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General Motors Is Headed For Bankruptcy - Again

Forbes: President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.

Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.

Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.

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There cars are trash

boycott them and let them fall for stealing tax payer money.

no

innovation and overpriced! gouging for "profits"

Sad

But the economy is doing FINE!

2700 dealerships in China

I read that GM now has 2700 dealerships in China and they are designing and producing vehicles, in China, specifically for the Chinese. They accomplished this with our bailout tax dollars. No more money for GM!

GM is, like everything else

GM is, like everything else nowadays, dependent on government.

"Believe half of what you see, and none of what you hear." - Benjamin Franklin

lmao

38k police impalas recalled serious defect can cause car to crash

Police better double check there supplied equipment because it seems like they are getting junk

Impala vs. BMW ????

If I were a police I would be offended by GM and this product

donvino

Good

Maybe their cars will break down and they will stop harassing everyone.

79% of GM's sales last month

79% of GM's sales last month were government purchased

http://pushbacknow.net/2012/07/12/79-of-gms-sales-last-month...

Uh... no, they rose 79%. That's a BIG difference.

http://nlpc.org/stories/2012/07/05/gm%E2%80%99s-government-s...

This shows that GM's government purchases ROSE 79%, the are NOT 79% of total sales. In fact...“total government sales for GM in June were still below 5% of total sales“.

As much as I enjoy finding evidence of wrongdoing, this is wildly incorrect and is misinformation. We're better than that.

SteveMT's picture

That's proof that GM = Government Motors.

They continue to prop-up the system with our money.

Price in Gold grams not $FRN

$FRN is an elastic ruler by design and is not fit for economic calculations over the long term.

This article tells me nothing of the valuation over time of the company. Since 2008 the dollar has fallen from $880 per ounce to $1760 today.

The money for the bailout in 2008 would buy half as much Gold today.
So The gubernment bailout of GM was about 28 million ounces of gold in 2008. Today GM shares are going for half that amount.

The government stands to suffer a loss of 10 million ounces of gold.

Back in 1912, Ford's a Model T was 40 oz of gold. A decent modern car is 20 to 25 ounces of gold.

A used Chevy S10 truck just sold for 2 ounces of gold equiv.

A 1975 Gremlin was 10 oz of gold.

The purpose of an constantly inflating currency supply is to confound the price system for the benefit of the CONfounders.

From 1999 to 2009 the value of the dollar went from $252/ozAU to 1,250/ozAU.

$1 cup of coffee became a $5 cup of coffee. A $1 gallon of gas became a 5$ gallon of gas.

A $10/hr wage feels like a $2/hour wage yet government still takes the same cut.

Free includes debt-free!

Awesome article...especially

Awesome article...especially the last page.

“Liberty means responsibility. That is why most men dread it.” -George Bernard Shaw

No Incentive to Innovate

The Government should of never bailed out GM that way it would force them to innovate and put out solid products and if not the markets would decide their fate. If they do happen to go under it would make way for smaller automotive companies to fill their place. Given how poorly the stock price has been doing, it puts the Government in a terrible position.

I think the bailout was a

I think the bailout was a failure, especially how it disrespected bankruptcy law and favored unions over bondholders.

However, the title is grossly misleading. GM is not headed towards bankruptcy based on current business and the strength of balance sheet.

The author is focused on the direction of the stock price which is a completely different matter.

Did the government overpay for its investment at expense of tax payers? Yes. Does that mean its headed for bankruptcy? No.

No - it is heading towards

bankruptcy due to loss of market share and ever declining quality of product. The stock price is a reflection of this direction.

A know a lot of people that flat out refuse to buy a GM - myself included.

I think the bailout was an

I think the bailout was an absolute failure, a failure to uphold the Constitution of the United States.

"James Madison is the acknowledged father of the Constitution. In 1794, when Congress appropriated $15,000 for relief of French refugees who fled from insurrection in San Domingo (now Haiti) to Baltimore and Philadelphia, Madison wrote disapprovingly, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents" (James Madison, 4 Annals of Congress 179 [1794]). Today, at least two-thirds of a $2.5 trillion federal budget is spent on the "objects of benevolence." That includes Medicare, Medicaid, Social Security, aid to higher education, farm and business subsidies, welfare, ad nauseam."

-Walter Williams

Subprime auto loans

Are another key factor that will be driving them toward bankruptcy again as well.

Yes, the shining example of

Yes, the shining example of how Paul Ryan's principles are offended but he must abandon those principles in order to save those principles. Great VP pick Mitt!

So I can clealy NOT choose

the wine if front of me. ...
So I can clearly NOT choose the wine in front of you.

You have a dizzing intellect.

Wait till I get going.

Great movie!

Great movie!

Moral Hazard continued

The firm has even begun engaging in subprime auto loans, as if we didn't learn our lesson from subprime lending in housing for years. GM is pursuing these loans to make a quick buck, and with the government as a large shareholder as well as the firm being established as "systemically important" by Dodd-Frank, they essentially are guaranteed a bailout.

Can you think of a better way to ensure poor decision-making in a business then an implicit guarantee of a bailout regardless of behavior? The free market would have annihilated the inefficiences of GM a long time ago, but once again government picks winners and losers and the politically-connected continue to benefit at the expense of those who are actually economically valuable.

Our government needs a

Our government needs a reboot. Back to the Costitution and free markets.

Wait a second!

We are told by the media, Obama, even Romney, that the auto industry bailout has been a stunning success, and we need to do that in other industries.

Just like we are told that Canada's socialized healthcare system works, as do all the socialized programs in Europe. Socialism is so wonderful and it works!! That's the message we get hammered into us by the media, educational institutions, and then the sheeple go around repeating it.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a rEVOLution before tomorrow morning." - Henry Ford

GM Bailout means bailing out other nations

GM has factories all over the world. The U.S. taxpayer is not only bailing out Detroit - which could arguably be OK - they are also bailing out workers in other countries.

LIBERTY2ME's picture

GM never fear! Paul Ryan is

GM never fear! Paul Ryan is near!

I work in the car industry

And I work for a company that supplies GM with parts. They are not doing good. Japanese companies are doing so good there are people at my job who haven't had even ONE DAY off in months. No lie. If you are on a GM line, you'd be lucky to get 40 hours. So this is not news to me.

If they bail out again, I foresee civil unrest. That's all I'll say about that.

ETA: Just for the sake of being clear. I work for a company who supplies GM and many other makes of cars. The best selling are Toyota, Honda, Nissan - in that order. Dead last is GM.

;-))

FASCIST stoled that Company!!!
Notice almost all New cop cars & Military Vehicles are Chevy or Dodge!!!
I think they are forcing other Countries to buy the same!!!
Fascist Pigs!
I Personally will never buy GM again!!
I was a big Chevy lover. 1969 Z28, 64 327 Built Nova II, 396 68 Chevelle.
List goes on. But i won't. HAHA
But never NO MORE!!

You are Correct

I know of one other local Federal Dept that swapped out all thier barely used Fords for GM cars. The Fed Employee said they just showed up, they didn't even want or need them, nobody knew they were comming.

..

every corporation and every american bank is bankrupt.
government. bankrupt. military, bankrupt. grandmas cookie jar, bankrupt.
our country has been bankrupt of morals and money since, well
a very long time.

broke is broke any way you slice it.
The system is failed,
the paradigm is about to change.

"OH NO! He has a SON?" Neoconservatives and Liberals EVERYWHERE!

Rand Paul 2016