The Cellar - Does Anyone feel like Bailing

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Another example of finance people playing money games as technology and infastructure gets ignored by those spread sheet moguls. From the NY Times of 11 Dec 2008:

Quote:

url=http://www.nytimes.com/2008/12/12/business/worldbusiness/12bell.html]As Buyout Fails, Bell Canada Seeks to Bolster a Struggling Business[/url]
With the record-setting $50 billion leveraged buyout of Bell Canada all over except for the potential litigation, the company, Canada’s largest telecommunications company, once again faces a possibly bigger issue: reversing the seemingly relentless decline of its business.

The takeover, which had several setbacks, appeared doomed late last month after the accounting firm KPMG concluded that Bell, ... would not be solvent after being burdened with about $30 billion in debt from the deal.

Its demise was confirmed on Thursday through two curt statements. The buyout group, which was led by the Ontario Teachers’ Pension Plan, said that the deal’s failure to pass its solvency test was the final blow, adding: “Under these circumstances neither party owes a termination fee to the other.”

Link

Quote:

...many analysts said that Bell was now better positioned to deal with the future than it would have been after a buyout.

“They were going to be saddled with a debt which would have meant that they could not have done anything.”

Mr. Eiley cautions that both Bell and Telus, which he said faced several of the same problems as Bell, would have to weigh carefully the potential returns from investments in network upgrades. That situation, he added, might delay or even block substantial change.

It seems the article is playing both sides. On on hand they are better off not being bought out, yet on the other the investment needed for upgrading and innovating may be prohibitive.

Quote:

Originally Posted by classicman (Post 512898)

[It seems the article is playing both sides. On on hand they are better off not being bought out, yet on the other the investment needed for upgrading and innovating may be prohibitive.

It is better to address problems when they exist. In a parallel example, GM has been bankrupt since the 1990. By playing accounting games and all but encouraged to do so by deregulation, GM also did not have to face reality.

Bell of Canada should have been addressing these problems years if not a decade ago. That is why credit rating firms, auditors, and government oversight exist. Maybe the bean counters in finanical markets and government were no longer doing their jobs? No. These people exist to advance mankind. They would do their jobs.

Bell of Canada is added to a long list of firms that ... well that list has not yet hit the half way point. Did I mention big steel because some stupid president protected them some four plus years ago from free market pressures that would have saved them?

BTW, a world record loss has now been set by a hedge fund. This will be the largest Ponzi scheme ever.

"Don't worry. Be Happy."

Quote:

Originally Posted by tw (Post 513065)

It is better to address problems when they exist.

To late.

Next.

Interesting if the numbers/math is right...from here.

That would make more sense as a stacked bar chart.

Yeah, a bar stacked with shots of Cuervo.

From the NY Times of 18 Dec 2008:

Quote:

Car Bankruptcy Cited as Option by White House
The White House raised for the first time on Thursday the prospect of forcing General Motors and Chrysler into a managed bankruptcy as a solution to save the companies from financial collapse. ...

Mr. Ray said that a number of airlines went through bankruptcy protection earlier this decade, using federally backed loans awarded by the Air Transportation Stabilization Board, which was set up to aid the industry after the September 2001 attacks.

The board turned down United’s request, however, and the airline subsequently restructured under bankruptcy protection without federal money.

“United is still flying, and G.M. is not doing very well,” Mr. Ray said. “Their chickens have come home to roost, and now it’s inevitable” that G.M. seek bankruptcy protection, he added.

Had GM not used Enron accounting in 1991 to avert bankruptcy, then GM's problems would have been addressed and solved. Cars would be designed by car guys. The Hybrid would have been widely available in 1999.

Chrysler is owned by a rich investment firm that could easily finance Chrysler's bridge loans. Maybe even do what 1979 Chrysler did when government did not bail them out. 1979 Chrysler replaced bad management, then bridge loans from the banks. Loans that Chrysler paid off in only four years because Lee Iacocca (a car guy) replaces Chrysler's only problem - top mangement.

Cerebus is an investment firm that would rather have government pay for their bad investment decisions. Rich investors once had to accept the risks of their investments. But the economy downturned. According to Cerebus, that is not fair. Therefore government should bail them out.

Deutsche Bank called it about one month ago. GM's future stock price is predicted to be zero dollars per share. Obviously. GM products were obviously that bad long ago.

Quote:

Originally Posted by tw (Post 515061)

Maybe even do what 1979 Chrysler did when government did not bail them out. 1979 Chrysler replaced bad management, then bridge loans from the banks.
Cerebus is an investment firm that would rather have government pay for their bad investment decisions. Rich investors once had to accept the risks of their investments.

They still should.

When GM stock shares hit $0 I will buy all of them.

then you can fire all of top management! You better be paying attention.

Bush Approves $17.4 Billion Auto Bailout
December 19, 2008

Quote:

WASHINGTON — President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and said another $4 billion would be available for the hobbled automakers in February. The entire bailout is conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
The president’s plan gives carmakers until March 31 to restructure.

The loans, as G.M. and Chrysler teeter on the brink of insolvency, essentially throw the companies a lifeline from the taxpayers that will keep them afloat until March 31. At that point, the Obama administration will determine if the automakers are meeting the conditions of the loans and will continue to receive government aid or must repay the loans and face bankruptcy.

Well at least its something. I also noticed that Ford declined to participate - good for them.
If they only built a better car I might consider buying one.

[quote=classicman;515190Well at least its something. I also noticed that Ford declined to participate - good for them.
If they only built a better car I might consider buying one.[/QUOTE] Ford had been many years into undoing the disaster created by Jacques Nasser. The finally came out with some 70 Hp per liter engines. Ford is ahead of GM in making better cars - only barely. Ford addressed the management problem which is why Ford does not need government rescue.

$100s of billions were given to banks to start loaning again. What does GM need? Exactly what Chrysler needed in 1979. New management AND loans from the banks. Who will better hold GM's feet to the fire of innovation? Bankers; not government. However since the president is a mental midget, he protected GM management AND is not letting free market forces operate. Banks now flush with cash would hold GM to actual solutions. The mental midget did not.

Only government requirements that GM must conform to: executives can no longer fly in private jets. Everything else is too subjective - as well planned as "Misson Accomplished".

cough.

why is it okay to have corporate welfare*** and NOT ok to have national health care?

***we all knows these fkkrs ain't going to make good OR pay up.

Quote:

Originally Posted by tw (Post 515392)

.

Only government requirements that GM must conform to: executives can no longer fly in private jets. Everything else is too subjective - as well planned as "Misson Accomplished".

AND continuing the further deterioration of workers rights. This is actually a direct shot at the unions.