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• zermatt

  This is a game of Chicken.

  The bond holders want to wait for the UAW to make more concessions before they give up anything further and the UAW says they are done making concessions.

  If I were the bond holders I wouldn't want to swap my debt for worthless equity. No one is going to want to invest in a Government controlled company after what the administration has been doing lately.

  What I have not heard about lately is how GM is going to reduce the number of dealers they have outside of bankruptcy.

• kabluey

  GM will go even further by revoking the franchises without repayment of those dealer fees, while they drum suppliers' costs down to an acceptable minimum, and then play the 'we're broke' plea to both the buyers of Saab and Hummer–as to demand top dollar for lifeless companies–and in addition, GM will snare workers by undervaluing their new contracts…

  GM must give their bonds away like honey-baked hams during the holidays.. Fitch rates their bonds at a grade of D, which is JUNK.. Bravo GM..

• zermatt

  With regard to the dealers, I don't believe that GM will just revoke the franchise agreements without payment.

  Following the Oldsmobile and Plymouth elimination, most states strengthened their franchise laws. These changes have made the valuation of dealers to be greater than what they really may be. This has been the biggest reason why none of the Detroit manufacturers have not taken active steps to eliminate dealers.

  GM paid a couple of billion to eliminate Oldsmobile between franchise fees and law suit settlements. GM needs to eliminate a much larger group of dealers and with the stricter state laws, it can only be even more expensive.

  Without Congress changing the rules that guts all of the state franchise laws, GM isn't going to risk thousands of law suits.

  On the supplier side, many suppliers have been bled dry by Detroit over the past few years. Many have been operating in bankruptcy and others are on the brink of bankruptcy. Those that are in decent financial shape are that way because they are sufficiently diversified with products outside the auto industry. My brother runs a diversified supplier that has told GM that they will not be cutting their profit free prices any further and will not be renewing their contract when it has expired.

  As I said earlier, there is no reason to be an investor in the new government owned GM.

• kabluey

  GM will go even further by revoking the franchises without repayment of those dealer fees, while they drum suppliers' costs down to an acceptable minimum, and then play the 'we're broke' plea to both the buyers of Saab and Hummer–as to demand top dollar for lifeless companies–and in addition, GM will snare workers by undervaluing their new contracts…

  GM must give their bonds away like honey-baked hams during the holidays.. Fitch rates their bonds at a grade of D, which is JUNK.. Bravo GM..

• zermatt

  With regard to the dealers, I don't believe that GM will just revoke the franchise agreements without payment.

  Following the Oldsmobile and Plymouth elimination, most states strengthened their franchise laws. These changes have made the valuation of dealers to be greater than what they really may be. This has been the biggest reason why none of the Detroit manufacturers have not taken active steps to eliminate dealers.

  GM paid a couple of billion to eliminate Oldsmobile between franchise fees and law suit settlements. GM needs to eliminate a much larger group of dealers and with the stricter state laws, it can only be even more expensive.

  Without Congress changing the rules that guts all of the state franchise laws, GM isn't going to risk thousands of law suits.

  On the supplier side, many suppliers have been bled dry by Detroit over the past few years. Many have been operating in bankruptcy and others are on the brink of bankruptcy. Those that are in decent financial shape are that way because they are sufficiently diversified with products outside the auto industry. My brother runs a diversified supplier that has told GM that they will not be cutting their profit free prices any further and will not be renewing their contract when it has expired.

  As I said earlier, there is no reason to be an investor in the new government owned GM.