WHY GM will blow up...

The credit rating and the delphi obligation are going to consume their cash. My money is that GM will be in court by spring time. The effects are going to echo around the globe when it happens. ..324,000 employees worldwide at GM alone.
 
Quote from Enfinity:

The greed of the unions by refusing to negotiate earlier on their pension and benefits is what has created this massive SYSTEMIC competitive disadvantage for them.

This has nothing to do with any greed you might perceive me to harbour. GM/Ford going into BK is about trying to maintain the long-term economic viability of our economy. By NOT going into BK we are only going to make MORE pension and health-care promises to people and postpone a necessary evil.

The fallout will be ugly...I am not paid to come up with the solution, so I haven't given much thought to what a feasible solution might be.

Unions were formed because of poor working conditions, not to define international labor wages...

Don't hate the messenger...BUT, I could be wrong too! Either way, we have a huge problem that the market is not going to like.
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GM is in trouble because of:

a) unregulated health care industry which is killing every company -- don't blame the messenger indeed.

b) incredibly poor management which refused to develop more fuel efficient, lower maintenace cars as a way leading the competition instead of following it.

c) If you were to actually look at the numbers you would find that the benefits issue is a drop in the bucket of the GM hole. Really, go take a look.

d) Toyota and Honda produce in the US and they're not screaming.
 
Quote from The Kin:

I hope GM and F go bankrupt. The only good to come out of the US budget deficts is that the government will be unable to bail them out this time.

Higher Oil placed them in the coffin and Higher Interest Rates will finish them off.
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who says the government won't bail out the pension benefits of the workers when gm goes bankrupt.

gm and ford management bargain with their workers as if they are the US government. they know that technically that that they don't have the US Treasury behind me, but in the end they figure with hundred of thousands(?) pensioners ready to march on washington the government will bail them out.(management doesn't care what they give away as long as they can be a few more years on the job. the interest of management is what can i grab today not what is good for shareholders) banana republic we are coming. watch for inflation to soar as the feds bail out state government and big corporations by running the presses. vive argentina
 
i would like to know what is kekorian's position in thestock and at what price.
how much does he stand to lose if gm stock becomes worthless?
 
Quote from MYDemaray:

Anyone else read the interesting article about GM recently in Forbes -- suggested that an outsourced manufacturing model might make sense for GM and other US Auto makers. If you think about it, this makes alot of sense. Similar to Cisco and Flextronics or Coke and Coca Cola Bottling. GM, Ford and Daimler Chrysler should simply be design and marketing companies. Spin off the production, spin off the financing, spin off the distribution (already spun off via dealerships).

Contract manufacturing would allow factories to compete for work and help keep the price down. It would also give greater production flexibility (think "Real Options").

What will put this puppy (GM) down however is the pension, which is essentially just debt. So much for the days of gauranteed benefit plans....those were a bad idea.
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It's not that pensons were a bad idea. It's that pensions have been mismanaged and corporations allowed to avoid keeping them fully funded.

GM's entire business model is faulty. If they had had to keep their obligations fully funded -- like paying the interest on their debt ya know -- then they would have had to face the hard choices earlier.

The whole debate is a an attempt by managers to weasel out of how they massaged their earnings for years by ignoring their pension obligations.

Look at IBM, they fessed up and paid into the fund a few years back. Why? Because they had a solid business model and could afford to. They didn't let it get out of hand and then blame the people that worked for years for those benefits.
 
Quote from zdreg:

who says the government won't bail out the pension benefits of the workers when gm goes bankrupt.

gm and ford management bargain with their workers as if they are the US government. they know that technically that that they don't have the US Treasury behind me, but in the end they figure with hundred of thousands(?) pensioners ready to march on washington the government will bail them out.(management doesn't care what they give away as long as they can be a few more years on the job. the interest of management is what can i grab today not what is good for shareholders) banana republic we are coming. watch for inflation to soar as the feds bail out state government and big corporations by running the presses. vive argentina
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I have no doubt in my mind that F and GM's pensions will be transfered to the PGBC, but after that it will be closed. If they don't, the government would be promoting unions to hold the company hostage and if they go bankrupt, Uncle Sam will take care of them for life.

I do not blame the unions for GM or F's financial troubles. I blame management for being a yes man toward the unions. Some of these contracts are ridiculously and management should've known better to sign off.

I would like to see union obligation claims raised slightly, maybe above shareholders but below bondholders. That way the union would also have a vested interest in the survival of the comapny. Right now they know that if GM fails, Uncle Sam is there for them. So they can afford to push whatever demands they want on GM, and if it turns out to much, they got their put option.
 
Quote from zdreg:

is kekorian subject to a margin call or a bank call. rest assured the boys of wall street will test his resolve
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He's playing for a breakup. The stock going lower actually doesn't hurt him long term as it forces management to make changes. It's the fund managers who get killed by GM heading down and any wrong sided hedge funds/derivative players -- although the latter have probably learned their lesson.

Having said that, he could get smoked by a true BK filing...
 
it's still a pretty dumb buy by keko. this was as situation that was only going to get worse, regardless of the implicit put that gm management has from the u.s. govt. pension insurance and underfunded pensions are an absolute disaster as is the insane mortgage tomorrow for today comp / benefit strategy employed by auto companies, airlines, etc.
 
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