GM's Wagoner gone

[GRG55]

Re: GM's Wagoner gone

I think the car companies will be like the airlines. Entering and exiting bankruptcy many times. Think Chapter 22,33,44

If GM goes down it's unlikely to be similar to any airline bankruptcy.

Dealing with the failure of, say, US Air is like the FDIC dealing with IndyMac.

The bankruptcy of General Motors will be more like Lehman...

[cjppjc]

Re: GM's Wagoner gone

If GM goes down it's unlikely to be similar to any airline bankruptcy.

Dealing with the failure of, say, US Air is like the FDIC dealing with IndyMac.

The bankruptcy of General Motors will be more like Lehman...

So, it may be more like Lehman. I was only saying that the auto companies will be like the airlines. In and out of bankruptcy more than once.

[c1ue]

Re: GM's Wagoner gone

A "quick, negotiated bankruptcy" for General Motors? It might be "negotiated", but I seriously doubt there will be anything quick about a GM bankruptcy. More likely a long, drawn out global mess, where the lawyers get rich...

Exactly so.

Let's not forget all those downstream suppliers of parts and what not.

A GM bankruptcy immediately results in dozens of its suppliers also going bankrupt.

[cjppjc]

Re: GM's Wagoner gone

Exactly so.

Let's not forget all those downstream suppliers of parts and what not.

A GM bankruptcy immediately results in dozens of its suppliers also going bankrupt.

I think the admin. will allow the suppliers to get (I'm totally guessing the amount. Not the idea.) 70 cents on the dollar. This will be prepackaged for all. A bankruptcy judge will just sign it. Goodbye shareholders. Goodbye bondholders.

Hello new shareholders. Hello new bondholders.

[GRG55]

Re: GM's Wagoner gone

I think the admin. will allow the suppliers to get (I'm totally guessing the amount. Not the idea.) 70 cents on the dollar. This will be prepackaged for all. A bankruptcy judge will just sign it. Goodbye shareholders. Goodbye bondholders.

Hello new shareholders. Hello new bondholders.

The most difficult problems in the wake of a GM bankruptcy may not be in the auto manufacturing & related parts supplier pieces...that might be the "easiest" part to restructure and help put back on its feet [in a very much smaller form of course].

GM is the "real economy" equivalent of a "too-big-to-fail" financial entity. It is an enormous global company with a wide variety of contractual and legal relationships with thousands of other business enterprises all over the world, and in virtually every economic sector. I don't see how something this complex can be "prepackaged" into bankruptcy. I think that's just a lot of media crap, because the reporters fell in love with the words "prepackaged bankruptcy"...it makes it sound so clean and sanitary. It also makes it sound like the Administration knows what it is doing, and has everything under control. Call me a sceptic, but a GM failure will be an unholy global mess that will drag out in courtrooms for years after Obama has left office, and Geithner has retired to spend more time with his tax planning software.

The Administration sees the political cost of trying to salvage GM. They appear to be taking the same line as the Fed and Treasury Dept used to take with asset bubbles..."it's easier to mop up the mess, than to prevent it in the first place".

There is a very high probability that the Administration will be proved as much in error as the Fed was, if they let GM go. They may even know that the cost of the clean-up [financial and political] is going to be higher in the future. But as with all public institutions [like the Fed ], given a choice between certain immediate pain and potential future pain, the participants will always opt for the latter.

[cjppjc]

Re: GM's Wagoner gone

The most difficult problems in the wake of a GM bankruptcy may not be in the auto manufacturing & related parts supplier pieces...that might be the "easiest" part to restructure and help put back on its feet [in a very much smaller form of course].

