Obama's Business Acumen

Discussion in 'Politics, Religion, Social Issues' started by Desertrat, Jun 1, 2010.

  1. Desertrat macrumors newbie

    Joined:
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    Terlingua, Texas
    #1
    I guess the scorecard reads, "UAW - 1; Taxpayers - 0".

    http://www.caseyresearch.com/displayCdd.php?id=444

    Scroll down to "Ally-Oops".

    "Ally Bank (formerly GMAC )...has been increasing the percentage of leases in its portfolio by 2 to 3x over the last few months. In fact, the company reports that in the first quarter, it had 12% of its loans in leases, up from 4% just a quarter earlier.

    Why is that worrying? Because it seems from comments by General Motors executives that many of these new leases have been the subsidized types with known inflated residuals that encourages lessees to drive cars off the lot in droves but nearly guarantee losses for the lender.

    As such, Ally is acting like a loss leader captive finance arm, basically moving the crappy inventory from GM's balance sheet onto Ally’s crappy receivables, making GM look a lot healthier in the interim. This scam will hit the wall when the leases start to expire in 36-48 months and Ally is left holding a bunch of cars it can’t sell for nearly what it paid for them.

    But by then GM will have IPO'd again and, courtesy of the mutual funds and other institutional investors, individuals will own more of the failed/failing car company in their 401(k)s. Meanwhile, the government will have sold most of its stake (at a massive loss most likely, unless GM miraculously trades at 2 or 3 times the valuation of its competitors right through the dumping of more than half its market equity) and left the big banks as the first lenders in line to get paid before any equity holders."

    So when the IPO comes out, don't invest. If you have a 401(k), guard it carefully. Otherwise, you'll get the queen's elevator: The Royal Shaft.

    Note en passant that Ally has continued to get bailout money; somewhere around five billion or so, last I read.
     
  2. citizenzen macrumors 65816

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    #2
    Damn that Obama!

    He is the worst bank loan officer that we've ever elected as President of the United States!!!
     
  3. leekohler macrumors G5

    leekohler

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    Chicago, Illinois
  4. citizenzen macrumors 65816

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    #4
    Well... obviously, he approves loans to undeserving applicants.

    The bastard. :rolleyes:
     
  5. upinflames900 macrumors 6502a

    upinflames900

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    May 20, 2009
    #5
    Yes, but crappy inventory is not necessarily true... although I agree with most of what you said. They do manage to make some good cars... but they make some really bad / stupid decisions.
     
  6. Desertrat thread starter macrumors newbie

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    #6
    The larger problem is that of using taxpayer money not only to prop up a failed corporation, but to have it continue failing and continue sucking up more taxpayer money. Add in the corruption aspect of this phony lease system to cook the books in an effort to hide the problems.

    And then, of course, the IPO to sell eventually-worthless stock to the public, and sell it at a loss for what the public has already been stuck with. This will eventually hurt the various investors--including universities and retirement funds, etc., as well as 401(k)s.
     
  7. upinflames900 macrumors 6502a

    upinflames900

    Joined:
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    #7
    I agree with you to some extent, although I am hard pressed to say they are continuing to fail. They are still selling cars (many very good cars - including the world's fastest production sedan, CTS-V, and one of the fastest cars in the world the Corvette ZR1, which holds the 10th fastest time on the Nuremberg Ring). In fact, there are several models that they can not produce enough of to keep up with the demand (including the Chevy Equinox). Also, they are no longer sucking more government money, and they are making (a small) profit.
     
  8. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #8
    He led the charge to undermine the bankruptcy and restructuring process. Let to its own the unions would have got the shaft for their canabilization of the company.
     
  9. Desertrat thread starter macrumors newbie

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    #9
    upinflames900, on paper, GM is making a profit. However, the successor to GMAC is taking a bath. While they're structured as separate incorporations, it's still a fiction that they operate separately.

    Zombie Acorn, aside from wage issues, the main contribution of the unions to GM's difficulties was the overly-generous retirement and medical programs instituted in the halcyon days of the 1960s. These became unaffordable by the 1980s/1990s. It's the same problem as California's CalPers has, or as the US government has with Social Security/Medicare etc. Can't afford it.
     

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