Bailout Nation 2: General Motors

[Subdude]

I just read a story somewhere that GMAC is going to start back up again with sub-prime auto loans in order to move inventory.

It all is starting to point to a bankruptcy.

I had to read that twice about the return to sub-prime lending. Apparently the last 18 months haven't made as big an impression as we might have thought.

Bankruptcy is a good thing here, isn't it? Doing something to weed out the unprofitable bits makes more sense than to just keep throwing billions at them and hope for the best. And it was a good sign when they forced Wagoner out.

Now if only they could be so strong with the banks!

[marmer]

I had to read that twice about the return to sub-prime lending. Apparently the last 18 months haven't made as big an impression as we might have thought.

Bankruptcy is a good thing here, isn't it? Doing something to weed out the unprofitable bits makes more sense than to just keep throwing billions at them and hope for the best. And it was a good sign when they forced Wagoner out.

Now if only they could be so strong with the banks!

This may be a dumb question, but is sub-prime lending defined as poor-risk customers or low interest rates? Or both? I just say it because I thought zero-percent financing had been around for the last several years. Is this something else?

It was not a good thing when Wagoner was forced out. Wagoner was the most decisive, visionary, and product-focused chief executive GM has had in at least a generation. The fact that GM went from having nothing decent except trucks in 1995 to having lots of excellent, competitive vehicles in several classes is due to Wagoner's courage in bringing in Bob Lutz and having the brains to get out of his way and spend the money to design and make decent vehicles. GM had a LOT of problems, and still does. But they probably would have gone belly-up a few years ago, even with a boom economy, if not for Wagoner's leadership.

[Subdude]

This may be a dumb question, but is sub-prime lending defined as poor-risk customers or low interest rates? Or both? I just say it because I thought zero-percent financing had been around for the last several years. Is this something else?

It was not a good thing when Wagoner was forced out. Wagoner was the most decisive, visionary, and product-focused chief executive GM has had in at least a generation. The fact that GM went from having nothing decent except trucks in 1995 to having lots of excellent, competitive vehicles in several classes is due to Wagoner's courage in bringing in Bob Lutz and having the brains to get out of his way and spend the money to design and make decent vehicles. GM had a LOT of problems, and still does. But they probably would have gone belly-up a few years ago, even with a boom economy, if not for Wagoner's leadership.

There's no way to prove that they might have gone belly up a few years ago if not for Wagoner, but the fact remains that they have gone belly up under his leadership. I agree that their product mix has improved, and you'll notice that Lutz wasn't tossed out like Wagoner. But until faced with bankruptcy GM could never bring themselves to make some of the hard choices like killing off half their brands or cutting capacity enough as market share fell. Wagoner may be any number of good things, but at the end of the day GM had a serious failure of leadership. After all, Ford has managed to survive the downturn.

I made the same point about the banks, but I would repeat that in a restructuring situation one of the most important things is to change the culture. Firing the CEO sends an appropriate message that things have seriously changed and that continuing to live in the past with old management in place simply isn't an option.

[marmer]

There's no way to prove that they might have gone belly up a few years ago if not for Wagoner, but the fact remains that they have gone belly up under his leadership.

You are right, I can't prove that they would have gone belly up, but here are some initiatives that Wagoner led, without which GM would have been in far worse shape:

Greater focus on the Asian, particularly Chinese, market

US-market introduction of strong Opel and Holden models as Saturn and Pontiac

Re-negotiation of UAW contracts and creation of VEBA programs

Started the streamlining and model reduction process.

Got serious about hybrids, particularly heavies like the Saturn Vue and the Yukon, and fast-tracked the Volt.

And none of those are as important as the biggie, which was to finally build vehicles people wanted to buy.

I agree that their product mix has improved, and you'll notice that Lutz wasn't tossed out like Wagoner. But until faced with bankruptcy GM could never bring themselves to make some of the hard choices like killing off half their brands or cutting capacity enough as market share fell. Wagoner may be any number of good things, but at the end of the day GM had a serious failure of leadership. After all, Ford has managed to survive the downturn.

Lutz had already announced his intention to retire in 2010, I believe, after the Volt is launched. And those hard choices like killing off brands and cutting capacity are strongly complicated by things like a patchwork of state dealer franchise laws. Ford is well and truly fortunate to have Alan Mullaly at the helm and they were able to restructure some of their heavy debt early enough that they're not in quite the dire straits of GM and Chrysler. But even Toyota is asking the Japanese government for help because no one can buy cars.

