I wrote about GM's shenanigans where they claimed to have "paid back the taxpayers, in full, with interest, ahead of schedule" a few weeks ago. Then I saw the ad they were airing on TV - it's so brazenly wrong that it even made my wife gasp at the audacity. Take a look, and make sure you enjoy the multimedia extravaganza I've put together for you in this blog post (potentially NSFW language ahead):
Whoa whoa, GM - in the immortal words of The Wolf in Quentin Tarantino's Pulp Fiction: "Let's not start sucking each others dicks quite yet."
I am writing about this again today because the NY Times's Gretchen Mortgenson wrote an article about it today, with the tagline, "Fair Game: At GM, Repaying Taxpayers With Their Own Cash." Of course, that header immediately made me think of Teddy KGB in Rounders: "It's a fucking joke anyway, after all, I'm paying you with your money."
Amazingly, GM's CEO, Ed Whitacre didn't clarify, "your money: I'm still up $45Billion from the last time I stick it in you."
I was excited to see that Mortgenson was trying to explain the "TARP money shuffle" to her readers, but I think she missed the absurd simplicity of these accounting shenanigans. I want to make sure everyone understand this, so I'll try to simplify.
1) GM has a big pile of debts they can't pay back so:
2) The US Treasury gives them a huge loan: $52 billion
3) Now, GM has a) the same huge pile of debt it had before, along with b) a new pile of $52B in debt to the Treasury, and c) $52B in cash.... then:
4) GM declares bankruptcy, which massively reduces 3a, as preexisting debtholders restructure the debt they hold. It also massively reduces 3b, as the Treasury restructures the debt they hold - taking equity instead. In fact, it reduced the Treasury debt to $6.7B, which GM then paid back - using the cash it had - WHICH IT GOT FROM THE TREASURY!
Voila - the TARP shuffle.
At least we can feel good that GM is spending money bragging about it's "payback," while the American Taxpayer is still $45Billion in the hole on this transaction.
-KD
11 comments:
Don't forget the cash for clunkers giveaway $ and the fact that they still have $17B (??) of unfunded pension liabilities.
Yeah they are doing great "on their own"!
Oh and also GM was trumpeting how they are ahead of the quality game.
Sorry buddy. You still make the same shitty cars. You just took advantage of Toyota's pants being down.
If you made quality cars someone might have paid you something for Saturn or Hummer.
Not that I don't know the answer to this, but can you explain why the government having 45 billion in GM equity, plus having GM pay them back 7 billion in cash doesn't add up to a full repayment of the 52 billion they were loaned?
sure, Sigchangeup - the $45B in equity is not worth $45B... simple. how much it's worth remains to be seen...
KD,
just back from vacation so still getting caught up.
OT,
went to the Atlantis Resort one night to try and play a little poker and NO MORE POKER ROOM!?
The floor manager said they cannot make money on the poker room and interest was low anyway. That really sucked. They also did not have the Texas Hold Em table game I love to cash in huge on. No gambling for me this trip.
Just another manifestation of the shameless lying culture we have developed over the last couple of decades, and getting worse every year, it seems.
There's just no end to the lies, obfuscation and deceit. It's disgusting and will be the death of our economy yet. With nobody trusting anybody else - ever - how can people do business? We have to layer on lawyers by the hundreds to sift through all the crap. Just another drag on our economy. UFB; and yet sadly, not.
May be a basic question, but help a brother out...at the end of the commercial, "General Motors Company" is shown with four logos. One of those logos is Ford's. Am I missing something here? I thought that Ford was standalone. Why is GM showing a Ford logo? Or is this a "all of the US car guys are up a creek and we're in this together?"
no - there's no Ford logo. there's Chevy, Buick, GMC and Cadillac - GM's brands
Hey KD,
Now I see it...I did mix up the Ford and Chevy logos. We never buy Ford, GM, or Chrylser in my house and I had mixed the two logos up. Thanks.
Separate but somewhat related point...are there any Ford, GM, or Chrylser cars in the Dynamite driveway/garage? Why or why not?
(And I agree with you w/ the ridiculously inaccurate statements in the commercial.)
we have a 2001 Honda Civic and a 2010 Subaru Forester (the State Car of New Hampshire). Ford actually seems to be cranking out some decent vehicles now, but you can still usually buy a japansese equivalent that's just as good for 10% less money.
that said, i hate the new Civic design, with the speedometer setback to look like a cockpit.
i don't think i'd be likely to buy a GM - Ford makes better vehicles than they do, if I wanted to go American.
So let's say I ask you for $52.
You give it to me and say "I'll take that mug for $45 of it, but you still owe me $7". Mug is worth $5, so I quickly agree.
You seem to be implying that once I pay you back the $7, it's somehow my fault that you took the mug in exchange for the $45 in the first place.
Why is GM to blame? How have they not paid back the government in full per the terms of their deal?
ah yes, Nucleus - as a capitalist, and one who believes in buyer responsibility, i'm always in favor of holding accountable those who should be held accountable.
and yes - the Treasury struck a horrendous deal, which is why i will not sit idly by as they allow GM to trumpet this bullshit about us getting our money back.
we didn't get our money back. If GM wants to put out a commercial with Ed Whitacre walking around saying "hah - we got you fucktards to give us $40B in free money, suck it," well, that's fine. but to say that they've paid back what they were given, and not have anyone in the government speak up, is unacceptable
of course, the Treasury would never speak up, because they don't want to be made to look like fools.
but anyway you look at it, the US Taxpayer has not been made whole on this transaction - that's not even debatable. and that's the point.
Post a Comment