[DeTomaso] fixing the economy (with p content)

[Gray Gregory]

I don't know what facts you injected here but you have a valid point about what is the actual value of the company. The stock price does indeed reflect the value of the company, but it only reflects it for that moment in time that shares actually trade hands at a given price and at this point everyone knows GM is no longer viable as a going concern in it's current form, so the stock price is really just speculation on what kind of bailout the company might be able to get from the Government.

The fundamental problem at GM is that it owes many times more than it is worth under virtually any valuation model you could use. The company owes somewhere between $40 and $45 billion and there's no way it's worth anywhere near that. Of that debt it's about equally split between what's owed to the employee pension plan (+ or - $20 billion) and what's owed to the bond holders. The other things you mention are small by comparison and with the exception of the aircraft leases are not debts at all they're just operating expenses and would go away immediately if the company shut down. 

I don't see any solution other than bankruptcy, but I'm sure the "effete corps" has other ideas.

Gray

-----Original Message-----
From: detomaso-bounces at realbig.com [mailto:detomaso-bounces at realbig.com] On Behalf Of Robert Kirk
Sent: Thursday, April 02, 2009 7:51 AM
To: detomaso at realbig.com
Subject: [DeTomaso] fixing the economy (with p content)

I always hate to wade into a good conversation with facts but GM stock does not reflect the value of the company.  It simply reflects the value of the stock at a given point.  The facts suggest  that GM owes more than its worth and much of that debt is to its workers but also includes its salaries and bonuses to top management and of course the corporate jet leases.  
 
I don't know if any of you are old enough to remember real railroads but what is happening to GM etc is similar.  Both the union and management are content to bleed all they can from the dieing animal and leave taxpayers what's left.  On the other hand Conrail and Amtrak have been doing a mostly adequate job.  I am just puzzled at why it costs as much to take an Amtrak as it does to fly anywhere other than the land of the "effete corps of impudent snobs who characterize themselves as intellectuals" (east coast corridor)...but then again that's why we have our cats and gooses.
 
The more clever remarks above are via Nixon era speech writers William Safire, Pat Buchanan and/or Sprio Agnew himself.



Regards,
Robert Kirk
www.kirks-auto.com
 


      
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