White House tells GM boss to step down

[alfred russel]

Oil companies are a great comparison and you have a good point. My explanation would be that in the past the oil industry was notorious for boom and bust cycles, but the current limitations on supply prevent too much production.

But another explanation is that the better oil companies have very good management.

There is a similar dynamic in the steel industry (which also has issues of state support) - but the better managed companies seem to survive and even increase share.

Better managed companies do better in any industry, but do you think that industries have better management than other industries?

I tend to think that the major problem with the airlines is oversupply, which isn't going to be much of a problem for the oil industry if OPEC can exercise price control, or more importantly the known supply of oil available for production at a reasonable cost is limited to a significant degree. Oil companies can also hedge their risks to a greater degree than airline companies.

[Savonarola]

It looks like Monkeybutt made the right call:

Jesse Jackson to hold rally in Lansing

As General Motors begins an expected bankruptcy Monday, the Rev. Jesse Jackson will lead a rally at the state Capitol to promote fairer trade policies he said will help bring manufacturing jobs back to the U.S.



The rally will cap a three-day swing by Jackson through Michigan to highlight the state's economic ills, which he told reporters today are linked to unfair trade and Wall Street greed that have sent jobs overseas.


Jackson will be joined in the noon rally by Lansing Mayor Virgil Bernero, who's become something of a national media figure on behalf of the Detroit three automakers, especially GM, which has a large presence in Lansing.


Also expected at the rally are Detroit Mayor Dave Bing, U.S. Sen. Debbie Stabenow, U.S. Rep. John Conyers, television judge Greg Mathis and representatives of the United Steelworkers of America.


"We need a comprehensive reindustrialization policy that is linked to reinvestment so American can reasonably compete," Jackson said in a conference call this morning from his Rainbow PUSH Coalition headquarters in Chicago.


Jackson said cars with advanced technology that should be assembled in the U.S. are being built in Europe and South America. He said low wages in China, Malaysia and other developing nations are the result of worker exploitation and child labor, and that the U.S. should demand fair worker policies from countries from which it buys products.


Bernero, who joined the call, said the U.S. cannot prosper without a strong manufacturing sector. He said a survival plan for GM that ships jobs overseas would harm the U.S., not help.


"I'm one who thinks protectionism isn't a dirty word," Bernero said. "We're not talking about closing our borders; we're talking about an even playing field. We want protection for fair trade, not isolation."


He added, "The middle class is being eroded, and Wall Street is aiding and abetting it."


Saturday, Jackson will hold events in Benton Harbor, Kalamazoo and Muskegon. On Sunday, he plans to visit several churches in Detroit and Flint.

Jesse Jackson is involved; we're saved.   

[Admiral Yi]

A leased plane isn't necessarily all that different from a purchased plan financed with debt.

Surely it must be easier to not renew a lease than to unload a plane in a buyer's market.

[jimmy olsen]

I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.

Company saved <> common shareholders saved.

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

I suggest investing your next $800 in Tim.

Even at this point, GM is probably a better investment.

So cruel

[alfred russel]

A leased plane isn't necessarily all that different from a purchased plan financed with debt.

Surely it must be easier to not renew a lease than to unload a plane in a buyer's market.

Checking on Delta, they have leased aircraft under contracts that don't expire until 2025 and have over $13 billion in mandatory future lease payments, almost half of which are after 2013. They have another $2.9 billion in commitments to buy new aircraft, a portion ($130 million) of which extends after 2013. They have long term commitments that are not going to be easy to break.

[Ed Anger]

I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.

Company saved <> common shareholders saved.

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

I suggest investing your next $800 in Tim.

get a job.

[jimmy olsen]

I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.

Company saved <> common shareholders saved.

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

I suggest investing your next $800 in Tim.

get a job.

I just did, now do you want to send the money by cash or by check?

[Ed Anger]

I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.

Company saved <> common shareholders saved.

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

I suggest investing your next $800 in Tim.

get a job.

I just did, now do you want to send the money by cash or by check?

For somebody with a supposed masters degree, you can be quite dense sometimes.

To repeat: Get a job hippie.

[MadImmortalMan]

e

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

It's not looking good. Chapter 11 Monday they're saying. I'd dump it if you get any bounce at all. I bet it hits just a couple cents pretty quickly. Maybe short it to offset.

[grumbler]

Ed, next time you have a yen to throw away some money, go to militaryhistorypress.com and do it there, please. 

[alfred russel]

e

It is petty cash to me, so we'll see if my crazy investor-fu pays off. 

It's not looking good. Chapter 11 Monday they're saying. I'd dump it if you get any bounce at all. I bet it hits just a couple cents pretty quickly. Maybe short it to offset.

Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.

[Admiral Yi]

Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.

No shares or no puts?  I can't imagine a situation in which there would be no shares to short sell.

[alfred russel]

Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.

No shares or no puts?  I can't imagine a situation in which there would be no shares to short sell.

