by Brian Brady
Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL
Here is yet another example of how the sharp noses of the Bloodhounds, caught a whiff of the stench, before the media did:
Do you remember how Sean Purcell was confused with the mathematics behind the GM IPO?
You know, I seriously don’t mind when others try to mislead me and I’m not much offended when I get force fed a whole bunch of obfuscation from the government , but when you mess with the math you insult me on a much deeper level. (Note: I may hold math a little more sacrosanct than most. I see in math the core of philosophy, music and precision; I look at math and I see poetry.) Listen, it’s not like this is differential calculus; it’s basic multiplication and division. Don’t stand there and tell me 2+2=5! As Mr. Brady is fond of saying: “I am cursed with the knowledge that two plus two does, in fact, equal four.”
I don’t know about anyone else, but I’m not buying shares in a company run by people who think they’re so smart math doesn’t apply to them. In the end, the math of the free market does apply, and it is always right.
Well, Patrice Hill from the Washington Times had a problem with the math as well. She was more conclusive than our Mr. Purcell. Ms Hill called the prestidigitation what it was; a payoff:
Thanks to a generous share of GM stock obtained in the company’s 2009 bankruptcy settlement, the United Auto Workers is well on its way to recouping the billions of dollars GM owed it — putting it far ahead of taxpayers who have recouped only about 30 percent of their investment and further still ahead of investors in the old GM who have received nothing.
The boon for the union fits the pattern established when the White House pushed GM into bankruptcy and steered it through the courts in a way that consistently put the interests of the union ahead of many suppliers, dealers and investors — stakeholders that ordinarily would have fared as well or better under the bankruptcy laws.
“Priority one was serving the interests of the UAW” when the White House’s auto task force engineered the bankruptcy, said Glenn Reynolds, an analyst at CreditSights. The stock offering served to show once again how the White House has handsomely rewarded its political allies, he said.
Bloodhound Blog might be a disquieting place but, as the old maxim goes, if you want an omelet…
Sean Purcell says:
I have refrained from writing about the long term, permanently increased cost of private capital the Obama administration created with their unethical and socialist reworking of GM. The acts were outrageous, but the writing would be archane.
Luckily, the union continues to provide its own fodder. Later in this same article, we get this gem:
Can you believe the unmitigated gall of these people? Investors, bond holders, stock holders and the American public were screwed six ways from Sunday on this deal, but the union looks forward to recouping its “losses” once GM (read: us) shares fairly with the union membership.
This is a great article Brian. Thanks for catching it.
November 26, 2010 — 4:34 pm
Jim Whatley says:
Stupid is as stupid does. I think the stock market is a rigid game. Now they are working on real estate.
November 26, 2010 — 6:17 pm
Michael Cook says:
Sean, I think the GM management will have the upper hand. Given the recent bankruptcy, management would be smart to take the hardest line they could. There is no possible way the union could call a strike in the near future. I thinks its tough talk from a figurehead.
December 3, 2010 — 2:28 pm
Sean Purcell says:
Michael, I’d like to agree with you but I’m just not sure. GM is not in charge, the government is; and the government enjoys playing under the covers with the UAW. (Actually, the government is a bit of a slut when it comes to unions in general…)
Case in point: The union can sell all of the shares it was “given” and at around $36/share recoup everything they lost in their various funds. For the US taxpayer to recoup their investment, the shares have to sell for anywhere from $54/share to some estimates of over $100. Of course, there’s no need to concern ourselves with share prices; the government has volunteered to NOT sell any more shares for at least six months. You know, putting a moritorium on any downward pressure on the stock until the unions can get their quid pro quo.
I can’t imagine being a former GM bondholder and watching this. I think there’s a good chance I’d go postal. As a matter of fact, I think that going forward, when someone feels they’ve been abused at work and goes nuts in the workplace, we should stop saying they went “postal” and start saying they were violent after being “GM’d”. My .02 worth.
December 3, 2010 — 4:01 pm