Wonderful News! I found grandmother's Faith Tones' album last week in the attic and just in a nick of time. I was getting a little jittery. I had seen where the Congressional Budget Office estimated that taxpayers would lose about $40 billion of the first $55 billion in aid to General Motors and Chrysler. I needed some reassurance from that lovely trio of beauties above that GM&C wouldn't do that.
Not if you know what a serious mess GM and Chrysler were in... and continue to be.
Let's take a realistic look at General Motors from an accounting standpoint (Chrysler was owned by private investment firm Cerberus and their numbers aren't available). I am not an accountant, but as a business man, I know something about profit and loss. Here's where it stands.
General Motors averaged a piddling profit of $1.5 billion each year from 2001 thru 2005 amounting to less than 1% of gross sales. And that's if the figures are accurate, as GM had to restate earnings for the prior 5 years after a Securities and Exchange Commission investigation in 2001.
In 2007, GM's gross sales declined to $180 billion and lost $43.3 billion ($38.3 billion was a one-time tax charge write-off).
In 2008, GM's gross sales again declined to $149 billion and lost $30.9 billion for the year with no tax write-offs. Effectively the worse 4-quarters in the 100-year history of the company.
In summation, GM's gross sales have steeply tanked for the past 10 years with a cumulative loss of over $80 billion. Market shared has collapsed as well.
So you tell me... a failing company that's made no money in a decade can pay off a tens of billions of dollars anytime soon?
I think it's going to take more than a dozen replays of the Faith Tones to make that happen.
Where did you find that cover? Amazingly disturbing.
ReplyDeleteBraxton - As usual I value your comments. I actually came across the album cover at a site featuring bad hair days and, like you, was profoundly shocked. Of course I photo-shopped out their original title and replaced it with my theme this week. I didn't much think any more about it until your reply. I googled "The Faith Tones" and to my surprise, there are dozens of references to them... mostly as one of the worst album covers ever produced. What appears to get everyone upset, besides their obvious hair-dos, is the sneaking suspicion that our lovely trio of angels may be, horrors of horrors, men! I'm betting on Tom Hanks, Brad Pitt and Jay Leno. BTW, the Faith Tones were a one-hit wonder whose album rose and sank in 1964.
ReplyDeleteNow that's weird.
ReplyDeleteBill - I hope the cover doesn't distract from your message. The fact that GM is in no position to repay their "loan" will not turn out to be such a great PR move. A lot of GM customers, and that would include me, are more than disappointed that our tax dollars are being spent with such abandon. Maybe the imperial government and the last two administrations don't think 40b is anything to sneeze at, but it remains a reckless financial maneuver in a country that can't pay its' bills now and is borrowing money like crazy. I know this isn't an investment site, but if we don't have a currency crisis in the next year or so, I will be surprised. What will that do to GM's survival? You talk about "creative destruction" in a later post. Well that is exacly what GM should have gone through. The American taxpayer wouldn't be on the hook for a cent and the company would have had a more resolute outcome... reality. Ben.
ReplyDeleteGM is shit.
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