No shares. I don't short things often--would that be unusual for a company flirting with bankruptcy?

[Savonarola]

GM bankruptcy filing expected 6 a.m. Monday
David Shepardson / Detroit News Washington Bureau
The Obama administration will name a veteran turnaround expert as chief restructuring officer for General Motors Corp., which plans to file for bankruptcy protection about 6 a.m. Monday in New York, but the U.S. Treasury Department will not remove Fritz Henderson as CEO.

Al Koch, a managing director at AlixPartners LLP, will be named chief restructuring officer Monday, a government official familiar with the matter said, and will help to wind down GM's "bad" assets that it plans to leave behind in bankruptcy.

The administration plans to give Henderson a vote of confidence just two months after the president's top auto adviser, Steven Rattner, fired Rick Wagoner as CEO. President Barack Obama will address the nation at 11:55 a.m. from the grand foyer of the White House on GM's restructuring -- the same place he has twice addressed the nation on the auto industry since March 30.

Meanwhile, the Obama administration was working to finalize the details of a deal with GM's European unit Opel. German Chancellor Angela Merkel called Obama on Friday to discuss the issue.

The German government chose Canadian auto parts manufacturer Magna International Inc. to buy Opel's assets and Germany will provide short-term financing to GM.

Under the agreement, Magna will get a 20 percent stake in Opel and Sherbank -- a bank controlled by the Russian government -- will receive a 35 percent share. GM will keep 35 percent and the final 10 percent will be held by Opel employees.

GM is expected to file for court protection from creditors under section 363(b) of the U.S. Bankruptcy Code. The Treasury Department plans to buy the automaker's "good assets" and provide GM with an additional $30.1 billion to operate while in bankruptcy, boosting the government's total investment in GM to about $50 billion.

The Treasury will hold an initial stake of 72.5 percent in GM, but will give some of that equity to Canada in exchange for an estimated $9 billion in Canadian financing for GM. The United Auto Workers health care trust fund will own 17.5 percent of GM.

Koch will oversee the sale or liquidation of other GM assets like Saturn, Hummer and 14 plants GM plans to close by the end of next year.

The White House auto task force planned to brief members of Congress late this evening on a conference call and Obama was expected to personally brief some senior members of Congress.

The White House had worked to orchestrate GM's filing to coincide with Chrysler LLC's departure from bankruptcy, which had been expected on Friday, to help reassure Americans that an auto bankruptcy can be surgical. U.S. Bankruptcy Judge Arthur Gonzalez may rule on Monday or Tuesday on Chrysler's sale.

Sorry, Monkeybutt, but it looks like investing $800 in Tim and/or millitary history books would have been a better idea.

[citizen k]

@Ed: You didn't read my post? 

Why We Should Suspend GM Trading:

Cramer: Suspend GM Shares
Posted By: Tom Brennan  |  Web Editor
cnbc.com|  27 May 2009  |  09:14 PM  ET


You might think, with bankruptcy a virtual inevitability at this point, that General Motors shares would stop trading. After all, the stock's chance for recovery is slim, if not completely hypothetical. But that hasn't been the case. U.S. exchanges continue to peddle GM to glossy-eyed investors hoping for a dramatic turnaround. To say that this outraged Cramer would be an understatement.

He called GM stock "practically valueless," a "charade," a "pretend piece of paper" that may pay off "years down the road," but only "if GM ever starts making a lot of money." Owners of common shares are in "huge, gargantuan, probably indescribable trouble," Cramer said, adding, "there's basically no way for them to win."

"If ever there was a screwed-up game," Cramer said, "selling people shares of GM's current common stock is it."

General Motors on Tuesday saw what might have been its only chance of escaping bankruptcy disappear, as bondholders rejected the company's shares-for-debt offering. Now the government's June 1 restructuring deadline will be all but impossible to meet. Also, going forward the majority of GM's shares will be held by Washington – up to 69% – with the United Auto Workers union holding 17.5%. In the end, common stockholders would own just 1% of the company.

Why then does this charade continue? Because just like AIG , Fannie Mae  and Freddie Mac , GM boosts volume on the New York Stock Exchange. Put simply, brokers and exchanges benefit from the trading.

"And in their desire to make just a bit more money," Cramer said, "they've made a joke of the market."

Worst of all, the Securities and Exchange Commission is doing nothing to prevent this. Nor is any other government agency. That's no surprise, though, because Washington is "completely oblivious to the day-to-day trading of all stocks," Cramer said. Apparently it's not in anyone's interest to get rid of these zombie stocks, "except the public's interest." And the public is "duped daily in the market, as these stocks are fitting treats for investors who don't know what they're doing."We should be going out of our way to protect these investors, Cramer said, "if we ever want to get to a place where the market can be embraced by everyone, not just the...sharks that dominate it."

video link:
http://www.cnbc.com/id/15840232?video=1134838543&play=1