I made the same point about the banks, but I would repeat that in a restructuring situation one of the most important things is to change the culture. Firing the CEO sends an appropriate message that things have seriously changed and that continuing to live in the past with old management in place simply isn't an option.

I understand your point, and in some situations I would agree, but in this case I think that bringing in a new person is going to waste money and time for no good reason. There are very real limitations on how boldly any executive can act, even assuming cooperation from the UAW and suppliers (which is a big assumption). It takes millions of dollars and several years to design and bring new vehicles to market, no matter who is in charge. Getting rid of brands and dealers is going to cost a giant bundle of cash, no matter who is in charge. And Henderson is a GM insider like Wagoner, right? Bringing in someone from outside the industry rarely works anyway. Mulally, with his Boeing experience, is the happy exception. Someone like Nardelli is a more usual result. GM did three decades of living in the past with old management, I'll be the first to admit. But they were on track for major strides and working hard to get where they needed to be. Firing Wagoner is like firing Captain Sullenberger for crashing into the Hudson River.

[Subdude]

U.S. Is Said to Prepare Filing for Chrysler Bankruptcy

By MICHELINE MAYNARD and MICHAEL J. de la MERCED

Published: April 23, 2009

DETROIT

[barracuda]

This is a speculative play in junk bonds, not a core investment. There's a reason I'm using junk bonds as the investment proposition, which is that their pricing is much more closely aligned to short-term cash flow and default risk than that of a stock (especially for a company that has no assets). You claimed that you believed that the government bailout would be successful, making them able to avoid bankruptcy, and an investment in GM corporate bonds affords you the opportunity to multiply your investment many times over in very short order (and since retirement is at least 25 years away, that is the kind of high-risk high-reward investment that should be on your radar--I don't care what Suze Orman tells you).

It sounds like you don't really have a good understanding of how bonds work. You should not invest beyond your level of competency. More to the point however, you should not put out BS financial forecasts when you have zero practical understanding of corporate finance.

Niche, I decided to put my money where my mouth was, and I've been purchasing shares in Ford over the last month and a half. It just so happens that my investment is up 73% with today's rally. So I guess you could say I took your advice, except that I bet on the horse with the better odds for the time being.

[TheNiche]

Niche, I decided to put my money where my mouth was, and I've been purchasing shares in Ford over the last month and a half. It just so happens that my investment is up 73% with today's rally. So I guess you could say I took your advice, except that I bet on the horse with the better odds for the time being.

...good thing you did. GM either wouldn't have made you any money, or depending on when you'd bought into it precisely, over that period of time, it could've lost you up to 45% (unleveraged).

As a DISCLAIMER, to you and anyone that might be reading this, my advice was limited to a recommended course of action given a projection made by barracuda that the auto manufacturing industry (and GM in particular) would be bailed out in such a way as benefited their stockholders. It was a general scenario-based analysis of strategy and did not--nor does it currently--reflect my own personal opinions about the future financial performance of the distressed automakers. The advice was also adapted to barracuda's financial expertise and would not have been ideal for all investors.

[barracuda]

...good thing you did. GM either wouldn't have made you any money, or depending on when you'd bought into it precisely, over that period of time, it could've lost you up to 45% (unleveraged).

As a DISCLAIMER, to you and anyone that might be reading this, my advice was limited to a recommended course of action given a projection made by barracuda that the auto manufacturing industry (and GM in particular) would be bailed out in such a way as benefited their stockholders. It was a general scenario-based analysis of strategy and did not--nor does it currently--reflect my own personal opinions about the future financial performance of the distressed automakers. The advice was also adapted to barracuda's financial expertise and would not have been ideal for all investors.

I don't recall ever writing that GM stock was a good investment. Interesting.

The government loans did prevent a bigger collapse of the auto industry where hundreds or thousands of interrelated businesses might have closed shop and worsened the recession. But those are loans, not stock investments.

[TheNiche]

I don't recall ever writing that GM stock was a good investment. Interesting.

Neither did I. However, GM was the company at issue at that point in the conversation.

The government loans did prevent a bigger collapse of the auto industry where hundreds or thousands of interrelated businesses might have closed shop and worsened the recession. But those are loans, not stock investments.

