DOW JONES INDUSTRIAL AVERAGE REPLACES GM AND CITI WITH CISCO AND TRAVELERS-AVERAGE WOULD BE 300 POINTS HIGHER IF THEY WERE IN IT EARLIER

The announcement that two of the long time DOW components (GM and CITI) were going to be substituted, did not get a lot of press, but that substitution could have major implications for the calculation of the DOW AVERAGE that is so widely publicized.

Some financial analysts did a "what of" analysis to test to see if the two new member components of the DOW; CISCO AND TRAVELERS.

They discovered, that this type of substitution would have had a major effect on the DOW AVERAGE figure that is reported daily. They estimated that if those two stocks were in the DOW for the last 12 months, the DOW would be approximately 300 POINTS HIGHER than reported!

So imagine what that would be like? Is it a run away market, is it a new bull market rally?

The DOW is watched so much and reported daily on all the financial newscasts, yet it could be significantly erroneous or not based on who the components are. So by substituting the stocks, and many other throughout its long history, the distortions could have major implications.

General Motors Corp. and Citigroup Inc., crippled by the first global recession since World War II, were removed from the Dow Jones Industrial Average and replaced by Cisco Systems Inc. and Travelers Cos.

GM, which filed for bankruptcy protection today, and Citigroup, the recipient of $45 billion in taxpayer aid, became the first companies since American International Group Inc. in September to leave the 30-stock average. Their shares have lost more than 90 percent since the start of 2007.

By replacing GM with Cisco, Dow Jones & Co. has removed automakers from the best-known benchmark for U.S. stocks, saying in an e-mailed statement that computers are as central to the economy as cars were in the previous century. Citigroup, until last year the world’s biggest financial firm by assets, is being replaced by a company it jettisoned in 2002 and that was once run by its former chairman, Sanford “Sandy” Weill.

“This announcement brings front and center the challenges facing the U.S. economy as it strives to remain competitive,” said Alan Gayle, director of asset allocation at Ridgeworth Investments, which manages $60 billion in Richmond, Virginia. “The Dow Jones Industrial Average is becoming less of an industrial average. It’s trying to reflect the broader economy.”

Below $5

Citigroup has traded below $5 a share since mid-January and is in the process of converting $52.5 billion of preferred stock into common shares, giving the U.S. government a 34 percent stake. GM’s ouster was foreshadowed in May by John Prestbo, the Dow Jones & Co. editor in charge of indexes, who said it would be removed in a bankruptcy filing.

GM, whose shares will be suspended on the New York Stock Exchange by the end of the day, closed unchanged at 75 cents. Citigroup fell 0.8 percent to $3.69.

“The parlous state of GM has left us with no choice but to remove it from the Dow,” said Robert Thomson, managing editor of the Wall Street Journal, in a statement announcing the change. The newspaper’s editors decide the makeup of the average. News Corp., the media company headed by Rupert Murdoch, has been its publisher since acquiring Dow Jones in 2007.

Travelers Merger

Citigroup, based in New York, was formed in 1998 from the merger of Travelers Group Inc. and Citicorp. In 2002, Citigroup gave up control of Hartford, Connecticut-based Travelers Property Casualty Corp. through an initial public offering and subsequent spinoff. The bank earned $1.6 billion in the first quarter of 2009, ending five straight quarters of losses totaling $37.5 billion.

“We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake,” Thomson said.

Thomson said Citigroup may be considered again after it has “refashioned itself,” according to the statement.

Cisco, the world’s largest maker of computer-networking equipment, joins Microsoft Corp., International Business Machines Corp., Intel Corp. and Hewlett-Packard Co. in the Dow, boosting its technology weighting from about 17 percent. With the addition of San Jose, California-based Cisco, computer companies will close the gap with industrials including 3M Co., the largest category with about 18.5 percent.

Cisco gained 5.4 percent to $19.50, outpacing a 2.6 percent advance by the Standard & Poor’s 500 Index.

Bank Shares

Travelers, the second-biggest U.S. commercial insurer, joins JPMorgan Chase & Co., American Express Co. and Bank of America Corp. among financial companies in the Dow. Its higher price than Citigroup’s will boost the benchmark’s financial weighting to about 10 percent from about 7 percent. Financials make up about 14 percent of the S&P 500, a broader benchmark.

The choice of New York-based Travelers restored an insurer to the Dow average, which had lacked one since the removal of AIG. Travelers rose 3.1 percent to $41.91.

