G.M. Posts a Quarterly Loss of $6 Billion - Will someone please turn-off the lights and lock the door?

So let's review a few of things:

- G.M. has borrowed $15.4 billion from the government (should read taxpayers)

- G.M. lost $6 billion in the first quarter

-G.M. says it needs $11.6 billion more

They want to borrow 11.6 billion more, which they will just lose in another 2 quarters if they continue losing $6 billion a quarter?

G.M. hasn't come close to stopping these outrageous quarterly losses. It is insane to continue to keep pouring money down the drain trying to keep the company afloat.
Rees

from The New York Times
By Nick Bunkley
May 7, 2009

DETROIT — General Motors, which faces a June 1 deadline to cut debt and expenses or else file for bankruptcy protection, on Thursday said it lost $6 billion in the first quarter.

G.M. said it depleted $10.2 billion from its cash reserves in the quarter, or $113 million a day, leaving the company with $11.6 billion as of March 31. That is roughly the minimum amount of liquidity needed to keep G.M. in business, the automaker has said.

“Our first-quarter results underscore the importance of executing G.M.’s revised viability plan, which goes further and faster to lower our break-even point,” G.M.’s chief executive, Fritz Henderson, said in a statement.

The first-quarter loss, equal to $9.78 per share, is the eighth consecutive quarterly loss for G.M. A year ago, the company lost $3.3 billion, or $5.80 a share.

Excluding special items, G.M. lost $5.9 billion, or $9.66 a share, which is better than the $6.7 billion that analysts were expecting the company to lose.

Revenue fell 47 percent to $22.4 billion due to a 40 percent drop in global sales during the quarter.

G.M. has borrowed $15.4 billion from the federal government since December to stay afloat, and the company says it needs $11.6 billion more. But the chances that it will end up in bankruptcy court at the end of this month are growing, particularly after Chrysler’s Chapter 11 filing last week.

Mr. Henderson, who took over running the company after the Obama administration forced Rick Wagoner to resign a month ago, has said bankruptcy is a probable outcome for G.M. but one that executives still hope to avoid.

G.M. is resuming negotiations with the United Automobile Workers union on Thursday as it seeks a deal to cut labor costs before the government’s deadline. The company also has offered to swap equity for more than $27 billion in debt held by bondholders, but analysts are skeptical of the chances that enough of the bondholders will accept the deal.

Under a plan unveiled last week, G.M. would give a majority stake in a restructured version of itself to the Treasury Department and more than a third of the company would be held by the U.A.W.’s new retiree health care fund.

Bondholders would own roughly 10 percent and existing shareholders would account for just 1 percent of the new company. G.M. is planning a reverse stock split, which would turn every 100 shares outstanding into one new share. Shares of G.M. have lost more than 90 percent of their value in the last year as the company has descended toward a possible bankruptcy.

As part of its restructuring, G.M. now says it will, by the end of 2010, cut 21,000 factory jobs, close 13 plants and get rid of about 2,600 dealerships. More job cuts and plant closings would occur in later years.

G.M. intends to slash its brand portfolio in half, by closing Pontiac and trying to sell Saturn, Saab and Hummer.

“This is a defining moment in the history of General Motors, and we are committed to our plan, which we believe will lead to a stable and sustainable operating structure with a strong balance sheet,” Mr. Henderson said. “Our goal is to fix this business once and for all to position ourselves to win in the long-term.”
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Obama sows seeds of demise - and the bigger the ego the harder the fall

from The Hill
By Dick Morris

When the Obama administration crashes and burns, with approval ratings that fall through the floor, political scientists can trace its demise to its first hundred days. While Americans are careful not to consign a presidency they desperately need to succeed to the dustbin of history, the fact is that this president has moved — on issue after issue — in precisely the opposite direction of what the people want him to do.

Right now, Obama’s ratings must be pleasing to his eye. Voters like him and his wife immensely and approve of his activism in the face of the economic crisis. While polls show big doubts about what he is doing, the overwhelming sense is to let him have his way and pray that it works.

But beneath this superficial support, Obama’s specific policies run afoul of the very deeply felt convictions of American voters. For example, the most recent Rasmussen Poll asked voters if they wanted an economic system of complete free enterprise or preferred more government involvement in managing the economy. By 77-19, they voted against a government role, up seven points from last month.

