I just saw a commerical with the head of GM bragging about paying off their debt early. Explain why this is not proof that it was a good decision to bail them out.
why don’t you start?
How is their income statement/cash flow looking this year? What is their bond rating/credit risk spread?
I don’t think GM has paid off their debt. Only Chrysler.
Irregardless, if I am a businessman and I make a good investment, does it really matter where the money came from when it comes to whether or not it was a successful investment? The problem with GM is not that it received government money, but the fact that it still has the same problems which caused GM to become a failed company after the recession. Namely, high wages due to union coercion, which make its fiscal situation very difficult. So, the question is if GM will continue to be a viable automobile manufacturer down the road. Also, we have to consider where that money given to GM would have gone otherwise.
What he didn’t tell you is that most of their debt has already been liquidated by unprecedented and irregular bankruptcy procedures, where most of the creditors got screwed.
The government, in order to avoid bankruptcy, basically bought most of the shares at overpriced values, then proceeded to bankruptcy court itself to get rid of its remaining debt. A few subsidized government loans could now be paid by further subsidizing the consumer (cash for clunkers, tax rebates, etc…)
There is also this from Sheldon:
http://www.thefreemanonline.org/anything-peaceful/gm-repays-government-in-a-manner-of-speaking/
Irregardless
Oh god, please don’t start with double negative psuedo-language.
Beyond that, I would imagine they can pay off their debt with taxpayer money (though I haven’t been paying much attention recently).
Well they aren’t listed on a US Stock exchange as far as I can tell. Unless they have a parent corp or I’m dumb. GG.
No you are not dumb.
What I meant is that it is not a market entity anymore, there is no way to establish whether it is actually adding any value…thus the question on wether the bailout was justified now that GM is ‘up and running’ again is like looking at a crown corporation with implicit debt guarantees etc and saying ‘omg their doing great! all firms should be nationalized!’
“I just saw a commerical with the head of GM bragging about paying off their debt early. Explain why this is not proof that it was a good decision to bail them out.”
They used money from a second bailout to pay back the first one. Source: http://www.foxnews.com/politics/2010/04/22/grassley-slams-gm-administration-loans-repaid-bailout-money/
As I understood it, they didn’t even pay back all the money and were told later that they should not have made that remark (I could be mistaken it’s 3:10 AM). GMAC was begging for more fascist money the other month, again. Let’s also keep in mind they’ve had the cash for clunkers nonsense and money printing. They’ll continue to be a bottomless pit of money losing, just like Chrysler, AIG, Fannie, Freddie, the banks, etc. and any other zombie on life support.
Sat. 10/04/24 11:22 EDT
.post #66
[url=How did GM pay off their debt? - #4 by Catalan]
Neither does this columnist:
What is this supposed to mean?
The very short answer is General Motors repaid the bailout TARP funds with bailout TARP funds. GM’s repayment and the PR campaign is nothing but a farce.
Excerpt from zero hedge article:
"
…
Government Motors is now blatantly lying to its existing and future buyers, and everyone in the administration is complicit.
…
General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers “in full.” But the claim isn’t standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.
The TV spot may land GM in hot water with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are “likely to mislead consumers.”
…
[the]charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP.
"
Sat. 10/04/24 13:04 EDT
.post #69
[url=How did GM pay off their debt? - #13 by jmorris84]
Translation: “suffers from competition.”
Is the author implying that competition is bad? I don’t get what he is trying to say.
Sat. 10/04/24 14:03 EDT
.post #71
[url=How did GM pay off their debt? - #16 by jmorris84]
I don’t think he’s implying that. I think what he’s implying is that the greater the competition, the lower the profit margins tend to be. This interpretation is sugested by his next sentence:
Here’s another article outlining exactly how GM paid off its debts with other government money. It basically confirms the other articles already posted.
Long story short: 1) Not all of the given money was a “loan.” 2) Loan was paid off with another part of the given money. 3) Loan was paid off to make another lower interest loan toward CAFE standards politically viable.