Kraft Foods Inc. was named to replace AIG in the Dow average on Sept. 18, the day after the nation’s biggest insurer was taken over by the U.S. government to avert its collapse.

GM, which had its last profitable year in 2004, was the worst-performing company in the average last year, losing 87 percent, and 77 percent this year through May 29. Its shares fell below $1 on May 29, putting them below the minimum normally required to trade on the NYSE. GM, based in Detroit, entered the 113-year-old index in 1915, replacing preferred shares of U.S. Rubber.

GM has been in the Dow average continuously since 1925. Only General Electric Co., a component since 1907, has been in the index longer. Travelers joined in 1997, and the company’s name changed to Citigroup in 1998.

Biggest Bankruptcies

GM, the fourth-biggest bankruptcy in U.S. history after Lehman Brothers Holdings Inc. and Washington Mutual Inc. in September and WorldCom Inc. in 2002, had been the lowest-priced company in the average for most of the past year. Citigroup closed at lower prices than GM on 27 days this year, mostly in March. The Dow average is price-weighted, meaning the lower a company’s share price, the less influence it has.

GM and Citigroup were taken out from News Corp.’s 150-stock Global Dow in April, less than five months after that index was introduced.

“The issues facing GM have been widely known and disseminated for some time,” said Jonathan Armitage, head of U.S. large-cap equities at the American unit of Schroders, the U.K.’s largest independent money manager. “It was less a question of if but of when” this day would come.

The Dow average was devised in 1896 by Charles H. Dow, co- founder of Wall Street Journal publisher Dow Jones & Co. Originally containing 12 stocks, it expanded to 20 companies in 1916 and to 30 in 1928.

Reputation, Growth

There are no rules for inclusion in the gauge, according to the Dow Jones Web site. Usually, a stock is added only “if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sectors covered by the average,” the Web site says.

Changes in the composition of the average “are rare, and generally occur only after corporate acquisitions or other dramatic shifts in a component’s core business,” the site says. “When such an event necessitates that one component be replaced, the entire index is reviewed,” and “multiple component changes are often implemented simultaneously.”

Three companies left the Dow last year, including AIG. Altria Group Inc. and Honeywell International Inc. were replaced by Bank of America and Chevron Corp. Those changes were the first since 2004.

GM WILL BECOME LARGEST CHINESE CAR COMPANY WITH NO EUROPEAN PRESENCE THANKS TO US GOVERNMENT MEDDLING-GOOD MOVE OR DISASTER?

Did anyone expect a different outcome given that the auto industry group of consultants that the administration sent to work on the GM (Government Motors) deal had never run any auto companies?

Their plan is to build "green" cars powered by THEIR PLAN IS TO BUILD "GREEN" CARS POWERED BY electricity that they do not want the electric companies to produce, nor are these cars that the vast majority of consumers want to buy; safety, cost and utility being the biggest reasons of why not.

As a result of the "great deal" worked out to "save" General Motors, there will be a total wipe out of present stockholders who saw hundreds of billions in stock losses on their stock which will now be "owned" by the US Government (who is that exactly?) and the UAW union and a little sliver owned by existing SUPER SECURED BOND holders who were threatened with various government intervention if they did not agree.

About $5-$8 billion of the bond holders were mostly regular folks who bought the bods for their "safety" as a secured instrument and for their yields so that they may retire, for instance.

Now thanks to government "help", they will be wiped out as secured creditors who had every right to get their full cash, and instead will receive some sliver of common stock ownership in the new mostly Chinese, GM.

There will also be no GM Europe, the other place that GM should be selling cars if it is to be a global player, but that will be sold.

The unsecured UAW members will get more than they will!

There is a revised wage deal for the UAW members, but it did nothing to reduce the wages and costs to GM, so what is the point of all this monkey business?

As to how effective will be the government "help", try to remember the last $80 billion that it spent to rebuild New Orleans!

Now they are spending an even more enormous sum of unrestricted TAXPAYER funds while shafting secured holders, the little people who held GM bonds.

I would not want to buy the new stock of GM, if for no other reason than to demonstrate its illegitimacy as a ethical corporation. But then again it is run by the ethical folks in Washington.

UPDATE:
Magna 'agrees to buy GM Europe'
Magna must still get German government clearance for the deal

Canadian-Austrian car parts maker Magna International has reached an agreement in principle to rescue GM Europe, owner of Opel and Vauxhall, reports say.

