General Motors: Yes We Can!

Yes we can! ( Absolutely hate this phrase! Did you hear it at the recent Grammy? Wanna try translating that phrease? oO )

Now here's am incredible development from General Motors.

General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program

Yes no joke!

The company that was crying out loud to be bailed out is considering to invest $1billion in its Brazil operations!

And I doubt if the American tax payers would be too happy to read such a development from GM.

• General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program
  
  By Russ Dallen
  Latin American Herald Tribune staff
  
  SAO PAULO -- General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.
  
  According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."
  
  "It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.
  
  Meanwhile, he cut the company's revenue forecast for this year by 14% to $9.5 billion from $11 billion, as the economic crisis began to cause rapid slowdowns in sales.
  
  GM already announced three programs of paid leave, and Ardila added that GM Brazil "is going to wait and see how the market behaves in order to know what decision to take" with regard to possible layoffs.
  
  For Ardila, the injection in Brazil's automobile sector of 8 billion reais ($3.51 billion) recently announced by the federal and state governments of Sao Paulo "has already begun to revive sales," which fell by 12% in October.
  
  The executive said that the company will operate a "conservative" scenario in 2009 with an estimated production of 2.6 million units, and another more "optimistic" that contemplates sales of 2.9 million.
  
  This year sales will reach 2.85 million vehicles, which represents a growth of 15% over last year.

And ob Reuters: GM bankruptcy could speed restructuring-analyst

• DETROIT, Feb 9 (Reuters) - A bankruptcy filing by General Motors Corp (GM.N: Quote, Profile, Research) could allow the struggling automaker to reduce its debt more aggressively than an out-of-court restructuring and might not be as damaging as it would have been just a few months ago, an analyst said on Monday.
  
  "We think the damage to the enterprise of a GM bankruptcy today is notably less than it would have been a few months ago, largely because of public desensitization to a bankrupt carmaker," JP Morgan analyst Himanshu Patel said in a note for clients.
  
  Patel's note raises the possibility by a prominent Wall Street analyst of the renewed threat of a bankruptcy by GM or Chrysler, a risk many observers believe had been sharply reduced by the government bailout.
  
  GM, like its smaller rival Chrysler LLC [CBS.UL], faces a Feb. 17 deadline to submit new restructuring plans to the U.S. government under the terms of the $17.4 billion rescue provided to the struggling automakers.
  
  GM has said it is aiming to reduce its unsecured U.S. debt by about two-thirds from nearly $28 billion to $9 billion. The company also plans to halve the $20 billion it has promised to a health care trust fund affiliated with the UAW by offering equity instead of cash.
  
  But Patel said the diminished threat of a bankruptcy filing by GM appeared to have removed a key incentive for bondholders to offer concessions.
  
  "After the GM bailout, GMAC received aid, GMAC received bank holding status without achieving required funding levels (and) Chrysler and its (financing company) received aid," Patel said. "All of these steps by the government were likely to have emboldened bondholders."
  
  "POLITICAL LIGHTNING ROD"
  
  Patel said that if GM fails to win substantial concessions from bondholders and the UAW, the bailout could become "a political lightning rod" for the Obama administration.
  
  "We are increasingly thinking that such a development might force the White House to more seriously consider allowing GM/Chrysler to go into bankruptcy," he said.
  
  GM has repeatedly ruled out seeking bankruptcy protection, saying such a step would scare off consumers, cause its revenues to plummet and risk that a Chapter 11-style restructuring would end up as a liquidation of its assets.
  
  But some critics of the U.S. bailout for the auto industry have said that the government could provide bankruptcy financing for GM or Chrysler and allow them to win deeper concessions from creditors and the union.
  
  The U.S. Treasury has retained two law firms with extensive bankruptcy experience and the investment bank Rothschild to advise officials on the taxpayer-backed restructuring of GM and Chrysler. One of the scenarios those advisers will consider will be a government-assisted bankruptcy filing, a person with direct knowledge of the work has said.
  
  Another of the other immediate priorities will be working out an agreement between other creditors and the government that would provide senior status to the public funding, a second person involved in the discussions said.
  
  JP Morgan's Patel said a bankruptcy filing by GM would likely cut the automaker's debt by over 60 percent compared with just a 25 percent cut in indebtedness under an out-of-court restructuring. (Additional reporting by Jui Chakravorty in New York; Editing by Brian Moss)
  

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General Motors Says No More Money!!!

