy - eliciting steadfast opposition from barney Frank and Maxine ("It ain't broke, so don't fix it") Waters in the House Finance Conmmittee.

Just hurling inaccurate generalities around is not persuasive argument.

georgeob1 wrote:

In this area you are dead wrong on several points. The Bust Administration tried hard to persuade a Democrat Congress to restrain and increase regulatory restraint with respect to Fannie and Freddy - eliciting steadfast opposition from barney Frank and Maxine ("It ain't broke, so don't fix it") Waters in the House Finance Conmmittee.

Just hurling inaccurate generalities around is not persuasive argument.

Except the GOP controlled the Senate and the House for most of the Bush years. How did Barney Frank and Maxine Waters prevent anything?

You mean like the propaganda from the WSJ?
So.. do you think GM will make $90 million in profits the next few years hawkeye?

But wait.. the US corporate tax rate is really only 35%..
That means GM will need to make $128 billion in profit the next few years

The tax benefit stems from so-called tax-loss carry-forwards and other provisions, which allow companies to use losses in prior years and costs related to pensions and other expenses to shield profits from U.S. taxes for up to 20 years

which allow companies to use losses in prior years and costs related to pensions and other expenses to shield profits from U.S. taxes for up to 20 years

OMG, GM is going to be able to use the same tax law as every other company in the US.

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OMG, GM is going to be able to use the same tax law as every other company in the US.

You seemed to miss the point last year where the new GM was created, because it is a new company. The old company is called Liquidation Motors now. Under law the new GM was not entitled to the old GM's tax breaks, Congress had to make special law to make it happen.

You dont pay attention much do you...