The agreement was reached with General Motors, but will need to be approved by the German government, which will be providing funding to the new owner.

The other potential bidder, Fiat, said it would not be attending Friday's talks with the German government.

GM in the US is expected to declare Chapter 11 bankruptcy on Monday.

There is due to be a meeting in Berlin at 1800 local time (1600 GMT) attended by Chancellor Angela Merkel, the ministers involved and officials from the German states that contain GM plants to discuss whether to approve the deal.

Extra funding

Magna and GM will not be attending the meeting at first, although they may be invited later.

There have been suggestions in the German media that it may be cheaper for the German government to allow GM Europe to declare itself insolvent than to allow it to be bought.

On Thursday, the German government criticised the US Treasury and General Motors after being told at the last minute that GM Europe would need another 300m euros ($415m; £260m) in short-term funding.

It has already offered almost 1.4bn euros in loan guarantees.

Magna and GM will also have to make sure that GM Europe is restructured in a way that will protect the carmaker if, as expected, its parent company in the US declares itself bankrupt which it is expected to file on Monday.

General Motors Corp. fell below $1, the minimum price normally needed to trade on the New York Stock Exchange, as the automaker headed for bankruptcy.

The world’s largest automaker until its 77-year reign ended in 2008 plans to file for Chapter 11 protection on June 1 and sell most of its assets to a new company, according to people familiar with the matter.

GREAT GROWTH FOR ALL CAR MANUFACTURERS OTHER THAN GM AND CHRYSLER-EMPTY DEALER SHOWROOMS TO FILL UP WITH COMPETING MODELS FOR REVENGE!

Thanks to the great management expertise of the administration forcing itself on both GM and CHRYSLER, and running the companies by firing CEO's and announcing massive closures of dealerships....there will be great news for the other car manufacturers.

The good news is that the other car manufacturers should immediately jump in and offer franchises at the cost of $1 for instance to the dealerships forced to close due to the unilateral crazy actions by GM and CHRYSLER!

Then as a totally justified act of revenge, those new re-branded dealerships should advertise heavily to sell the new cars under those new brands to drive the GM and CHRYSLER brands into the toilet for their dictatorial tactics.

Advertising should be something like this: "HELP US DRIVE OUT GM, HELP US DRIVE OUT OF BUSINESS CHRYSLER" THEY TRIED TO WIPE US OUT, NOW LETS WIPE THEM OUT!.

That sounds fair. It is almost necessary, so that the new dealerships can then advertise their new brands, and sell more of the new brands as dealers of cars much more in demand.

Many of the dealerships who got their closure notices were established in large and small communities and were family businesses for 40, 60 and 60 years or more! They were fixtures in the community.

In addition to taking revenge on GM and CHRYSLER, they should also put up the picture of the new GM and CHRYSLER "REAL" CEO, Mr. Obama as who is really responsible for their drop in business.

How is that going to save jobs, the closing of the dealerships by canceling their franchises?

We can hardly wait for the next business action of the new GOVERNMENT MOTORS management.

CUTTING 2,600 GM DEALERS IS SUPPOSED TO HELP THE COMPANY-YEAH, RIGHT, HAVING LESS SALES OUTLETS ALWAYS HELPS TO SELL MORE! GM EXEC's DUMP THEIR STOCK

GM is hoping that its various strategic plans will either keep them out of bankruptcy though being able to obtain cost reductions, wage concessions, etc., or if not they will file sometime soon.

It could not be soon enough, please stop the torture. Everyone is waiting; customers who want to buy cars, dealers who want to know if they are cut, suppliers, creditors and we taxpayers funding them.

The most ridiculous plans are to close 2,600 of their dealers, out of their total of 6,246 dealers in their network among the various brands.

As we can recall, GM was the biggest auto manufacturer for a reason, it had more dealers than others, it could have a representative sales office just about anyplace you were located. You could walk into a showroom or have your car serviced close to your home.

Their thinking was that if they had less dealers, the individual dealerships would be more profitable. I don't get it? Is that not why we can now play them off against each other to get the best deal on a new car?

So now GM is adopting the GM (Government Motors) mentality-"you get what we got, if you do not want it where else are you going to go!" Nice business model.

Less competition, and therefore less choices.

They actually think this will work.

I am not a stock picker, but shrinking to profitabilty has always been a policy that rarely works.

Six General Motors executives disclosed Monday they sold almost $315,000 in stock and liquidated their remaining direct holdings in the struggling automaker.

