General Motors - An American Fiasco!
It is a rare occasion when ViewPoint devotes this space to a personal story. Even more rare when you see the letter 'I' frequently - but there are times when the 'I' factor actually is the story. So, without further ado, I take you back to 2007 - now referred to as 'the good ole' days!'
I have been an investor for much of my life in the stock market. The gyrations of the market have never caused me to run for the exit. On balance, my portfolio of investments has been positive, and, yes, there were stocks that did not do well, there were times I made mistakes, but Wall Street became my street of dreams despite the presence of some soft blows. Then along came the General. General Motors, that is!
In a rash moment, and that's the only way to look at it, I decided that America's number one auto maker, had to be a safe investment. True, the stock market had battered the company as foreign makes became the darlings of the auto showrooms across the country,and the price had dipped considerably - down to $6.00 per share. Nevertheless,I had funds from a recent liquidation of some tired 'oldies' but goodies - and the order was phoned in. "Get me 1000 shares of GM!"
Dear Folks - that was the last I saw of that $6000!
The financial crisis of the 21st century was just getting under way. Small investors, like yours truly, had no idea what was happening - or why! Our new President pressed for Goverment help and new words appeared regularly on front pages - stimulus was one - a powerful aphrodisiac that offered more than sexual desire! Wall Street and a bevy of high flying corporations lined up at the Fountain of Funds - and WOW! - how effective that dose of stimulus became.
Meanwhile, back at the ranch, this canny investor was shocked to note that the great American auto giant, General Motors,was one of the supplicants lined up for a dose of stimulus. Almost before the truth sank in, word was out that GM would not go down in flames - no way! A plan to breathe life into the fallen giant was shaping up - with considerable help from the math majors at the Treasury and the White House. It was called 'BANKRUPTCY!'
A new company, called Motor Liquidation was born, and with it, the determination to assume ownership of some plants, millions of dollars of equipment, and a pre-built employee roster - while unloading unnecessary brands like Oldsmobile, and a half dozen others whose time had come. It was :Happy days are here again! for thousands in Motor City, and elsewhere. In fact, as the new company went in and out of bankruptcy, a new issue of GM stock appeared on the ticker - and in short order it was offered in the $30-$40 range. Millions of shares were snapped up by the new, about-to-be millionaires. And, you could almost hear the weeping of owners of the old, original, General Motors stock. Not a word. No provision for the thousands who owned millions of shares -shares now worth about $0.08 per share - if you can find a buyer!
How could it be? The dying giant gets hundreds of millions (taxpayers money) to resume breathing. The recovery is dramatic. Employees are getting bonuses! And, I have a tax loss to compensate me. What a way to go! So UnAmerican! Would it have been illegal, immoral, or just insouciant to consider the innocents - the stockholders who bought General Motors before the panic, and helped build the company!
Remember - it was my money that went into the stimulus. I helped revive the General. You guys who planned and distributed the billions might have thought about it.
Let's see. Where's that Ford dealer ad?
Richard Carlton
February 17, 2011
Issue No. 14
I have been an investor for much of my life in the stock market. The gyrations of the market have never caused me to run for the exit. On balance, my portfolio of investments has been positive, and, yes, there were stocks that did not do well, there were times I made mistakes, but Wall Street became my street of dreams despite the presence of some soft blows. Then along came the General. General Motors, that is!
In a rash moment, and that's the only way to look at it, I decided that America's number one auto maker, had to be a safe investment. True, the stock market had battered the company as foreign makes became the darlings of the auto showrooms across the country,and the price had dipped considerably - down to $6.00 per share. Nevertheless,I had funds from a recent liquidation of some tired 'oldies' but goodies - and the order was phoned in. "Get me 1000 shares of GM!"
Dear Folks - that was the last I saw of that $6000!
The financial crisis of the 21st century was just getting under way. Small investors, like yours truly, had no idea what was happening - or why! Our new President pressed for Goverment help and new words appeared regularly on front pages - stimulus was one - a powerful aphrodisiac that offered more than sexual desire! Wall Street and a bevy of high flying corporations lined up at the Fountain of Funds - and WOW! - how effective that dose of stimulus became.
Meanwhile, back at the ranch, this canny investor was shocked to note that the great American auto giant, General Motors,was one of the supplicants lined up for a dose of stimulus. Almost before the truth sank in, word was out that GM would not go down in flames - no way! A plan to breathe life into the fallen giant was shaping up - with considerable help from the math majors at the Treasury and the White House. It was called 'BANKRUPTCY!'
A new company, called Motor Liquidation was born, and with it, the determination to assume ownership of some plants, millions of dollars of equipment, and a pre-built employee roster - while unloading unnecessary brands like Oldsmobile, and a half dozen others whose time had come. It was :Happy days are here again! for thousands in Motor City, and elsewhere. In fact, as the new company went in and out of bankruptcy, a new issue of GM stock appeared on the ticker - and in short order it was offered in the $30-$40 range. Millions of shares were snapped up by the new, about-to-be millionaires. And, you could almost hear the weeping of owners of the old, original, General Motors stock. Not a word. No provision for the thousands who owned millions of shares -shares now worth about $0.08 per share - if you can find a buyer!
How could it be? The dying giant gets hundreds of millions (taxpayers money) to resume breathing. The recovery is dramatic. Employees are getting bonuses! And, I have a tax loss to compensate me. What a way to go! So UnAmerican! Would it have been illegal, immoral, or just insouciant to consider the innocents - the stockholders who bought General Motors before the panic, and helped build the company!
Remember - it was my money that went into the stimulus. I helped revive the General. You guys who planned and distributed the billions might have thought about it.
Let's see. Where's that Ford dealer ad?
Richard Carlton
February 17, 2011
Issue No. 14
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