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General Motors Files for Bankruptcy – America Left Holding the Bag
General Motors has indeed become Government Motors as the automobile manufacturer files for bankruptcy protection today.General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.
GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
As it reorganizes, the fallen icon of American industrial might will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That’s on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.
GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection in April. A judge gave Chrysler approval to sell most of its assets to Italy’s Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.
The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.
And, American taxpayers get left holding the bag to bail out, yet again, General Motors, I mean Government Motors.
Back in December, in an economy far, far away, then-CEO Rick Wagoner tossed out the scary cost to taxpayers of $100 billion if General Motors wasn’t saved by the government. Well, GM was saved in December and again in March, and as early as today the feds will rescue it a third time in a prepackaged bankruptcy that is already costing at least $50 billion, and that’s for starters. Welcome to Obama Motors, and what is likely to be a long, expensive and unhappy exercise in political car making.
Flap asks what is the exit strategy of the federal government for Government Motors? How much more will Americans be forced to pay to prop up the United Auto Workers and this failed company?
This entire GM bailout has been a calculated political manipulation of the marketplace by the Obama Administration. Obama interventions includes help for the unions, trade protectionism and help for the Michigan economy that Obama needs for re-election in 2012.
How much more will Americans have to cough up?
Technorati Tags: General Motors, Barack Obama
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Slogan of the Day: GM = Government Motors
Stockholders be damned. Obama is in control now.Is private enterprise capitalism now dead in the United States?
Technorati Tags: General Motors, Barack Obama
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Obama Demands GM CEO To Resign and Rick Wagoner Quits
If you want the federal bailout dollars, then you do what “The One” demands.The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.
The White House confirmed Wagoner was leaving at the government’s behest after The Associated Press reported his immediate departure, without giving a reason.
General Motors issued a vague statement Sunday night that did not officially confirm Wagoner’s departure.
“We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement,” the company said.
The government should have let GM and Chrsyler fail last Fall when they requested $ billions in federal bailout aid. President Bush kept them afloat with $9.4 billion to GM and $ 4 billion which turn out to be just the start – as everyone feared at the time.
Of course, Obama could say NO to ANY bailout aid and allow GM to file for bankruptcy. Once in bankruptcy, the GM management could eliminate union contracts to allow them to become profitable again. But, the unions hate this idea and Obama is beholden to them for support and campaign cash.
So…….
The Obama Administration, including Treasury will become the de facto CEO of GM. Will this nationalized or socialized company be able to return to profitability or will it continually rely on government for viability?
Obama says government.
But, the market will have other ideas and so might American taxpayers when they get the bill.
Technorati Tags: Barack Obama, Geneeral Motors
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General Motors is on THE BRINK of Bankruptcy
General Motors is on the BRINK of bankruptcy.General Motors has warned that billions of dollars in government aid may not prevent it from running out of cash if vehicle sales do not improve soon.
In a regulatory filing, GM, which was overtaken by Toyota as the world’s biggest carmaker last year, underlined the magnitude of its liquidity crisis by warning that it cannot afford to repay a $1bn bond maturing on June 1. The bond is part of $27bn in unsecured debt that GM is seeking to restructure through a debt-for-equity exchange.
Bondholders’ advisers were due to meet on Thursday afternoon with the US government task force overseeing GM’s restructuring. They were ex-pected to ask for a guarantee on new securities that GM would issue as part of its debt restructuring.
GM’s filing repeatedly raises the spectre of a possible bankruptcy filing, in spite of warnings that such a move would be costly and could do irreparable harm to its image in the marketplace.
Looks like GM will go BK and have to restructure its business operations, including its onerous union labor contracts.
This is unfortunate but may be what is required to right the automaker.
Technorati Tags: General Motors