RELATED LINKS

Current DateTime: 06:00:21 12 May 2009
LinksList Documentid: 30696442

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In filings with U.S. securities regulators, the GM insiders led by former GM Vice Chairman and product chief Bob Lutz detailed stock sales on their behalf Friday and Monday during a trading window for such transactions.

Lutz, who is now an adviser to the automaker, sold $130,989 worth of GM stock at the closing price of $1.61 Friday.

That sale of the 81,360 shares cleared out all of Lutz's direct holdings of GM stock, according to his filing with the Securities and Exchange Commission.

The five other executives, including Lutz's successor, Thomas Stephens, GM North America President Troy Clarke, Chief Information Officer Ralph Szygenda and manufacturing chief Gary Cowger and head of European operations Carl-Peter Forster also sold all of their GM stock holdings, according to the filings.

GM [GM 1.19 -0.25 (-17.36%) ] is headed for either a bankruptcy filing or an out-of-court restructuring that would wipe out current stockholders by flooding the market with new shares to pay off creditors.

The automaker's stock could be either worthless in a bankruptcy or worth less than 2 cents per share if it proceeds with its plans to issue shares to creditors led by the U.S. Treasury, the company has said.

Insider trading restrictions have prevented GM's senior executives from selling stock holdings for most of this year as the automaker has scrambled to restructure under the oversight of the Obama administration's autos task force.

But after the filing of its quarterly report with the SEC last week, GM executive officers and directors were notified a "trading window" had opened Friday, spokeswoman Julie Gibson said.

The trading window remained open Monday and could be open for Tuesday as well, she added.

GM, PLEASE FILE FOR REORGANIZATION AND STOP BURNING THROUGH OUR MONEY, PLEASE! NOTE TO GOVERNMENT, BUY SOME OTHER STOCK INSTEAD, NOT GM STOCK FOR ME!

GENERAL MOTORS is burning through OUR money, it announced today. Nice going GM, it burned through $10 BILLION or so, out of the $15 BILLION it received.

Now over the years I have done my part in helping GM by buying their cars, practically resisting buying "foreign" cars, even those made in the USA by the "foreign" companies employing thousands of Americans right here in the good ole USA. I wanted to help American companies.

Let's see if I can remember my list of GM cars over the years ( I have also bought my share of other American cars too, including Fords, Lincolns, Chryslers, Mercurys and Dodge): 6 Cadillacs of every type (one of them a stretch limo bought from the dealer who used it as a model car with 100 miles on it even though it was 3 years old at the time), 5 Pontiacs, 1 Chevy G20 Conversion Van with custom captain chairs ( when those were the rage) and even 1 Chevy Vega purchased for my mom (remember those cars?). There may have been another one somewhere but I just can't remember it.

So I have done my part, what else could I do personally for GM.

I stopped buying GM cars after the local dealership shafted me on servicing my Van, and I never went back for any GM automobile. Writing a complaint letter to the factory, I received no reply, so I was finished with GM. I thought that after all that money I spent, it would be nice if they sent me a $10 off coupon for an oil change for instance, but no, GM could care less that I bought no less than 13 cars from them; I deserved nothing for that loyalty.

So I became loyal no more.

Could this be the story of other GM customers? Probably not, I'm sure that nobody else ever had my similar experience with GM, that's why they are now so popular, NOT!

Now GM is getting the shaft from the government, from its customers and from the stock market, that it deserves. Like every business, it has management to blame, and nobody else, and it needs to sink or swim within the marketplace, not being propped up by my TAX money.

So why is it that I/WE have to bail out this company, with our TAX money? Why?

There are over 1,500 different car models to choose, most of which are not being made with my tax money.

PLEASE GM, STOP BURNING THOUGH MY MONEY AND FILE FOR THE REORGANIZATION so that the pain of paying $75/hour for your employee costs is not MY PROBLEM!

ALSO, PLEASE DO NOT LET THE GOVERNMENT START MAKING GM CARS (GOVERNMENT MOTORS)..PLEASE SAVE US.

General Motors Corp said it burned through $10.2 billion in the first quarter as it failed to cut costs fast enough to offset a sharp decline in global sales and was kept afloat by a federal bailout.

Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and tried to run down costly inventories on dealer lots in the United States and Europe.

Chief Financial Officer Ray Young said there was evidence consumers were scared away from GM cars and trucks because of concern the automaker was headed for bankruptcy.

"You could not offset the revenue implosion that we experienced here," Young told reporters following release of the quarterly results on Thursday.