And in the Fox News poll — the very same survey that gave Obama a 62 percent approval rating and reported that 68 percent of voters are “satisfied” with his first hundred days — voters, by 50-38, supported a smaller government that offered fewer services over a larger government that provided more.

By 42-8, the Fox News poll (conducted on April 22-23) found that voters felt Obama had expanded government rather than contracted it (42 percent said it was the same size) and, by 46-30, reported believing that big government was more of a danger to the nation than big business. (By 50-23, they said Obama felt big business was more dangerous.)

By 62-20, they said government spending, under Obama, was “out of control.”

So if voters differ so fundamentally with the president on the very essence of his program, why do they accord him high ratings? They are like the recently married bride who took her vows 100 days ago. It would be a disaster for her life if she decides that she really doesn’t like her husband. But she keeps noticing things about him that she can’t stand. It will be a while before she walks out the door or even comes to terms with her own doubts, but it is probably inevitable that she will.

For Americans to conclude that they disapprove of their president in the midst of an earth-shaking crisis is very difficult. But as Obama’s daily line moves from “I inherited this mess” to “There are faint signs of light,” the clock starts ticking. If there is no recovery for the next six months — and I don’t think there will be — Obama will inevitably become part of the problem, not part of the solution.

And then will come his heavy lifting. He has yet to raise taxes, regiment healthcare or provide amnesty for illegal immigrants. He hasn’t closed down the car companies he now runs and he has not yet forced a 50 percent hike in utility bills with his cap-and-trade legislation. These are all the goodies he has in store for us all.

Obama’s very activism these days arrogates to himself the blame for the success or failure of his policies. Their outcome will determine his outcome, and there is no way it will be positive.

Why?

• You can’t borrow as much as he will need to without raising interest rates that hurt the economy;

• The massive amount of spending will trigger runaway inflation once the economy starts to recover;

• His overhaul of the tax code (still in the planning phases) and his intervention in corporate management will create such business uncertainty that nobody will invest in anything until they see the lay of the land;

• His bank program is designed to help banks, but not to catalyze consumer lending. And his proposal for securitization of consumer loans won’t work and is just what got us into this situation.

So Mr. Obama should enjoy his poll numbers while he may.

Morris, a former adviser to Sen. Trent Lott (R-Miss.) and President Bill Clinton, is the author of Outrage. To get all of Dick Morris’s and Eileen McGann’s columns for free by e-mail or to order a signed copy of their new best-selling book, Fleeced, go to dickmorris.com .
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Memo to Obama: Stop Playing the Economic Shell Game

Common stock in the bailed out banks will do nothing to help the real issues facing the American economy

from Pajamas Media
April 29, 2009
by Martha Zoller

If you lent someone money and that person offered to pay you back early and with interest, you’d take it, right? Not the Feds. They don’t want to take back your money, they want to lend you more. The Feds don’t have much common sense when it comes to the mood of the country. They don’t get it. We are waiting for the other shoe to drop.

Last Tuesday, David Kellerman, the acting CFO for Freddie Mac committed suicide. I had a flashback for a moment to early in the Clinton administration when White House Counsel Vince Foster committed suicide. What was so horrible, what piece of information so controversial, that it led men with so much to offer to think the world was better off without them? We may never know.

In the banking world, many have discovered it isn’t nice to have a partner the size of the Federal government. In fact, many of the banks didn’t want to take TARP money but the government – and particularly former Treasury Secretary Henry Paulson — didn’t want consumers to know which banks were in trouble, so they strong-armed the other banks into taking money they didn’t need. Right now, some of those banks want to pay back the money — our money — and the Feds don’t want to take it. This is a typical government practice but counter-intuitive to basic business principles.

There is about $110 billion dollars left in the TARP fund. The problem is there’s very little evidence that this program is working. While some banks are showing profits, many think the numbers are just being moved around to reflect a profit, the progress is all smoke and mirrors, and it won’t last. Now President Barack Obama’s economic team thinks it can avoid asking for more money from Congress if it converts loans made to banks to common stock. Having the Federal government as the major stockholder in the nation’s banks scares me and it should scare you. The government as shareholder means the Feds can determine hiring, salaries, and a whole host of other issues. Many of us like the idea of the government controlling corporate executive’s salaries, but what about when they cap everyone’s salaries?

