Saturday, May 30, 2009

With Opel out of the way, uncle Obama becomes the proud new owner

Uncle Obama (with a mighty phone call) convinced the Germans that Opel is free from GM's bankruptcy - and off it went on it's own. So the Germans gave Opel a 1.5 billion Euro loan, as part of the sale to a Canadian parts manufacturer with the help of some Russians, and who knows who else. Real mess.

Some might remember Opels used to be popular in the US years ago (from Wikipedia).

Saab (that used to be owned by GM) went the same way. After getting some concessions from the union and freed from the messy European operations (see map), GM is ready to cross over into bankruptcy.

Until the last minute people hoped that the negotiations with creditors will succeed, potentially giving current shareholders some 1% of the new restructured GM. But it wasn't meant to be. The shares closed at 75c on Friday. It was amazing to see they actually had some non-zero value (possibly some short covering).

GM shares

Debt traded below 9c on the dollar. That's why in a rational world where contract law makes sense, equity should have no value when debt trades cents on the dollar. But in the don Rama Manuel's family business it's a different story.

GM Debt

Here are the new proud owners of GM. The greedy bond holders get what they deserve- how dare they ask for their money back. Shut up and take it from uncle Obama.

And when things get grim in the bankruptcy court and more jobs are lost, we can always go back to those happier times.

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