Government Motors: Government Wants Equity Shares
The U.S. government is considering swapping some of the $13.4 billion it lent General Motors Corp for an equity stake in a stripped-down version of the carmaker, people familiar with the matter said.
A government stake would mean a smaller share of the new company for bondholders, who own $27.5 billion in GM debt. Bondholders had been offered 90 percent of the new entity’s equity by the company. The swap would be part of an effort to cut GM’s debt as the carmaker approaches a June 1 deadline to come up with a plan to become viable, the people said.
“What the government is doing is stepping them down and easing the blow,” said Albert Angrisani, a turnaround executive who was assistant secretary of labor under President Ronald Reagan. In doing that, “they lessen the rights of the creditors in bankruptcy,” he said.
A government stake, “means you essentially have a nationalized General Motors until such time as the government sells off its equity to someone else, which won’t happen for a while,” said Gerald Meyers, a professor at the University of Michigan Ross School of Business and a former chairman of American Motors Corp. “The problem is it’s political. On the other hand, it’s a cheap way for the good GM to keep going and probably solidify its strengths.”
I can’t wait to see how this plays out – keep a close eye on how the government handles this and if they pull our or not. I have a feeling that D.C. is power hungry and this may just prove that inclination.
GM has been seeking to reduce its obligations to a union- run health care fund, owed $20.4 billion, and bondholders, whose debt is trading at as little as 8 cents on the dollar. Talks with those constituents are held up because of uncertainty about the value of the new company and the unprofitable assets it would leave behind for creditors to fight over, the person said.
Retirees owed health benefits would probably get more equity in the new company than bondholders, who would likely get only “a sliver,” the person said.
But it’s never the union’s fault! I mean, we fired the CEO of GM, but not the head of the union – yet the union is one of the reasons why GM has become so unprofitable. Is it the only reason? No, of course not, but in my opinion, it is the largest reason.
President Barack Obama believes bankruptcy is the most likely way for GM to become a competitive automaker, people familiar with the matter said.
Captain Obvious has graced us with his presence again! How long have fiscal conservatives been arguing for free markets – which would have meant that GM file for bankruptcy months ago? They would not have received a bailout, taxpayers would still have more money in their pockets, the government wouldn’t be as in debt, and the government would not be in control of a private, free market, company. If they do go bankrupt does that mean we get our money back that was obviously wasted on a company that never could have dug themselves out in the first place? Yeah… I thought so…
Limousine Liberals, the Party of the Little People!?
Another report of yet more liberals in Obama’s cabinet making more money than most people, using the corporate and capitalistic structure set in place that has worked so well over the past 200 years:
David Axelrod, the president’s top political advisor, reported in his form that he will get $3 million over the next five years from the sale of his two media consulting firms, ASK Public Strategies, LLC and AKP&D Message and Media. In addition, Mr. Axelrod took a salary of $896,776 last year from AKP&D and reported $651,914 in partnership income from the two companies.
In total, Mr. Axelrod reported assets valued between $6.9 million and $9.5 million. Mr. Axelrod’s clients were mostly political campaigns, including those of Rep. Patrick Kennedy, New York Attorney General Andrew Cuomo, and Chicago Mayor Richard M. Daley. He also reported receiving money from large corporations such as AT&T Inc., Comcast Corp. and the nuclear energy company Exelon Corp…
…Valerie Jarrett, assistant to the president for intergovernmental affairs, lists a $300,000 salary and $550,000 in deferred compensation from The Habitat Executive Services, Inc., in Chicago.
Ms. Jarrett also disclosed payments of more than $346,000 for service on boards of directors that reflect her political ties, and work in Chicago real estate and community development.
She was paid $76,000 last year for service as a director of Navigant Consulting, Inc. a Chicago-based global consulting group with governmental clients. She received $146,600 for service on the board of USG Corporation, a building materials manufacturer, and $58,000 to serve on the board of Rreef American REIT II, a real estate investment trust based in San Francisco. The Chicago Stock Exchange, Inc., paid her $34,444 to serve on its board.
Deputy National Security Advisor Tom Donilon earned $3.9 million as a partner at the law firm of O’Melveny & Myers LLP, where his clients include Citigroup, Inc., Goldman, Sachs & Co., and Obama fundraiser and heiress Penny Pritzker.
Carol Browner, assistant to the president for energy and climate change, disclosed earnings of between $1 million and $5 million from lobbying firm Downey McGrath Group, Inc., where her husband, Thomas Downey, is a principal. She states $450,000 in “member distribution” income, plus retirement and other benefits from The Albright Group, a lobbying firm whose principals include former Secretary of State Madeline Albright.
Here’s the deal, I could care less about the fact that these people have made a dime and make a good living, but just be honest about it. Stop pandering to “average joe” as the party of average America and the “little people” when you obviously are a party that is very well off, enjoys the benefits of capitalism and gets kickbacks from Wall Street. Stop demonizing, that which you use yourself. It’s really just that simple.
So yet again, it’s the blatant hypocrisy that bothers me the most here:
Democrats want to define “millionaires” as folks who make more than $150,000 a year and yet they themselves make well over that amount. It’s ironic how conservatives and the silent majority actually give more money to charities than other groups because of their faith-based institutions and do so anonymously. However, Democrats want to attack taxable deductions from charitable giving. Those who make way more than your average joe on the liberal side can barely give 1% of their entire annual salary to charity – and when they do they need to be recognized for it and publicly announce all the good they have done.
One Hollywood Movie I Will Endorse!
Hollywood and Clint Eastwood are possibly making the first anti-bailout movie and one that actually puts Capitalism in a good light! I hope that this movie does come to fruition but I would actually prefer to see it as a miniseries since the entire book is great, but possibly too long to make a significant and memorable movie.
Hollywood could soon be going Objectivist.
After decades in development hell, Ayn Rand’s capitalism-minded “Atlas Shrugged” is taking new steps toward the big screen — with one of the film world’s most prominent money men potentially at its center.
Ryan Kavanaugh’s Relativity Media is circling the Baldwin Entertainment project and could come aboard to finance with Lionsgate, which got involved several years ago.
Rand’s popular but polarizing book — it’s derided by many literary critics but has a huge public following — tells the story of Dagny Taggart, a railroad executive trying to keep her corporation competitive in the face of what she perceives as a lack of innovation and individual responsibility.
A number of stars have expressed serious interest in playing the lead role of Taggart. Angelina Jolie previously had been reported as a candidate to play the strong female character, but the list is growing and now includes Charlize Theron, Julia Roberts and Anne Hathaway. Please anyone but Anne Hathaway – a progressive nutroot.
Although it was written a half-century ago, producers say that the book’s themes of individualism resonate in the era of Obama, government bailouts and stimulus packages — making this the perfect moment to bring the 1,100-page novel to the big screen.