General Motors (GM) is simply in dire straits!!

• GM Says It May Run Out of Operating Cash This Year
  
  By Jeff Green and Mike Ramsey
  
  Nov. 7 (Bloomberg) -- General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall ``significantly short'' of the amount needed by the end of June unless the auto market improves or it raises more capital.
  
  The largest U.S. automaker reported a $4.2 billion third- quarter operating loss today and said its available cash fell to $16.2 billion on Sept. 30 from $21 billion at the end of June. Merger talks with Chrysler LLC were suspended.
  
  ``GM is making a pretty direct plea for help,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. ``The message is, `we've done all the things we can do, and we need help.' And if we don't get help, fill in the blank.'' ... read rest here

And it's no wonder that chatter of bailout has begun!

Will Obama Bail Out GM, Chrysler and Ford?

• Posted by Heidi N. Moore
  
  Will it or won’t it?
  
  It is the question swimming around the Big Three U.S. auto makers. Will the federal government give them a bailout? The auto makers, particularly General Motors, have been begging the government for quick disbursement of the $25 billion of loans and they seek more. GM chief Rick Wagoner has been making the rounds of Congressional and Bush Administration officials to talk about the industry’s need for help; one of his advisers, former Treasury official Roger Altman, has been kicking up some dust as well.
  
  And as GM and Ford Motor continue to post massive losses, the windows keep closing for options, such as the now-called-off GM-Chrysler deal. Today, GM warned it “estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business.” The company would find it prohibitively expensive to borrow, even if it could pay it back. The auto maker also abandoned plans to merge with Chrysler. And Wagoner wasn’t afraid to invoke the precedent of disastrous bankruptcies today on CNBC: “Letting GM go is a terrible idea. Look at the effect of Lehman Brothers.”
  
  Enter President-elect Barack Obama. His first press conference included encouraging signs for the auto makers and their efforts to get government helpHere is what Obama said:
  
  The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the Administration do everything they can to accelerate the retooling assistance that Congress has already enacted. In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States. I have asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose.
  
  But read between the lines: While it’s certainly nice that Obama called the auto makers “the backbone of American manufacturing,” Wagoner & friends might be in for a rude awakening unless they come around to Obama’s way of thinking on producing more fuel-efficient cars.
  
  After all, the auto makers have long resisted the call to make more fuel-efficient cars. And while the $25 billion of federal low-cost loans were intended to help the auto makers retool to produce smaller, greener vehicles, the auto makers, especially GM, would like to use that government money for other priorities.
  
  So were Obama’s words a prelude to negotiation, or a Hobson’s choice? The auto makers can’t wait ’til inauguration day to find out.

Here is how GM has performed as the stock this last 10 years!

Too big too fall?

Hold for longer period?

That above chart simply says it all!

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GM and The Working Group

There is this very interesting piece posed on LewRockwell.com ( here )

It first talks about the Plunge Protection Team or The Working Group:

The New York Post recently ran a piece on Washington’s tight-lipped Plunge Protection Team, or, the "Working Group," as it is formally known. Essentially, the role of this group is to prevent another 1987 "Black Monday" in the stock market. It was put into law in 1988, as Executive Order 12631, by Ronald Reagan. If you read the Executive Order you’ll note that it essentially allows the government to intervene in the stock market – should a crash or foreseeable dip appear to be on the horizon – via legislative law, administrative fiat, or the manipulation of private bodies via coercive tactics on the part of the Federal Reserve, Treasury Department, or the executive office. Section Two of the order states that its purpose and function is to recognize "the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence."

The Working Group was established in order to identify issues – which studies have vetted out – in regards to the events surrounding the 1987 market crash. Its purpose is to gather recommendations from anointed experts and consider what government actions, under existing laws and regulations, can be undertaken in order to carry out those recommendations. The last step is to "appropriately consult" with private sector bodies and participants in order to seek any possible private solutions. These "private solutions," however, will come from puppet organizations of the corporatist establishment.

And the author, Karen De Coster, has these comments on General Motors.