Instead of President Obama’s clearly stupid move of trying to cut $100 million dollars from the budget at the first full cabinet meeting last week, maybe he and and his economic team could return the remaining $110 billion dollars from TARP fund to the treasury and let the banks repay the other TARP funds when they are ready and get the government out of the way.

In fairness, some economists justify the effort to convince the stakeholders to convert preferred stock to common stock as part of the plan to improve the nation’s largest banks. The much talked about stress tests for banks are expected this week and according to some, such a conversion would give the banks more stability. While I am not an economist, I know what the free market is and this is not the free market. The free market is the best way to lift people out of poverty. It created the middle class in America and it’s what makes the American economy the most important economy in the world — even now.

The bailouts were supposed to loan the capital to the institutions with the purpose of paying the funds back with interest so that the taxpayers got more for their money. But government arbiters think there is an endless supply of taxpayer money. When several banks said they were ready to pay back the TARP funds loaned to them with interest, the Obama economic team said no. So the goal appears to have changed and we weren’t told about it. We cannot allow this to go on. It is our money to be spent on a limited number of things.

David Walker, former U.S. comptroller general and president of the Peter G Peterson Foundation (pgpf.org) has for years been preaching the message of fiscal responsibility — in government and out. According to Walker, less than 40% of the money appropriated every year by Congress is based on guidelines set out in the Constitution. That leaves roughly 60% a year that is potentially being overspent. Let’s start streamlining government. There’s work to be done to save this economy and this Republic. Don’t spend any more money on the banks. Put a commission together to recommend solutions to the spending problems relating to entitlements. Don’t allow the Bush Tax Cuts to expire, and stop taxing people’s assets after they die. Return the individual more of his or her money to spend as he or she wishes. Unleash American exceptionalism.

Common stock in the bailed out banks will do nothing to help the real issues facing the American economy. Let the banks fall if they aren’t profitable. The longer we put off the inevitable with this economic shell game, the longer it will take for the economy to bounce back.
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GM To Layoff Additional 21,000 By Year's End

Th e 21,000 is the GM number only. It obviously doesn't reflect all the workers that will be laid off by the subcontractors and businesses that support GM. The total number will be staggering. I'm sure we're going to see the Obama administration adjusting their numbers over the next several weeks. I don't believe we've seen the bottom of this recession yet, and probably won't until at least next sometime next year.
Rees

GM Scrambles to Survive
from The Wall Street Journal
By KERRY E. GRACE
April 27, 2009

General Motors Corp. said Monday it will continue to reduce its work force and dealer network and eliminate its Pontiac brand by the end of next year as the auto maker works furiously to survive

GM is also starting an exchange offer for $27 billion of its unsecured public notes as part of its restructuring plan, saying a successful exchange offer would allow it to restructure out of bankruptcy court.

The company said by the end of the year, it will employ 21,000 fewer hourly workers than it does now.

The company is offering to exchange 225 common shares for each $1,000 principal amount of outstanding notes. The stock closed Friday at $1.69 a share and shares were recently up 11% at $1.87 in premarket trading.

The exchange will commence only if 90% of bondholders agree to the terms. Under the plan, if GM fails to get adequate participation, it would file for bankruptcy protection.

GM, which is surviving on federal loans, is racing to restructure by June 1 under close watch of the Obama administration.

The U.S. Treasury will extend an additional $11.6 billion to GM, in addition to $15.4 billion in existing loans. The government will forgive half the debt in exchange for equity in a restructured GM.

GM, in setting forth tough terms for a bond exchange and requiring almost compete participation, has stepped up the likelihood for a Chapter 11 filing on June 1 without further government intervention.

The company said it will focus on four core brands in the U.S. -- Chevrolet, Cadillac, Buick and GMC -- as it looks to make fewer different models and focus on product development programs.

It will also restructure its U.S. dealer organization, reducing its U.S. dealer count by more than 40% by the end of next year, a reduction of 500 more dealers four years sooner than its earlier viability plan.

Chief Executive Fritz Henderson said the company is taking "tough but necessary actions" that are critical to GM's long-term viability.

The company added that negotiations regarding contract changes with the United Auto Workers union are still ongoing.

Write to Kerry E. Grace at kerry.grace@dowjones.com
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When you wish upon a car...

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