The extent of the possible damage is entirely unclear. There are different kinds of bankruptcy each of which have different effects on the operations of firms. And in the case of the auto industry, government prepackaging of bankruptcies would probably be easier still. Of those firms that would have closed up shop, there would be others expanding operations, for instance to provide parts to foreign-based multinational automakers, which would've gobbled up domestic market share.

Surely, though, we can both agree that auto production was/is excessive and needs to be reduced. By one means or another, that's what is going to happen. And whether companies are forced to reorganize by way of bankruptcy or not, staffing cuts are going to be necessary.

[Subdude]

The government loans did prevent a bigger collapse of the auto industry where hundreds or thousands of interrelated businesses might have closed shop and worsened the recession. But those are loans, not stock investments.

I've said this before, but it wasn't a collapse of the auto industry - it was a collapse of two particular manufacturers.

If all GM and Chrysler needed were loans they should have gone to banks, which make loans for a living. The bailouts are equity injections without the benefits of equity. It annoys me to no end that the government bails out loser companies like GM and Chrysler but doesn't take commensurate ownership stakes.

[barracuda]

I've said this before, but it wasn't a collapse of the auto industry - it was a collapse of two particular manufacturers.

It's also been widely discussed that their collapse would affect thousands of interdependent businesses, such as part suppliers, and cause much more economic turbulence than just the two carmakers and their hundreds of thousands of employees. From that perspective, the automaker loans/bailouts were a relatively inexpensive way to stimulate the economy. Letting them completely fail could have been more costly to the economy at large, as we would instead be directing aid at affected communities and unemployment. At least in this situation, the money is going towards something productive (jobs, people actually making things, etc.).

If all GM and Chrysler needed were loans they should have gone to banks, which make loans for a living. The bailouts are equity injections without the benefits of equity.

In normal conditions, they could have sought loans from banks, but that wasn't an option (something about the subprime meltdown and falling car sales and banks not willing to loan money).

It annoys me to no end that the government bails out loser companies like GM and Chrysler but doesn't take commensurate ownership stakes.

But that would be one step too close to socialism.

Edited April 25, 2009 by barracuda

[Subdude]

But that would be one step too close to socialism.

Oh give me a break.

So it isn't socialism if the taxpayer has to repeatedly bailout mismanaged businesses, but it is socialism if the bailouts take the form of equity? So we are supposed to give companies money, but not get any upside in return or say in how the money is spent? And the government is supposed to be the bank of last resort, and yet not be socialistic? I'm sorry, but I'm failing to see the logic here.

It's also been widely discussed that their collapse would affect thousands of interdependent businesses, such as part suppliers, and cause much more economic turbulence than just the two carmakers and their hundreds of thousands of employees. From that perspective, the automaker loans/bailouts were a relatively inexpensive way to stimulate the economy. Letting them completely fail could have been more costly to the economy at large, as we would instead be directing aid at affected communities and unemployment. At least in this situation, the money is going towards something productive (jobs, people actually making things, etc.).

Industry sales would be quickly made up by other manufacturers so most of the suppliers would stay in business. Propping up selected manufacturers is just the government trying to pick winners. It doesn't work in the long run. And for me, it is one step too far away from capitalism.

[Subdude]

Pontiac next to get the ax.

* APRIL 25, 2009

Pontiac Headed for Junk Yard

By SHARON TERLEP and JOHN D. STOLL

General Motors Corp. is readying plans to ditch its fabled Pontiac, an 82-year-old division that last flourished selling sporty, muscle cars, people familiar with the matter said Friday.

During its heyday three decades ago, Pontiac was the launching ground for young auto designers and executives including John DeLorean. But its sales have tumbled 70% since their peak in 1978, and the unit in recent years has been a steady money loser.

GM has more than three months' supply of Pontiacs on dealer lots, according to Edmunds.com. Last month, the average Pontiac sold for 22% off the sticker price, compared with the industry average of 16%, Edmunds said.

The auto maker, facing a June 1 federal deadline to dramatically restructure or go bankrupt, is expected to disclose next week it will eliminate or sell Pontiac, according to several people who have been briefed on the plan.

Link

[Geoff8201]

That is indeed depressing news. My family has been buying Pontiac since 1987 with a Grand Am, 2002 I bought a used 98 Grand Am Again, and just 3 months ago I bought a new G6.