On May 24, 2006, at the behest of the Working Group (in our opinion), Merrill Lynch came out with a "buy" recommendation pertaining to General Motors’ stock. Keep in mind that this recommendation was made fully one month before Tracinda recommended that GM explore the idea of forming an alliance with Nissan and Renault. Shamefully enough, Merrill’s rationale hinged upon the premise "…that the automaker's restructuring plans, specifically the number of workers taking buyout packages, are coming along ahead of schedule." This is nothing short of harebrained reasoning serving the demented ends of the Working Group.

It is highly unusual for a restructuring plan that is so far away from accomplishing anything substantial to get such a standing ovation, even from the fraudulent Wall Street analysts. This move by Merrill Lynch is a hoodwink designed to keep the confidence level high among investors speculators, thus keeping under wraps any unwanted drama or uprising from the unsuspecting masses. In fact, if Johnny Beer Drinker could read a balance sheet, he'd bail out of GM's stock immediately. But Johnny Beer Drinker can't read a balance sheet; he may watch CNBC and Jim Cramer, and if he does, he is a blind fool following a bullish fool who is serving up bad advice to serve his own interests.

Since Merrill Lynch’s pronouncement, GM’s stock has shown market leadership like a four-star general – it was up by 40.1% during the second quarter of 2006, making it the best performing Dow stock for the three-month period ending June 30^th. Even on days where the Dow Jones Industrial Average had declined by over 100 points, the "General’s" stock held steady. One day, it was even up by over 4% when the market swooned terribly – and this in spite of the fact that gasoline prices are at $3.00 per gallon. We have little doubt that GM stock is being accumulated by Caribbean-based hedge funds owned and operated by the Federal Reserve – the very same folks who mysteriously emerged as buyers of U.S. Treasury debt (thus, keeping interest rates down) when other buyers began to shy away from that debtaholic Uncle Sam. For now, the General looks unbeatable – as long as "investors" believe the stock is the company.

When examining General Motors’ March 31, 2006 balance sheet, what comes to mind is not a proud general, but a bloated inmate of a debtor’s prison. It is boggling that any financial analyst would recommend purchasing the common stock of a company with the following financial profile:

• General Motors’ automotive operations have a combined working capital position of deficit $15.4 billion.
  
• GM has total debt and liabilities approaching half-a-trillion dollars.
  
• GM’s total liabilities to equity ratio is 29 to 1. There once was a day when financial analysts sounded the alarm bells when this ratio exceeded 4 to 1.
  
• Arguably, GM has a deficit net worth of $18.2 billion. Such a sobering conclusion can be deduced simply by disallowing intangible assets such as goodwill and deferred tax assets.

It is interesting to note that GM’s market capitalization was recently at $12.4 billion, which is smaller than that of Harley-Davidson, about equivalent to the market cap of Hershey Co., and in comparison, Toyota’s stands at $194.7 billion. With such a weak balance sheet, GM will not survive a recession. Hence, bankruptcy is a possibility – even if the aforementioned alliance with Nissan and Renault is consummated. GM’s banks understand this and have required that General Motors provide additional collateral in order to keep open a $5.6 billion operating line of credit. On the heels of this move by the banks, Standard & Poor's and Moody's cut GM's senior unsecured debt rating even deeper into junk territory. For the banks’ collateral-call and the debt downgradings to occur shortly after such a high-profile recommendation to buy GM stock, Merrill Lynch’s top executives should be embarrassed.

Ah, but the top dogs at Merrill Lynch have no shame and will sleep well. They know that most Americans don’t pay attention to the corporate bond market nor the backroom dealings of bankers. It is the Dow Jones Industrial Average that grabs the attention of Americans. By keeping the Dow up, the Plunge Protection Team – as assisted by Merrill Lynch – understands that it is making a key contribution to the insanely expensive game of "bread and circuses" Uncle Sam is playing with its citizens. Consequently, the Federal Reserve will conjure up as much fiat money as possible in order to intervene in, and prop up, the stock market so as to keep our collective confidence elevated – and, in the mind of these Keynesians, the economy will be peachy. Ultimately, and Bill Gross not withstanding, why is GM stock a selected target of the Plunge Protection Team? As GM’s CEO Charles E. Wilson famously stated in 1953: "…because for years I thought what was good for the country was good for General Motors and vice versa."

Take a look at GM's two year chart. Look how a plunging stock staged a remarkable turnaroun in May despite any change in its fundamentals.

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