Barack's Obama; The New Iraq
James Bibbings, June 4th, 2009
Page 1
James Bibbings - Commodity News Center
June 3, 2009
Another Government Bailout...
On Monday General Motors Corporation officially filed for Chapter 11 bankruptcy. This should have come as no surprise to the financial community as bankruptcy rumblings began as far back as 2005. Furthermore, on March 30th, 2009, the announcement of a chapter 11 filing by the auto giant on June 1st became a near certainty. If you recall March 30th, 2009 was the date that the Obama administration announced GM would have to submit an acceptable long term viability plan to the US government. At that time the administration indicated that if GM was to be eligible for more tax payer funds, the company would be required to submit an acceptable restructuring plan. This plan was to be turned in to the government within 60 days; now those days have come and gone and no acceptable plan was provided. Where does that leave us?
According to bankruptcy information made available Monday, the US tax payer will now own 60% of General Motors at the cost of roughly $50 billion dollars ($19.4 billion before bankruptcy; $30 billion while in bankruptcy). Shortly, after GM made the historic bankruptcy announcement President Obama came to the microphone:
"I am confident that the additional Federal help was justified by the changes being made at GM. GM and its stakeholders have produced a viable, achievable plan that will give this iconic American company a chance to rise again. But GM can't put this plan into effect on its own. Executing this plan will require a substantial amount of money that only a government can provide."
Per GM's official bankruptcy filing, as of Monday, the company had $82.3 billion in assets and liabilities of $172.8 billion; a shortfall of $90.5 billion dollars.
Obama went on to ensure taxpayers that the company would not need additional government help in the future, and would not be at risk of failure after it emerged from bankruptcy as a "New GM". He concluded by saying:
"We understand there are no second chances. We won't need one."
Exit Strategy
Exit Strategy; noun - A plan for removing oneself from a difficult situation if it arises- 1. "The method by which a venture capitalist or business owner intends to get out of an investment that he or she has made in the past."
