levin70

I Was Wrong About GM Bankruptcy

The only real alternative was the liquidation of the company, which would have yielded very little to the creditors

I've seen this bandied about so many times, but I have yet to see anyone, including the OP, back up this statement with facts.

And as for GM shedding its liabilities, the only liabilities shed were those of the bondholders. Correct me if I am wrong, but the UAW took no cuts in pay or benefits, so GM is still as unprofitable making cars today as it was before bankruptcy. The only difference is a reduction in total losses for $2 billion per year in reduced interest expense. But what;s the real difference between 6 billion annual loss and 8 billion, it;s still losing money on every car it builds.

Regards

Appraising the Auto Industry Wreck

I expect to see GM/Chrysler back in bankruptcy within 12-24 months, tops, unless the President decides that 40,000 autoworkers are worth another 30 billion or so, which I think given the state of the US economy he will be unable to do so.

Since GM isn't using bankruptcy to actually cut its costs other than about 1.5 billion in interest, how exactly is it supposed to make it for the next 2 years? In 2008, operating cash deficit of 12 billion, adding back 1.5 billion in interest costs and taking that 8 billion in PP&E and increasing that for the spend to cover re-tooling to smaller cars of 10 billion per year puts GM at a yearly cash burn rate of approx 20 billion. LOLLERSKATES

Regards

Treasury Directs GM to Get Ready for Bankruptcy

Don't underestimate that the Company itself may and try to sabotage its own bankruptcy filing. Remember, that the auto company's have the most to gain from going through a normal bankruptcy filing.

Act 1 - the Company files for Ch 11 and sabotages the pre-pak so that it goes through normal Ch 11.

Act 2 - the Company files a request with bankruptcy Judge to void all of its union contracts

Act 3 - the Company files a request with the bankruptcy Judge to remove its legacy benefit plans and hand them over to the PBGC

Act 4 - the Company files a request with the bankruptcy Judge to terminate 2,500 dealer contracts in the various states

Act 5 - the Company renegotiates with the bondholders

Imagine a GM without a union and having its debts exchanged for equity. It may actually be able to make a profit.

Regards

GM's Tough Treatment Should Be a Model for Other Bailouts

Rick

Let me first preface this by saying that I actually think having the FDIC take over the banks and having the holding co's go into bk, but realize that at a policy level that might not be "financially correct" let alone "politically correct". My comments below discuss as such

One of the reasons why this hasn't happened is because of the fact that the banks have the cash to repay TARP. Would it be economically sound, no, but they could, and as a choice between being booted with no severance and paying back the TARP and being able to pay market salaries, they will chose paying back the TARP. There is no downside as worse case, would result in having to have the FDIC call the banks insolvent and the holding co's would go bk. The difference being is that a bk judge sets compensation for management, including offering very nice retention bonuses. Remember, the FED and treasury have said they want oversight and the ability wind down holding co's, but they don't have it yet. That means a nasty BK for the holding co level, which would trigger a lot of angst in the markets right now a la lehman bros.

I think the Treasury guys have already explained that they cannot play chicken yet with the banks as the banks management would actually receive higher compensation under bk then they would under TARP and that would be bad, very bad. Law of unintended consequences you know

Kind Regards

Why Capping Pay Is Likely to Work

Felix

I agree with you on the $500,000 is a lot of money. I disagree with you about the consequences.

I think most people tend to get worried about when congress says that "plan A" will only be "temporary". I think the real fear is that congress opens the floodgates to lasting wage controls. Maybe im just a little paranoid, but I have a lot of history on my side.

Regards

When to Sell Dividend Stocks

I would also add that if a company takes on debt to maintain the div - that is also a good signal to exit

Kind regards

Forget $100 a Barrel - Oil Will Plummet to $30

Source for my comment above on 1.6% of power generation

www.eia.doe.gov/cneaf/...

Regards

Forget $100 a Barrel - Oil Will Plummet to $30

Oh yes, one more item to debunk from your article. You claim that oil demand will be hit by the US swtiching to alt energy power plants.

Obviously, you did absolutely no research on this as you would know that petroleum fuels produce less than 1.6% of all power from power plants in the US. This will have absolutely no effect on the world oil price.

Forget $100 a Barrel - Oil Will Plummet to $30

I have to say that the conclusions you draw are so unsupported by the evidence you give, its made me laugh quite hard. Please go put on the dunce cap and sit in the corner. Your analysis failed.

The evidence you give is (1) reduced driving demand by us consumers as evidenced by moving towards hybrid vehicles (2) easy recent oil finds outside the US and (3) some rinky dink 150 million bbl find in Utah

Lets tackle these one at a time (1) I agree US driving demand is decreasing. However, you have yet to indicate what's happening with US industrial demand? If we have an economic pickup in activity in a year or so, will that increased demand overcome the recent declines in consumer consumption? No evidence I have seen says that the consumer decline is enough to offset future higher industrial prod (2) You do realize that the marginal cost of production for all these new discoveries you are touting range between $65 to $80 per bbl right? Its incredibly expensive to drill in these areas and on top of that, the production facilities needed are ghastly expensive. That alone will keep prices higher as any price declines cause shut-ins that then lead to price increases (3) 150 mm barrels, pls - when you start talking about US onshore finds of 150 BILLION bbls, I will take notice, but until then, that's just a drop in the bucket (or approx 7 days of US imported oil)

Regards