Pontiac has been making cars that work well and are fun to drive, not to mention stylish. Who can say they don't like the look of the G6 or the Solstice. And don't forget about an American muscle car legacy... The GTO, the Firebird, the Grand Prix.

I'm hoping someone else buys at least part of the line, instead of just ditching it all in the trash. Indeed a sad day for owners of Pontiac vehicles.

[BryanS]

That is indeed depressing news. My family has been buying Pontiac since 1987 with a Grand Am, 2002 I bought a used 98 Grand Am Again, and just 3 months ago I bought a new G6.

Pontiac has been making cars that work well and are fun to drive, not to mention stylish. Who can say they don't like the look of the G6 or the Solstice. And don't forget about an American muscle car legacy... The GTO, the Firebird, the Grand Prix.

I'm hoping someone else buys at least part of the line, instead of just ditching it all in the trash. Indeed a sad day for owners of Pontiac vehicles.

So sad. We build Excitement!

oh wait. That's a piece of crap. A "stylish" piece of crap.

[mkultra25]

So sad. We build Excitement!

oh wait. That's a piece of crap. A "stylish" piece of crap.

What does that have to do with the cars Pontiac is making now?

This is the third forum I regularly read where someone's posted a picture of an Aztek in response to the news of Pontiac's demise. Every car manufacturer has built its share of four-wheeled turds, but as I've said before, I have to wonder how many people repeating the received wisdom that GM builds poor-quality cars has actually driven one recently.

I've bought used Hondas exclusively for almost 20 years. I don't think GM cars' build quality or longevity can equal Honda's or Toyota's yet, but there's no denying they've made great strides in becoming competitive with the Japanese manufacturers on those fronts in recent years.

[barracuda]

So sad. We build Excitement!

oh wait. That's a piece of crap. A "stylish" piece of crap.

In all fairness, most cars from that era look like crap now.

Believe it or not, a version of that car was named one of the 10 Best Cars in 1984 by Car and Driver. http://www.caranddriver.com/reviews/hot_li...ars+page-7.html

Also hard to believe, it's sibling the Oldsmobile Cutlass Ciera was the top selling car in 1983. My first car was a mid-80's beat-up Cutlass Ciera that had made it's rounds through the family.

[marmer]

That is indeed depressing news. My family has been buying Pontiac since 1987 with a Grand Am, 2002 I bought a used 98 Grand Am Again, and just 3 months ago I bought a new G6.

Pontiac has been making cars that work well and are fun to drive, not to mention stylish. Who can say they don't like the look of the G6 or the Solstice. And don't forget about an American muscle car legacy... The GTO, the Firebird, the Grand Prix.

I'm hoping someone else buys at least part of the line, instead of just ditching it all in the trash. Indeed a sad day for owners of Pontiac vehicles.

What does that have to do with the cars Pontiac is making now?

This is the third forum I regularly read where someone's posted a picture of an Aztek in response to the news of Pontiac's demise. Every car manufacturer has built its share of four-wheeled turds, but as I've said before, I have to wonder how many people repeating the received wisdom that GM builds poor-quality cars has actually driven one recently.

I've bought used Hondas exclusively for almost 20 years. I don't think GM cars' build quality or longevity can equal Honda's or Toyota's yet, but there's no denying they've made great strides in becoming competitive with the Japanese manufacturers on those fronts in recent years.

Yes. What they said. The Aztek was the last bad Pontiac. I'm sad that we won't get to see a Firebird on the new Camaro platform or the new rear-drive G8 (why didn't they call it a Bonneville?) which would have been a Dodge Charger killer. I'm sad that the perfectly lovely GTO and the American Miata, the Solstice, will die before their time and never live up to their potential. I'm sad that the redesigned G6, especially the pretty little convertible, won't ever be named something like Tempest, because it's a way, way better car than the Chrysler Sebring.

[Geoff8201]

So sad. We build Excitement!

oh wait. That's a piece of crap. A "stylish" piece of crap.

For you information I was thinking more like this:

So tell me your favorite car manufacturer and I'm sure I can find a rundown, old-school, dull, boxy image of it too.

[marmer]

You go, Geoff! Although I could maybe do without some of the cladding and body effects on the Trans Am.

