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How many knew that our GM bailout money has been going to bailout foreign operations?; SEC report reveals the dirty details
Topic Started: Oct 16 2012, 08:31 AM (1,045 Views)
Pat
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http://www.thetruthaboutcars.com/2012/10/how-the-gm-bailout-turned-into-foreign-aid/

If Obama and GM were honest, they would inform the American taxpayers that rather than pay us back, the money is going to bailout foreign operations.

It's time to pay up GM, give us back our money. :tantrum: We need it.
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Neutral
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Christ, will the nonsense ever end?
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Berton
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Not as long as the Dem's are on power.


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tomdrobin
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Quote:
 
Will GM Spend Taxpayer Bailout Money on Overseas Operations?

By JAKE TAPPER (@jaketapper) and MATTHEW JAFFE (@matthewbjaffe)
SHANGHAI, CHINA, Nov. 16, 2009

At a meeting with President Obama Monday morning, Communist Party Secretary Yu Xheng Sheng told the U.S. president how well General Motors' Chinese division was doing.

"The business of GM in Shanghai is pretty good," Secretary Yu told the president. "By the end of October this year their sales has increased by 40 percent over the same period of last year. I think that the fantastic performance here in Shanghai is definitely a boost to their business in the United States."

"Absolutely," said President Obama. "I think they can learn from their operations here in terms of increasing sales back in the United States."

But some critics wonder if GM is a little too focused on its international operations.

Specifically, at a time when the nation's unemployment rate has soared to levels not seen in decades and GM is cutting thousands of U.S. jobs, the company's CEO is considering spending millions from its U.S. coffers -- fattened by $50 billion in taxpayer aid -- on its overseas operations, a possibility that has outraged critics and lawmakers.

"I don't think most Americans believe that when the taxpayer bailouts were happening it was intended for that purpose," said Rep. Anthony Weiner, D-N.Y. "It was intended to protect the American economy -- not take the money overseas."

GM today reported that it lost $1.2 billion in the third quarter, from the time it left bankruptcy protection through Sept. 30.

GM's Chief Executive Fritz Henderson recently announced that the bailed-out automaker might use its U.S. funds to help restructure its European unit Opel, noting that the financing agreements with the Treasury for the $34 billion of bailout funds already spent allow GM to spend any subsequently earned funds as its executives see fit. Some $16 billion remaining after its bankruptcy has strings attached.

In a world where funds are fungible, where GM has yet to repay the $50 billion bailout, and where GM only remains in existence because of those bailout dollars, critics argue sending these funds to Europe is essentially the same as sending taxpayer dollars overseas.

"We certainly need to be prudent about it, be very careful about it, but we do have the ability to run a global business," Henderson told reporters earlier this month.

GM has other plans to expand its business abroad. In August, GM China announced a $293 million venture, while last month GM South Korea announced a new infusion of more than $400 million. The automaker also recently inaugurated a $300 million transmission plant in Mexico.

The reasons for international expansion are obvious -- Asia, for instance, is the fastest-growing economic region in the world, forecast to grow at a 7 percent rate next year.

A GM spokesman noted that the best way for the Detroit automaker to repay American taxpayers is to be strong internationally.

"As much as some people might wish that it were not so, the reality is that the auto industry is global, and no company can survive without a strong global presence," said GM spokesman Tom Wilkinson. "Any dream of a U.S.-only carmaker is just that: a dream."


Wilkinson said "the exit financing agreement for the new GM does permit some money earned by GM here to be used for non-U.S. operations."

The Treasury Department declined to comment on whether it was appropriate for GM to send money from its U.S. accounts to shore up its European operations.

Wilkinson said Treasury "realizes that the best way for taxpayers to maximize their return is for GM to be a strong, healthy company."

Others say that while it may be legal, that doesn't make it right.

"I don't believe that it is consistent with the original objective so I would say it's not wise or helpful that our taxpayer dollars are being used to support the global efforts of these companies," said Thomas Hopkins, professor of economics at the Rochester Institute of Technology.

Said Rep. Weiner, GM "might legally have the right to do this, but politically and from an optics perspective I can't imagine a more boneheaded move."

When President Obama announced his plan to send GM into bankruptcy, he pledged an initial $30 billion of taxpayer aid to help the automaker emerge from the process successfully, casting the investment as a way to save American jobs.

"GM is an American company with tens of thousands of employees in this country, and responsibility for its future ultimately rests with us," the President said June 1 at the White House. "That's why our government will be making a significant additional investment of about $30 billion in GM – an investment that will entitle American taxpayers to ownership of about 60 percent of the new GM."

It is precisely that 60 percent ownership stake that could make American taxpayers open to GM doing whatever it takes to be successful and eventually repay its bailout funds, even if that means expanding abroad.

"GM is trying to make a profit," said Dan Ikenson of the Cato Institute. "They know best how to do that. We should not infringe on their decision-making."


