Should GM Get A Bailout Deal?

--I'd only give a bailout to a 'local' company. GM is global.

----------- Right on.

GM has enough money to expand in China but not enough to keep the doors open here???? click on

GM is also working the "alternative fuels" scam in China as well as Washington. See

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

------------------- If anyone wants to write to their Congressman, you can get their web mail at

Here is a letter I sent. Feel to use all, some, or none of it.

---------------- On Tuesday, the House leadership will submit legislation for a separate 25 billion dollar loan package for the Detroit automobile companies.

In the above video clip, Representative Franks several times indicated he would insist on the maximum possible collateral for the government to insure repayment and thus protect the taxpayers.

I call your attention to the following points:

(1) All three Detroit automobile companies have borrowed to the maximum -- THERE ARE NO UNENCUMBERED ASSETS.

The latest public information indicates: "GM, in the most recent quarter, has a NEGATIVE $58 BILLION IN STOCKHOLDER EQUITY on its balance sheet. That's how much the liabilities exceed its assets. That compares with negative $42 billion it reported a year ago."

Additionally, there are huge amounts of unsecured debts and other obligations such as defined benefit pension obligations, and enormous obligations to former units such as Delphi and GMAC. Thus, any legislation making the United States the preferred creditor, means that other creditors are deprived of their collateral/security, and the unsecured creditors such as their suppliers are totally without recourse.

(2) If the Detroit big three go under this will not be the end of a domestic US automotive industry. A very considerable domestic automotive industry will exist, albeit with names such as Toyota, Honda, and KIA.

(3) Even with a 25 billion dollar "loan," the same management groups will be in charge that drove the domestic automotive industry, first into the ditch, and are now in the process of driving it over a cliff.

(4) General Motors is not being forthright about their need for capital. They apparently have adequate capital to attempt to buy majority control of a manufacturing operation in China, but no capital to "keep the doors open" in America.

------------ "GM seeks to raise stake in China vehicle JV-paper Wed Nov 12, 2008 1:25am EST SHANGHAI, Nov 12 (Reuters) - General Motors is seeking to raise its stake in its commercial vehicle venture with SAIC Motor, China's biggest automaker, China Business News said on Wednesday. GM wants to increase its 34 percent stake in SAIC-GM-Wuling, a three way tie-up between the U.S. automaker, SAIC and Liuzhou Wuling Automobile, the newspaper said, citing SAIC chairman Hu Maoyuan. Hu, addressing an industry forum, did not elaborate on the additional stake GM was asking for. Foreign holdings of Chinese auto joint manufactures is capped at 50 percent.

----- for complete article see

additional details see (5) GM is not being honest about their development of alternative fuel vehicles, in that they are attempting to have not only the US government fund this research, but also the government of the PRC, through their part ownership of SAIC.

----- China Will Help Fund Development of Fuel-Efficient Car Models By Tian Ying Nov. 10 (Bloomberg)

The plans may aid Chinese automakers, such as SAIC Motor Corp. and China FAW Group Corp., the country's two largest, which are struggling to enter developed markets overseas and are losing market share at home as foreign carmakers slash prices. Investing in systems such as fuel cells and hybrids is also in line with a

4 trillion yuan economic stimulus budget China announced yesterday. Like other carmakers, ``SAIC has invested heavily in developing self-owned models, but there is still no profit,'' said Gu Jiahao, a CSC Securities Co. analyst in Shanghai. ``There won't be a fundamental improvement in profitability unless they come up with something that really sells.''

----- for complete article see

(6) While Chrysler comes closest, the "Detroit big three" are NOT simple domestic car manufacturing companies but rather huge, transnational conglomerates that manufacture cars, trucks and components, among many other activities such as commercial and investment banking/finance, commercial and residential mortgage lending, automotive and other leasing, and insurance. General Motors at one time or another has engaged in consumer appliance manufacturing, computer services /IT, robotics, and aerospace/defense contracting. Thus while this "loan" package may be sold as a domestic automotive rescue, without forced divesture of extraneous operations, it will be nothing of the sort, but rather another " 'too big to fail' transnational corporation with good political connections" rescue package.

FWIW -- in the US Navy, a Captain of a ship that runs aground is immediately relieved for cause, even if he was asleep in his cabin at the time of impact, and quite likely his entire command staff is replaced as well. I can see no reason why this should not also apply to the officers and directors of corporations that "hit the sand," with the additional restriction, depending on the circumstances, of a minimum 1 year to a life-time ban on employment as an officer or director of any US publicly owned corporation subject to SEC regulation.

I would be pleased to discuss any of these items in more detail with you or a member of your staff.

-----------

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).