Eric Bryant

It's quite possible that this will happen. GM owes about $70B in accounts payable at any given time. I don't see any ability to pay this.

If we use the long-term bonds as an example, what's worth more - 21 cents on the dollar in liquidation, or a 25% stake in a company that's currently worth $2.5B?

In order for that 25% stake to exceed your figure of 21 cents on the dollar on a $30B obligation, GM's stock price would need to be in the neighborhood of $40/share.

It'd take a hell of a shift in the company's fundamentals to pull this off. I'm not saying that it can't be done or shouldn't be done, but I also don't envy the task of whomever has to talk the creditors into accepting this agreement.

teal98

If GM recovers, it should easily go up to $40 per share. If it won't recover, then kill it now. I think that's what it's all about. You seem to think they're doomed either way. If you're starting from that position, I agree with your reasoning.

Also, the percentages were out of the thin air, so don't get hung up on the numbers. The main idea is that you come up with a number which, assuming a recovery for GM, that those who are owed money will get significantly more than they would under liquidation. Once again, if it's your judgment that there are no numbers under which that can be true, liquidate.

I don't know enough to judge what GM's chances are under the various scenarios (seems to me a crystal ball would come in handy there). I'm merely commenting on the mechanics of how you do this.

teal98

Well, the news is reporting that there was a deal, except for the UAW, who would not make wage concessions to bring their wages into line with the transplants.

The UAW is playing a very dangerous game here. It's difficult to see how they win.

This latest proposal by Senator Corker seemed pretty reasonable to me, though it did take a hard line on wages. Now we have the next three weeks to consider how a deal would have gone through with a small wage concession. What does that do to the chances of a deal between Jan 3 and Jan 20? Will GM last that long?

High stakes poker indeed....

SSbaby

I agree. Now that there is focus on the UAW, it's almost obvious to all political concerns to understand why GM are competing against 'foreign' brands with one hand tied behind their back. The UAW is demonstrating just how inflexible it can be, which is alarming given how perilously close they are to a terminal non-existence.

Adam4356

the self preservation focus of the union is ridiculous. fools.

Chuck!

Is there a breakdown at the wages with the contract signed this year vs. a comparable worker makes at a import plant based in the US?

I ask because I thought one of Rick's speaking points last week was how they made the wages equal if not better than what the import workers get.

HuJass

If anybody watched the press conference with Gettlefinger a little bit ago, you would have learned a LOT about the negotiations. It seems the UAW had an agreement with Sen. Corker. But the GOP caucus (which included Shelby and DeMint, among others), saw this situation as an opportunity to break the union.
Gettlefinger even had an e-mail from this group of people from Dec. 10th that pretty much said as much.

Go watch the UAW news conference.

HuJass

I can see your point of view.

And I agree with your assessment of my framing of this as a "Unions vs. Republicans" issue. And I believe it is.

But this is about ideology.
It's no secret that repubs like to minimize costs and maximize profits, all else be damned. Big business is their friend. They will support causes that big business feel necessary.
And it's no secret that dems are more about the little guy. Looking out for the little guy. And unions are about protecting the little guy. Unions & dems are one in the same.

So I'll put forth that this is an ideological war between the dems & repubs.
And what's forgotten here, sadly, by the repubs, is the little people involved. Oh, they'll give lip service to the little guy on TV, but their actions speak louder than their words.

I believe repubs view unions as a road block to greater profits, and they will do whatever it takes to bring them down. That's my view.
So is it a surprise that the unions will continue to fight the repubs?

If repubs starting seeing the little guy as an asset instead of a liability in this country, you would probably see the unions stance of them soften.

But until then, it will be like the Hatfields & McCoys.

Z284ever

Just my opinion, but I think you're giving ideology far too much weight here. I think Republican politicians (as individuals), simply see unions as a roadblock to being elected. And an ally to their adversaries in defeating them.

Politically speaking, unions as organizations, cause them harm.

It's too bad union leaders never found it necessary to 'reach out' to both side of the aisle. They may have made some friends, instead of entrenching enemies.

Z28Wilson

Umm, unless I am mistaken this is what NEEDS to be done in this case, doesn't it? No profits equals no company and no employment for anyone. Conservativism is about making sure that business succeeds so that as many people as possible can succeed. I've never understood the hatred of big business that consumes the left. At the risk of turning this too political, I will stop there.

Nah, it's just no secret that dems do a good job of cultivating that perception. All this talk about the "little guy" makes people feel warm and fuzzy, but I don't get the real sense that anyone on Capital Hill has the pulse of the "little guy".

Adam4356

You can't break this situation down to idealogy fronts. It's politics as usual. With no particular party being any working mans "hero".

Congress is barely doing it's job. The union is just as bad.

HuJass

You left off the four most important words of my sentence, which really gives a different flavor to my statement.

"ALL ELSE BE DAMNED"


There's no doubt that a proper business model would be to minimize costs and maximize profits. But it has to be done in a socially and ethically responsible manner.

HuJass

On the flip side, I would bet that the repubs never reached out to unions either. If the repubs gave some inkling that they were willing to do something, anything, for the union or the little guy, then I think the union would be quite receptive to that.

Unfortunately, there is an animosity there, and I'm not sure it can be cured.

HuJass

I still believe there is idealogical headbutting going on here.


And I agree with you that Congress is barely doing it's job.

graham

"•UAW workers for the Detroit 3 would have to accept the same pay, benefits and work rules as employees of import-brand factories."

Why not force import automakers to pay benefits Americans are used to making in America? Why are Americans asked to do the "bending over" so we can let the Japs manufacture here?? Its bad enough we ask our auto makers to compete equally against countries with less standard of living than ours.