GM bankruptcy

[Lurker]

You really have no idea what you're talking about.

[Kulaf]

Kulaf,
I think you strongly implied that they didn't have money for R&D. We'll leave it at that.

The word processes is right there in my quote, so no......I didn't strongly imply anything. I said what I said. But thanks for letting me know the discussion is over......I wouldn't have known otherwise.

[Lurker]

Here's your original statement.

You can't make good product if you don't have money for R&D into new processes and such and you can't get the money if you don't sell product. So much of the American car companies profits were being eaten up by various factors that they started to fall behind technologically.

You claim you just meant that GM spent R&D money on the wrong things, and never meant to imply that they didn't have R&D money. I think you're lying now.

From the context of what you were responding to and the underlined parts of your statement it's clear you were saying they didn't have R&D money to make better products because they weren't selling enough products, and that they coudn't direct profits towards R&D because they were being eaten up elsewhere. It's blisteringly clear, and Fallakin ran with it, that you thought GM did not have money to spend on R&D. When I proved that they vastly outspent Toyota until very recently, you morphed your argument.

So, I'm accusing you of lying. You can now say you weren't, and we can go round and round like that if you want.

[Embar Angylwrath]

You really have no idea what you're talking about.

Are you addressing this to me or Kula?

If was to me, my last post was that:

1. The US converted the loans to equity in GM,
2. As result the US now owns the majority of GM.
3. And now GM is in BK.
4. So the US converted loans into shares of a troubled company that is now in BK.

Are you saying one of those positions are incorrect? If so, which one?

[Lurker]

Embar,
It was directed towards you. That post and your latest one are wrong on so many levels I hardly know where to begin.

GM and Chrysler were heading to bankruptcy with or without government intervention. You make it sound like the government forced them into bankruptcy, which isn't the case at all. Without government assistance GM and Chrysler would have liquidated; with help they will reorganize and have a chance to survive.

The government is providing the financing required to guide the companies through Chapter 11 and taking an equity stake to protect the taxpayer. It's exactly what you agreed we should do. Also, the idea that the government devalued the companies when they were worth less than zero is beyond absurd. They did the exact opposite. All sides agreed to a restructuring deal and made concessions towards a future viable company before things even arrived in bankruptcy court.

Just everything you've said about this is wrong. I have to wonder where are you getting your information because it seems really divorced from reality.

[Kulaf]

Here's your original statement.

You can't make good product if you don't have money for R&D into new processes and such and you can't get the money if you don't sell product. So much of the American car companies profits were being eaten up by various factors that they started to fall behind technologically.

You claim you just meant that GM spent R&D money on the wrong things, and never meant to imply that they didn't have R&D money. I think you're lying now.

From the context of what you were responding to and the underlined parts of your statement it's clear you were saying they didn't have R&D money to make better products because they weren't selling enough products, and that they coudn't direct profits towards R&D because they were being eaten up elsewhere. It's blisteringly clear, and Fallakin ran with it, that you thought GM did not have money to spend on R&D. When I proved that they vastly outspent Toyota until very recently, you morphed your argument.

So, I'm accusing you of lying. You can now say you weren't, and we can go round and round like that if you want.

Well when you factor in my opinion of you......it really don't sting as much as you might think.

[Embar Angylwrath]

Embar,
It was directed towards you. That post and your latest one are wrong on so many levels I hardly know where to begin.

Your opinion, yet I was right about them heading into BK before the government tried a bailout. The bailout didn't seem to work so well, did it? I was also right about the socialization of part of the industry (the US owns the majority of GM through the conversion of loans - taxpayer dollars - into shares, I haven't seen you dispute that, so we'll let that stand as fact)

GM and Chrysler were heading to bankruptcy with or without government intervention.

Correct.. so why spend taxpayer dollars on a company you yourself admit wasn't healthy ('were heading to bankruptcy"). Not very good fiscal policy..., especially if you're going to loan or own part of a company everyone knew was heading to BK.

You make it sound like the government forced them into bankruptcy, which isn't the case at all.

No, sorry, I don't. There was never any implication that I thought the government forced them into BK. They were headed there before the government got inolved, as you noted above, and as I had noted several times in other threads.

Without government assistance GM and Chrysler would have liquidated; with help they will reorganize and have a chance to survive.

Speculation from an individual who has been off the mark on this subject more times than any other that has posted.

The government is providing the financing required to guide the companies through Chapter 11 and taking an equity stake to protect the taxpayer. It's exactly what you agreed we should do.

Show me where I ever said the government should take an equity stake to protect the taxpayer. I said assist in the BK, not take opwnership. If you do, I won't post here for a month, if you can't, you won't post for a month.. deal? Notice Lurker will not take this challenge directly, because he can't refute the position.

Also, the idea that the government devalued the companies when they were worth less than zero is beyond absurd.

Who said anything about worth less than zero???? I said worth less than what was paid for. Did you get infected with the Rsak virus?

They did the exact opposite. All sides agreed to a restructuring deal and made concessions towards a future viable company before things even arrived in bankruptcy court.

Really? Then why did bondholders sue to prevent the Chysler sale (which) you have lumped in with the GM sale as noted above, and I don't think you've heard the last of the GM bondholders either...)

Just everything you've said about this is wrong. I have to wonder where are you getting your information because it seems really divorced from reality.

Just because you say its wrong doesn't make it so.

I await your response.

[Lurker]

Huge posts are against my nature - I like quick and snappy best - but I'll respond in a bit.

