[DeTomaso] fixing the economy (npc content)

[Lynn Wall]

Stock price does NOT reflect the "value" of a company.  It represents the
"bet" people are willing to make regarding the future movements of the stock
market, that particular segment of the market and finally rumors (sometimes
facts) regarding the position the company is in to leverage external
market/governmental forces.  This is why there is the term "market
capitalization" (number of shares in the market times the share price) and
"company value" (assets minus liabilities).  Either way for GM it is not a
pretty picture for the reasons others have identified.

I don't think the government wants the company nearly as much as it wants
the union membership to continue voting for them.  Either way, and I have
said this before on this forum, look for the US to spend about $100 billion
more in an attempt to save the $20 billion they already put in.  

Slippery slope, pouring good money after bad, pot committed (poker term)
pick your saying, just about any of them work.  Very few of the people, if
any, on this forum (including myself) know the incredible complexities of
the GM brand many of which will be sold to us as necessary for the security
of the US and therefore we must save.

I personally think the government is trying to desensitize us to the terms
"trillions" and "billions" so when they tell us that the next social program
will cost us $1 trillion dollars we will say "golly, at least it is not 2
trillion" and our silence will be interpreted as support.

I will now slip back into obscurity

Lynn, shaking his head while driving his Chevy Duramax diesel



-----Original Message-----
From: detomaso-bounces at realbig.com [mailto:detomaso-bounces at realbig.com] On
Behalf Of Steve Hawkins
Sent: Thursday, April 02, 2009 3:41 PM
To: detomaso at realbig.com
Subject: Re: [DeTomaso] fixing the economy (npc content)

This begs the question why did the Government invest $20 billion in a
company doomed to fail?  Might it be just to gain control?

Steve

-----Original Message-----
From: detomaso-bounces at realbig.com [mailto:detomaso-bounces at realbig.com] On
Behalf Of Gray Gregory
Sent: Thursday, April 02, 2009 8:46 AM
To: Robert Kirk; detomaso at realbig.com
Subject: Re: [DeTomaso] fixing the economy (with p content)


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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