GM is the "real economy" equivalent of a "too-big-to-fail" financial entity. It is an enormous global company with a wide variety of contractual and legal relationships with thousands of other business enterprises all over the world, and in virtually every economic sector. I don't see how something this complex can be "prepackaged" into bankruptcy. I think that's just a lot of media crap, because the reporters fell in love with the words "prepackaged bankruptcy"...it makes it sound so clean and sanitary. It also makes it sound like the Administration knows what it is doing, and has everything under control. Call me a sceptic, but a GM failure will be an unholy global mess that will drag out in courtrooms for years after Obama has left office, and Geithner has retired to spend more time with his tax planning software.

The Administration sees the political cost of trying to salvage GM. They appear to be taking the same line as the Fed and Treasury Dept used to take with asset bubbles..."it's easier to mop up the mess, than to prevent it in the first place".

There is a very high probability that the Administration will be proved as much in error as the Fed was, if they let GM go. They may even know that the cost of the clean-up [financial and political] is going to be higher in the future. But as with all public institutions [like the Fed ], given a choice between certain immediate pain and potential future pain, the participants will always opt for the latter.

Points well taken. Especially these:

I think that's just a lot of media crap, because the reporters fell in love with the words "prepackaged bankruptcy"...it makes it sound so clean and sanitary. It also makes it sound like the Administration knows what it is doing


given a choice between certain immediate pain and potential future pain, the participants will always opt for the latter.

[GRG55]

Re: GM's Wagoner gone

Looking more likely...

GM Said to Be Warned Obama Won’t Make Debt Payment

April 1 (Bloomberg) -- General Motors Corp.’s 60-day deadline to restructure is unlikely to be extended because the U.S. won’t repay $1 billion in convertible notes maturing June 1, according to a person with knowledge of the discussions...

...GM Chief Executive Officer Fritz Henderson yesterday said that June 1 was the final deadline for completing the debt restructuring and that the automaker may enter bankruptcy sooner if it’s clear an agreement out of court isn’t possible...

...Obama gave GM 60 days to come up with deeper cost and debt reductions than the carmaker proposed in its plan submitted in February. GM is trying to prove it’s viable, a U.S. requirement to keep $13.4 billion in federal loans. The president believes a quick, negotiated bankruptcy is the most likely way for GM to restructure and become a competitive automaker, according to people familiar with the matter...

So the President is now a business work-out expert?

A "quick, negotiated bankruptcy" for General Motors? It might be "negotiated", but I seriously doubt there will be anything quick about a GM bankruptcy. More likely a long, drawn out global mess, where the lawyers get rich...

Doesn't seem like anybody really sure what is going on. Here's a Reuter's item that denies the Bloomberg report...

Obama thinking on GM, Chrysler unchanged -official

Tue Mar 31, 2009 9:31pm EDT
WASHINGTON, March 31 (Reuters) - President Barack Obama's thinking on the crisis facing General Motors Corp (GM.N) has not changed since Monday, a senior administration official told Reuters on Tuesday.

"Nothing has changed on this," the official said when askedabout a Bloomberg report that the president has determined thata prepackaged bankruptcy is the best way for GM to restructureand become competitive. "This report is not accurate."

The White House wants the 60-day period for GM and a 30-dayperiod for Chrysler [CCMLPD.UL] to play out, as announced bythe president on Monday, the official said, speaking oncondition of anonymity.

[Finster]

Re: GM's Wagoner gone

I don't know anything about Wagoner, but it seems odd to me that Wagoner is getting the boot for taking $10B (give or take) of the government's money, but the CEOs of Citigroup, BofA, JPMorgan, Wells, etc etc are all safe despite taking multiples of that.

As Fred mentioned previously - the PC CEOs must jump through hoops and be ritually sacrificed whilst the FIRE CEOs merely get the tongue lashing (and a bigger pile of government money)

Bingo! Wagoner didn't create GM's problems. He's the sacrificial lamb. Symbolic of the auto industry as a whole. These bailouts are hugely unpopular with the electorate, and the auto industry - which actually produces something - serves here as a token nod to cool the political heat while TPTB frantically throw buckets of gasoline on the smoldering embers of the FIRE economy ...