[Lurker]

Your opinion, yet I was right about them heading into BK before the government tried a bailout. The bailout didn't seem to work so well, did it?

We discussed back in April why the loans were the right move even though it just delayed the bankruptcies. The loans gave the companies time to restructure. You were hardly Nostradamus here.

why spend taxpayer dollars on a company you yourself admit wasn't healthy ('were heading to bankruptcy"). Not very good fiscal policy..., especially if you're going to loan or own part of a company everyone knew was heading to BK.

See response above. Also, once the decision had been made to try to save the US Auto industry the only path available was a government financed restructuring; a move you agreed with.

Speculation from an individual who has been off the mark on this subject more times than any other that has posted.

Links please.

Also, the idea that the government devalued the companies when they were worth less than zero is beyond absurd.

Who said anything about worth less than zero???? I said worth less than what was paid for. Did you get infected with the Rsak virus?

I phrased that badly. The companies were already worth less than zero because the debts were many times more than the value of the assets. The government assisted in negotiations that reduced the debts, increasing the value of the company. It is through the looking glass backwards to claim the government devalued the companies.

Then why did bondholders sue to prevent the Chysler sale (which) you have lumped in with the GM sale as noted above, and I don't think you've heard the last of the GM bondholders either...)

We talked enough about bondholders earlier in this thread. I find your concern for the bondholders interesting since in April you were worried Obama would "ease the loss of the bondholders". Not all of them are happy with the restructuring plan, but they would have ended up with nothing in a liquidation.

Show me where I ever said the government should take an equity stake to protect the taxpayer. I said assist in the BK, not take opwnership. If you do, I won't post here for a month, if you can't, you won't post for a month.. deal? Notice Lurker will not take this challenge directly, because he can't refute the position.

Right here. You said you agreed that government money "must be tied to drastic restructuring", and that avoiding liquidation would require a "government backed bankruptcy". Did you want the government to finance the bankruptcy without taking any collateral? That would be insane.

[Embar Angylwrath]

All of those responses were poofery Lurker. None had a substantial refutation of points.

And I don't conversion of loans to equity as the only way to go in a government assisted BK. By a government assisted BK, and particular to GM and/or Chrysler, this is what I mean:
1. Setting up a procedure to honor warranties;
2. Bringing large players to the table and facilitating negotiations
3. Short term loans for interim financing
4. Arranged for a pre-packaged BK, so the company can file and close the BK in a matter of says instead of months.

All of this could have been done long before the government loaned money to GM, and then converted that money.. our money... into devalued stock.

[Lurker]

All of those responses were poofery Lurker. None had a substantial refutation of points.

Try reading next time.

Anyways... It seems we disagree on whether the loans last year were necessary to give the company time to prepare for Chapter 11. I think the time was needed and that with all the other shit hitting the fan at the end of last year delaying the bankruptcies was critical. You don't. Fine.

But everything else on your list was done. The "short term loans" were secured by taking a temporary equity stake in the new company. The government got everyone to the table, negotiated the debt down, and pre-arranged the restructuring before landing in court. The bankruptcies will be over in record time.

And again, you are wrong about the government devaluing the companies. The companies were worth less than nothing. You can't devalue something worth less than nothing. On the contrary, they increased the value of the companies by getting people to waive debt as part of a restructuring.

[Embar Angylwrath]

All of those responses were poofery Lurker. None had a substantial refutation of points.

Try reading next time.

Anyways... It seems we disagree on whether the loans last year were necessary to give the company time to prepare for Chapter 11. I think the time was needed and that with all the other shit hitting the fan at the end of last year delaying the bankruptcies was critical. You don't. Fine.

But everything else on your list was done. The "short term loans" were secured by taking a temporary equity stake in the new company. The government got everyone to the table, negotiated the debt down, and pre-arranged the restructuring before landing in court. The bankruptcies will be over in record time.

And again, you are wrong about the government devaluing the companies. The companies were worth less than nothing. You can't devalue something worth less than nothing. On the contrary, they increased the value of the companies by getting people to waive debt as part of a restructuring.

Where are you getting that notion that I think the government devalued the companies??? The companies were devalued before the government stepped in, which is the basis of my point that buying worthless stock is a bad use of taxpayer dollars.

[Lurker]

Where are you getting that notion that I think the government devalued the companies???

Here, when you said "We bought a company, only to devalue it and sell it back."

Also, equity (stock as you call it) in the restructured companies isn't worthless if they survive, which they have every chance to do thanks to the restructuring.

[Embar Angylwrath]

Where are you getting that notion that I think the government devalued the companies???

Here, when you said "We bought a company, only to devalue it and sell it back."

Also, equity (stock as you call it) in the restructured companies isn't worthless if they survive, which they have every chance to do thanks to the restructuring.

That was a misstatment on my part. I should have said bought it only to see it devalue (which happens when a company is headed towards BK).

[Lurker]

Oh.

Well, we didn't get shares in the old company only to watch it devalue as bankruptcy was declared. We got equity in the new company that will emerge after bankruptcy restructuring.

[Fallakin Kuvari]

We got more than equity, we got controlling interest.

[Embar Angylwrath]

Oh.

Well, we didn't get shares in the old company only to watch it devalue as bankruptcy was declared. We got equity in the new company that will emerge after bankruptcy restructuring.

That statement is correct. The US will own a substantial amount of the new GM, and a trust mostly comprised of bondholders, the UAW, Canada and Ontario holding most of the rest of the company.