However, a government watchdog group recently warned that it was "unlikely" that American taxpayers would receive a full return on their investment in GM.

"Treasury is unlikely to recover the entirety of its investment in Chrysler or GM, given that the companies' values would have to grow substantially above what they have been in the past," the Government Accountability Office said in a Nov. 2 report.

Speaking in Washington last month about GM's future prospects, Steve Rattner, the former head of the Obama administration's auto task force, said, "Like any patient that undergoes major surgery, a successful recovery is far from assured."

On Monday morning GM will release its third-quarter earnings report. Sources familiar with the announcement told ABC News that the automaker will state that it aims to repay taxpayers $1 billion per quarter, starting in December.


http://abcnews.go.com/Politics/general-motor-spend-taxpayer-bailout-money-overseas-operations/story?id=9091248&page=2#.UHzx-8VG_Sg
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colo_crawdad
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As best as I can tell, the only money "owed" to taxpayers is the GM stocks owned by the government. Do private investors consider stock owned in a corporation as money "owed" to them by the corporation? Does the government, or do we, have the right to sell of those stocks whenever we desire?
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Mountainrivers
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Pat
Oct 16 2012, 08:31 AM
http://www.thetruthaboutcars.com/2012/10/how-the-gm-bailout-turned-into-foreign-aid/

If Obama and GM were honest, they would inform the American taxpayers that rather than pay us back, the money is going to bailout foreign operations.

It's time to pay up GM, give us back our money. :tantrum: We need it.
Foreign operations are a large part of GM and will be necessary if they are to make enough profit to make the value of the government owned stock worth what we have invested in it. Why one would object to using the money wherever it's needed is crazy. We might never recover the full amount invested in GM and Chrysler, but 4 years later, they are still in business, have repaid the loan part of the investment and millions of workers are employed and paying taxes instead of drawing from various government assistance programs like unemployment compensation, food stamps, aid to dependent children, etc.. The righties can't stop looking for bad news to blame on Obama and they look foolish in the process.
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Banandangees
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colo_crawdad
Oct 16 2012, 08:46 PM
As best as I can tell, the only money "owed" to taxpayers is the GM stocks owned by the government. Do private investors consider stock owned in a corporation as money "owed" to them by the corporation? Does the government, or do we, have the right to sell of those stocks whenever we desire?
But didn't the government do the "investing" in GM..... with money it borrowed from the tax payer. Two separate transactions. If so, then the government can do what they want with their investment but they still owe a debt to the taxpayer from whom they borrowed the money.
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Pat
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Colo, did you follow the initial stock offering when GM emerged from the planned bankruptcy? How do you like the stock price now?

The world economy wa sin shambles when we bailed out GM, so the pending losses in the international market were known in the financial community, but the dummies who never look beyond the hype bought back in. And the stock price has gone down ever since.

The question that was hushed up then is now getting news treatment now. Why are we bailing out international companies?

And to answer part of your question, the stocks we hold are so depleted in value, it would be an embarrassment for Obama to sell them. Which is another reason why we should not bail out private companies. As an investor, you can't let emotions or as in the case of Obama, political embarrassment, affect your investment decisions. The stock should have been dumped that first week of trading, when all the suckers had driven up the initial offering. This is all so stupid it is laughable. But I still want our money back, what little that is left in stock value.
Edited by Pat, Oct 16 2012, 10:32 PM.
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Mountainrivers
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Pat
Oct 16 2012, 10:30 PM
Colo, did you follow the initial stock offering when GM emerged from the planned bankruptcy? How do you like the stock price now?

The world economy wa sin shambles when we bailed out GM, so the pending losses in the international market were known in the financial community, but the dummies who never look beyond the hype bought back in. And the stock price has gone down ever since.

The question that was hushed up then is now getting news treatment now. Why are we bailing our international companies?

And to answer part of your question, the stocks we hold are so depleted in value, it would be an embarrassment for Obama to sell them. Which shows another reason why we should not bail out private companies. As an investor, you can't let emotions or as in the case of Obama, political embarrassment, affect your investment decisions. The stock should have been dumped that first week of trading, when all the suckers had driven up the initial offering. This is all so stupid it is laughable. But I still want our money back, what little that is left in stock value.
The governments investment in the car companies was not an attempt to make a profit as one would do with an individual investment. It was to save the millions of jobs that would have been lost had the companies gone out of business. Why don't you guys address the issue of saving all those jobs and the economic impact of losing all those taxes and the need to assist those who lost their jobs? Would that make your argument less palatable?
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tomdrobin
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GM still has to get it's costs in line to be successful. They are working at that, but still have the UAW albatross around their neck. They are addressing the legacy costs on the salaried side, but the union resists what it figures are gains over the years. I no longer have GM paid for health care, and they just purchased an annuity for salaried retirees and will dump the salaried retirement plan. It will be tough to do the same to hourly though.
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