But I'll go one further on that mid-80s 6000 looking all sad and forlorn, beat to hell and neglected in that impound-looking lot. It even looks like a rainy day. How much harder could you try to make a car look bad? But the proportions of the body and the crispness of the hood and trunk line are way above its Ford and Chrysler competition of the time. K-car, anybody? Fairmont? Tempo? And if that has the Iron Duke 2.5L straight-four engine, which it probably does, that was a solid and reliable engine for lots of GM vehicles. Yes, this was produced when cost-cutting was king. And it was not nearly as good a car as its Japanese competition of the time (though the Japs were smaller and more expensive, with fewer dealers at the time)

But some poor stylist still could hold his or her head up at the end of the day and feel like they had done a good job with what they had to work with.

[Subdude]

What does that have to do with the cars Pontiac is making now?

This is the third forum I regularly read where someone's posted a picture of an Aztek in response to the news of Pontiac's demise. Every car manufacturer has built its share of four-wheeled turds...

True enough, but the Aztek sticks in a lot of people's mind because of its atrocious styling. It was enough over the top, and enough of a flop, that to me at least it was almost lovable, like the Charlie Brown of cars. I think eventually it will be considered a bit of a collectible like Edsels. And to be fair, although people might not want to admit it, the hideous Aztek gets pride of place as the very first hideous fastback crossover SUV. It blazed the trail for the hideous BMW X6, the hideous new Acura ZDX and even the hideous Ssangyong Actyon. Credit given where credit due, that's my motto.

As for Pontiac, I don't feel anything in particular about it being killed, any more than for Plymouth or Oldsmobile. They may have had the occasional home run like the GTO, but that was decades ago and wasn't enough to offset the accumulated impact of all the Astres and Sunbirds and Phoenixes and Parisiennes.

[Subdude]

You go, Geoff! Although I could maybe do without some of the cladding and body effects on the Trans Am.

But I'll go one further on that mid-80s 6000 looking all sad and forlorn, beat to hell and neglected in that impound-looking lot. It even looks like a rainy day. How much harder could you try to make a car look bad? But the proportions of the body and the crispness of the hood and trunk line are way above its Ford and Chrysler competition of the time. K-car, anybody? Fairmont? Tempo? And if that has the Iron Duke 2.5L straight-four engine, which it probably does, that was a solid and reliable engine for lots of GM vehicles. Yes, this was produced when cost-cutting was king. And it was not nearly as good a car as its Japanese competition of the time (though the Japs were smaller and more expensive, with fewer dealers at the time)

But some poor stylist still could hold his or her head up at the end of the day and feel like they had done a good job with what they had to work with.

Yeah, I am going to join the defend-the-6000 bandwagon. At the time GM styling was improving with respect to American manufacturers, although there were misfires like the stumpy Riviera/Trofeo/ElDorado. That said, I have a huge weakness for the styling of Japanese cars of the period and I don't think GM had anywhere near the talent. The Japanese guys had a lot of very nice, crisp designs in the 1980s. (Honda Accord, Isuzu Impulse, Toyota Celica etc etc.)

[marmer]

True enough, but the Aztek sticks in a lot of people's mind because of its atrocious styling. It was enough over the top, and enough of a flop, that to me at least it was almost lovable, like the Charlie Brown of cars. I think eventually it will be considered a bit of a collectible like Edsels. And to be fair, although people might not want to admit it, the hideous Aztek gets pride of place as the very first hideous fastback crossover SUV. It blazed the trail for the hideous BMW X6, the hideous new Acura ZDX and even the hideous Ssangyong Actyon. Credit given where credit due, that's my motto.

I think hideous is a little too strong a word for some of the modern crossovers. Also, the Aztek's platform was the basis for the Buick Rendezvous, which didn't do a lot for me, looks-wise, but sold like hotcakes. And, to GM's credit, the lessons learned from that series of vehicles led to the outstanding Enclave and Acadia platform crossovers.

As for Pontiac, I don't feel anything in particular about it being killed, any more than for Plymouth or Oldsmobile. They may have had the occasional home run like the GTO, but that was decades ago and wasn't enough to offset the accumulated impact of all the Astres and Sunbirds and Phoenixes and Parisiennes.

The Astres and Sunbirds and Phoenixes and Parisiennes were decades ago. There is a modern GTO, sourced from the Australian Holden. And Holden also provided the spectacular G8 GT and GXP. Ah, so sad. Here's another link with a picture, for those who think I only read the Autoextremist:

For Pontiac, Quality Comes Too Late

[Subdude]

I think hideous is a little too strong a word for some of the modern crossovers. Also, the Aztek's platform was the basis for the Buick Rendezvous, which didn't do a lot for me, looks-wise, but sold like hotcakes. And, to GM's credit, the lessons learned from that series of vehicles led to the outstanding Enclave and Acadia platform crossovers.

