Let GM go Bankrupt

Taxpayers will lose about $14 billion in the government's $80 billion bailout of Chrysler and GM, the White House said Wednesday, portraying the outcome as good news since the losses are far lower than originally anticipated.
Seizing on the figures, the Obama administration took credit for the resurgence of the U.S. auto industry, assuring taxpayers that the government's bailout of Chrysler and GM was an investment worth making.
A report by the president's National Economic Council noted that as Detroit automakers rebound, the taxpayers' loss from the bailout will be about $14 billion, or less than 20 percent of the $80 billion that the Bush and Obama administration used to prop up the companies in 2008. The Treasury Department had expected losses closer to 60 percent.

Some bonds are secured; some are not. These were.

Oh, back up your own claim first.

The price of distressed debt is dependent on what traders believe they'll be able to recover—i.e., how much the company will be worth after it legally sheds certain debts in bankruptcy. Debt holders can recover in two ways. Companies can reorganize, transfer ownership to the debt holders, continue as going concerns, and emerge from bankruptcy. The recovery comes down the road when the former creditors sell their equity. Or companies can liquidate—wipe out their debt, sell off property and other assets, and distribute proceeds to the creditors. In the case of Chrysler, either path to recovery would require a significant influx of taxpayer money. Companies in bankruptcy require new debt—known as debtor-in-possession in financing—so they can keep the lights on. That market is not functioning particularly well since (irony alert!) so many banks are themselves in danger of bankruptcy. And so, in the case of Chrysler, the taxpayers are providing up to $4.6 billion in such financing.

Liquidation is an option, of course. Instead of fixing up the house, you could sell it in its current state to the first available buyer or break it down and sell the plumbing and fixtures. But even a liquidation of Chrysler would require further taxpayer intervention. Given the precipitous decline in auto sales for the global auto industry, the market for industrial production capacity for cars in the United States isn't exactly robust. Assuming a buyer didn't materialize immediately, Chrysler would have to keep operating to maintain any viability. If Jeep suddenly stopped making cars and advertising, the value of the brand for sale would decline rapidly. You can make the case that if the government didn't intervene at all, a bankruptcy would have happened sooner rather than later, and that, if the government didn't intervene again by providing more financing, it would have required a swift liquidation at the worst possible time.

Finally, secured debt holders' argument that they're getting the shaft relies on their belief that the true value of the bank debt is worth more than what the government was offering. But in this cycle, investors have frequently overestimated the amount of recovery they could get by taking possession of distressed assets. Think about the banks that foreclosed on a borrower and figured they'd be able to recoup 70 percent of the mortgage's value by selling the home—only to find that when they dumped the house onto a market already glutted with thousands of other foreclosed properties at a time when financing wasn't available, the best offer amounted to only 30 percent of the mortgage's value. That's also what is happening in the world of corporate debt. Ed Altman, the sage of high-yield debt at New York University, estimates that so far in 2009, the recovery rate has been 25 percent (25 cents on the dollar), compared with 42 cents on the dollar in 2008 (about the historical average) and 56 cents in 2007. It turns out that the Detroit executives weren't the only ones counting on a taxpayer-funded bailout.

http://carscoop.blogspot.com/2011/07/nissan-leaf-outsells-chevy-volt-in.html
"The battle for supremacy in the electric car category has begun –even though at present there are only two prime contestants. According to Bloomberg, the Nissan LEAF sold 3,875 cars the first half of the year, compared to 2,745 of GM’s Volt over the same period.
From January through May, the Volt was only 17 cars behind the Leaf, but in the following month, sales of the Volt plunged to just 561 cars, while those of the LEAF took off with a record 1,708 units, giving Nissan’s EV the lead."

Well hello there, Nissan Leaf. My, how you've grown. I hear your 2012 model is getting some significant updates.Let's explore, shall we?

To address the weather concerns associated with electric vehicles, a new "cold weather package" will come standard with the 2012 Leaf. This kit includes: battery heater, heated outside mirrors, heated steering wheel, heated front seats (front and rear) and a standard quick-charge port.

But an even bigger change is lined up for 2013 as well. Katherine Zachary, Nissan's senior manager of corporate communications, confirmed that the Leaf's on-board charger will double its current 3.3-kilowatt rating to 6.6 kW, allowing it to charge twice as fast as the current model. That could bringing charging time down from 8 hours on a 240 volt outlet, to just four hours or less.

As my father always says, "never buy the first-generation model of a new technology." That's because infant tech typically has the dubious distinction of being both overpriced and underwhelming. The Leaf was no exception to this rule, as this significant hiccup demonstrates.

Ah, but what a few years can do for fledgling young technology. It remains to be seen whether the price comes down for 2012-those figures will be out soon-but the car seems to be filling out nicely. Nissan's EV should be hitting that sweet spot of technological maturity and affordability within a few years

This is GM, that their latest alleged wiz bang product is shunned by consumers should come as no shock, though this is the car that was supposed to save the company and make the taxpayer tackover of the company a good deal for taxpayers, so this failure of GM is more significant than normal.

based upon a brief search and the link posted below, it does not appear that the numbers of volts sold by government motors are on a scale to save the corporation the size of GM

GM built zero Chevrolet Volts in June, but don’t worry, the stoppage was planned, says company spokesman Robert Peterson.

Detroit-Hamtramck Assembly, where the Volt is built, is currently undergoing upgrades for the model-year changeover, which adds new features to the Volt at a reduced price. Volt production will begin again in mid-July, Peterson says.The stoppage means the Volt will have extremely limited availability until August. Currently there are about 200 units available nationwide, he says.

GM is adding new workers as it increases Volt production. The automaker raised its intended Volt production last week, to 16,000 for 2011 and 60,000 for 2012. Executives have discussed building as many as 120,000 Volts a year if demand increases with rising gas prices

The Chevy Volt will be more widely available starting in August, and GM plans on producing 16,000 Volts by the end of 2011, with 3,500 expected to head overseas.

General Motors Co. is expected to announce Monday it will invest about $300 million to build a new full-size truck at its Flint Assembly plant, according to sources familiar with the plans.

The investment will create or retain hundreds of jobs, the sources said.
GM spokeswoman Kim Carpenter declined to comment other than to say: "We have some exciting news and we look forward to sharing it on Monday," when company and union executives have scheduled a morning news conference in Flint.

And if the electric vehicle was the the silver bullet for GM, it wouldn't be happening either, cyclops.

You're right tho - the Volt isn't the solution to every problem, or GM's savior. Good thing nobody proposed that it was.

I rode in a Nissan Leaf the other day, it was a fine automobile, lovely, rode well and was roomy and comfortable. All electric.
Cycloptichorn

Primarily because us Lib's like 'em. Isn't that what a lot of your resistance boils down to, in the end?Cycloptichorn

U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.