Let GM go Bankrupt

Also, with all the GOpers expressing a desire to allow GM and Chrysler to "go bankrupt" will pay dividends for Obama as the electorate recall that ALL the GOPers wanted to ditch the Michigan based auto industry and toss in a virtual towel because they have no balls to do the tough job.

But the idea that Michigan is united in its support for the bailouts is simply not the case.

Pick and choose
I meet a group of Tea Party supporters near Brighton, outside of Detroit. They aren't agreed on a candidate: some are for Romney, some Santorum and some have yet to make up their mind.


Many at the Brighton tea party meeting thought bankruptcy would have made GM stronger
But they are united in telling me that the bailouts were misguided.

"I have a lot of friends from a lot of companies who didn't get bailed out," Bill Gavette says. "A lot of suppliers. The companies the auto companies owed money to, got 17 cents on the dollar and they went under, they went bankrupt.

"I have a problem with the government picking and choosing. I have a small business, a lot of us here have small businesses, if we fail we fail. The government choosing who succeeds and who fails is so against our constitution and what we were founded on."

Susan Kotrys agrees: "I owned a small business. I owned record stores in the Detroit area but they went under because the industry changed, nobody bailed me out. I didn't think of asking the government for millions. I started working and doing something else."

Their opposition is both that it is unfair some people don't get the help, but also that it stops the system from working.

Larry Recca calls bailouts "a real bad idea".

"That's not how free markets work," Mr Recca says. "If you have a lousy company they should go out of business. If they can't deal with the unions and make a profit they should go out of business."

Most of the people here see Obama and the management appeasing the unions. They think a structured bankruptcy would have let GM survive.

"My husband is in the auto industry but I thought they should go through the natural process," Deb O'Hagan says. "They may not have been called GM but they would have come out stronger."

In the primary elections, bailouts have been peripheral, because all the candidates agree that such moves were wrong.

But in November's presidential election this debate will take centre stage, hinging on whether Obama saved the American economy from a terrible state, or put it deeper into debt by defying the logic of the free market

Most of the people here see Obama and the management appeasing the unions. They think a structured bankruptcy would have let GM survive.

GM's horrible week may get more horrible.
The week began badly for the world's No. 1 automaker with the unexplained ouster of its global marketing chief. Barring a late July surge, GM is expected to report July sales numbers on Wednesday that lag behind its chief rivals. And on Thursday it will announce what is widely forecast to be dismal profit numbers for the second quarter -- largely reflecting the maker’s ongoing problems in the free-falling European car market.
Complicating matters, GM’s recent problems have been magnified by its unintended and unwanted role in the 2012 presidential campaign. Though it was the former Republican President George W. Bush who launched the bailout of the struggling maker -- and rival Chrysler -- in late 2008, it was his successor, President Barack Obama, who took that effort to the next, far more costly level. To critics, “Government Motors” is a symbol of the administration’s perceived failures.
“Other than Europe, there isn’t one definitive problem, just a myriad of small problems” plaguing GM, said Rebecca Lindland, chief analyst with IHS Automotive. .
.
.
But the latest series of GM ads, notably including those running during the much-watched Olympics, have received negative to lukewarm feedback. And the more significant measure, market share, shows that GM has dropped from 19.9 percent of the U.S. market during the first half of 2011 to just 18.1 percent this year, only 3.7 points ahead of resurgent rival Toyota.
.
.
.
Rumors suggest the GM board is running out of patience as the maker’s stock dips to its lowest level since GM’s 2010 IPO. So is Washington. The U.S. Treasury still owns 26 percent of the company and that puts GM in an uncomfortable spotlight

Since the company left bankruptcy three years ago, its ads haven't boosted sales much. The company's biggest campaign, "Chevy Runs Deep," has failed to generate buzz. And now, GM has forced out its star marketing chief just as it launches two key vehicles.

The lackluster ads and loss of marketing head Joel Ewanick raise doubts about GM's ability to improve sales longer term. Experts say that even though it's making better cars and trucks, advertising has failed to get the message across. Despite spending upwards of $4 billion a year on marketing, GM hasn't been able to dent the perception that other brands are better.

"GM continues to have an image problem, which really isn't fair because their products are vastly improved," says Rebecca Lindland, an analyst with IHS Automotive, an industry consulting firm.

Dear Mr. Woodhill,
I am embarrassed for you writing such an article when GM currently has about $40 billion in cash and liquid assets in the bank and is projected to earn
about $4.00 per share next year which comes to another $8 billion profit to add to it. GM currently has enough cash in the bank and liquid assets on hand to buy back ALL of it’s shares at the current market price if it chose to do so. GM’s liabilities per the balance sheet are maybe $15 billion which is very manageable for a company of GM’s size. The shortfall in the pension and benefits is estimated depending on who you check it out with between
$15 and $25 billion. GM has well over $100 billion on hand in its pension trust fund and the shortfall is payable over many years into the future. There has just been a law enacted which increases the future interest rate expected on the future returns for pension plans that will significantly decrease the present value of the future obligations and GM has billions in tax deferrals to use up.
It doesn’t matter if GM loses some market share as they are downsizing. What matters is how much profit they are making whether they are first in sales or not. A big problem GM had before was that they strove to be #1 regardless of their profit status or the reputation they were sacrificing to remain first in sales. I will be very happy to send you a contribution to enable you to sign up for Security Analysis 101 as it appears you have never taken that course or need a refresher.

30 Apr 2014
US government says it lost $11.2B on GM bailout

http://www.cnbc.com/id/101628848