Of course, not all modern crossovers are hideous. I was referring specifically to the Aztek's progeny of fastback crossover SUVs such as the X6, which for which I think hideous is indeed the correct adjective.

The Astres and Sunbirds and Phoenixes and Parisiennes were decades ago. There is a modern GTO, sourced from the Australian Holden. And Holden also provided the spectacular G8 GT and GXP. Ah, so sad. Here's another link with a picture, for those who think I only read the Autoextremist:

For Pontiac, Quality Comes Too Late

Again, they may have some excellent cars - although I have to admit I've never seen a G8 - but that doesn't necessarily mean the brand could have been saved. In a way this is a good thing. GM is finally going through the massive changes it has needed for years but could never bring themselves to do. It's probably hard for them internally to kill off another of the traditional GM makes, but they need to get past the historical baggage.

[RedScare]

No reason whatsoever why GM cannot reincarnate the G8, Solstice, or even the Firebird under one of the remaining brands. If the cars are worth saving, they'll still be around.

[marmer]

Again, they may have some excellent cars - although I have to admit I've never seen a G8 - but that doesn't necessarily mean the brand could have been saved. In a way this is a good thing. GM is finally going through the massive changes it has needed for years but could never bring themselves to do. It's probably hard for them internally to kill off another of the traditional GM makes, but they need to get past the historical baggage.

I sorta agree with you. In fact, I would have agreed with you completely five to ten years ago. Pontiac had lost its way and the cars weren't very exciting. They were ugly, with too much body cladding and there were unnecessary "Pontiac" variants of SUVs (Torrent) and minivans (Trans Sport). But, darn it, they're getting their mojo back and the historical baggage is starting to look like, just maybe, brand identity and a distinguished tradition of innovation.

No reason whatsoever why GM cannot reincarnate the G8, Solstice, or even the Firebird under one of the remaining brands. If the cars are worth saving, they'll still be around.

I sorta agree with you, too. Sorta. Although they are strongly identified with Pontiac, the G8 could plausibly become a new Impala SS and the Solstice could get a Chevy name, like Monza.

No reason to even do a non-Pontiac Firebird though with the Camaro there. Pity, because even when they were rather obsolete, the last iteration of the Camaro and Firebird were big sellers for GM.

[marmer]

An interesting historical footnote (sorry if I've posted this before). For the 1929-30 period, GM decided that they needed even more brand names to fill every price point in the market. Several of these (the more obscure ones) lasted only the one model year. Talk about bad timing! Here's the list:

Chevrolet

Pontiac (cheaper Oakland)

Oakland

Viking (cheaper Oldsmobile)

Oldsmobile

Marquette (cheaper Buick)

Buick

LaSalle (cheaper Cadillac)

Cadillac

Only Pontiac among the "new" brands survived the Great Depression; Viking and Marquette were gone in a year or two as was Pontiac's "parent" Oakland. LaSalle lasted until 1940 or so.

[frheard]

Here's a 2006 Pontiac GTO. Great car. Super fast for the money. It has a Corvette 400hp engine and cost $30-40K less! This one has had the fin removed for a sleeker look. This one is for sale, btw. PM me if you would like to add an American Icon to your collection.

[Subdude]

No reason whatsoever why GM cannot reincarnate the G8, Solstice, or even the Firebird under one of the remaining brands. If the cars are worth saving, they'll still be around.

It is my understanding that the plan is that none of the vehicles from Pontiac or the other discontinued brands is to be shifted to another make.

What is interesting is that it appears now that the federal government will end up the largest GM stakeholder, so GM will effectively end up a state-owned enterprise.

And the 2006 Pontiac GTC is NOT an "American icon". Good grief.

[20thStDad]

What is interesting is that it appears now that the federal government will end up the largest GM stakeholder, so GM will effectively end up a state-owned enterprise.

I read that with a debt-stock deal, it's possible that would leave current GM shareholders with only 1% ownership after it goes down. That means the government and other debt owners would have 99%. Why would they want that, even if it's off by 10-20%? I guess stock is better than nothing at all, maybe. The bankruptcy alternative would leave many with nothing at all.