He said GM still hoped to complete a debt restructuring out of court but was ready for bankruptcy if that proved necessary. He said GM was pressing ahead with contingency plans for a quick bankruptcy process, drawing on the experience of Chrysler LLC, which filed for bankruptcy last week.

"We are very very cognizant of this issue of revenue perishability and how consumers react to the threat of bankruptcy," Young said.

"So that's from our perspective the importance of avoiding bankruptcy at all costs. But if we have to go through a bankruptcy, the importance of doing it quickly -- get in and out very very quickly -- in order to alleviate the concerns of consumers," he said.

Young said GM would make a decision at the end of this month on whether an offer to extinguish $24 billion in bond debt in exchange for new shares had garnered enough support for the company to avoid a bankruptcy filing.

GM lost market share in the quarter as its global sales fell 28 percent, compared with an industry wide decline of 21 percent.

DEADLINE LOOMS

GM posted a first-quarter net loss of $6 billion, compared with a loss of $3.3 billion a year earlier.

Excluding $73 million of one-time net charges, it lost $9.66 per share. That was within the wide range of analysts' expectations.

GM is facing a government-imposed June 1 deadline to reach agreements to overhaul its operations and cut more than $40 billion in debt. To date, the company has taken $15.4 billion in emergency loans from the U.S. Treasury.

The first quarter was also marked by GM's failure to win federal backing for a turnaround plan that the U.S. autos task force concluded was too slow-moving to succeed.

The Obama administration ousted Rick Wagoner as GM chief executive at the end of the quarter.

Creditors have been looking beyond GM's results, focusing instead on whether it succeeds in winning debt concessions from its bondholders and the United Auto Workers union.

The automaker said on Thursday that it had not yet reached the deal it needs with the UAW.

It also said the Treasury had not yet agreed to convert half of the loans it has extended to GM into stock in a restructured company, as the automaker has proposed.

Young said GM was back in talks with union representatives this week and was ready to negotiate around the clock to reach a settlement.

The UAW faces pressure to accept GM stock in exchange for about $10 billion the union is owed for a trust fund for retiree health care. That would give the union a 39 percent stake in the restructured company. That's nice, they get to own the company stock now as probably its biggest stockholder. What will those wage negotiation be like now?

Under the restructuring plan GM detailed last month, the government would own a majority stake, effectively nationalizing the 100-year-old Detroit-based automaker.

Hello, big brother, I do not want to buy GM stock, why are you buying it for me, NO, NO!

GM shares rose to $1.72 in pre-market trading, up from a close at $1.66 on Wednesday.

How much is the government buying MY stock for?

Please buy some Microsoft, or Apple or maybe Toyota instead?

GM FEDERAL HELPERS ( aka AL CAPONE) GIVE CREDITORS A DEAL THEY CAN NOT REFUSE-JUST LIKE IN THE MOVIE!

GM took the FEDERAL help, to "help" it weather the time of losses by getting time to propose a financial restructuring. The FEDS have provided it with $27 BILLION so far of helpful loans to continue operations. The real house of cards is in the making.

GM was supposed to present a plan for its own recovery as a condition of receiving more aid; it was insufficient.

Now the FEDS have taken a page out of the screenplay from the GODFATHER movie, and given the creditors of GM "a deal that they can not refuse."

The Feds have proposed that holders of $27 billion in existing bonds, "exchange" them for a 10% equity stake in the new GM business, while the FEDERAL $27 billion in loans be exchanged for a 50% equity stake. Nice deal, if you have a gun to your head.

The UAW would "give up"claims" calculated at $20 billion, and would receive a 39% stake in the new business.

Finally, the existing stockholders, those people who actually provided all the capital over the last 80 years or so, would receive a 1% equity stake in the new business.

So this is the price for the government help-push out all the free market loans aside, push out the stockholders and elbow-in the government and the unions for a 89% ownership interest.

GM's CFO said that if the various debt/bond holders do not accept this plan, he would ask a bankruptcy court to cram down this plan in any bankruptcy reorganization.

As a side note, many of the bonds and debt held is held by banks that are themselves part of the FED's "helping hand" program, so please explain to us how exactly does this work?

At a news conference in the Detroit suburb of Warren, several bondholders from as far away as Colorado said holding stock in a newly restructured GM doesn't compare to the bond interest payments they rely on to supplement their retirement or pay property taxes or medical bills. They also said they can't afford to lose the principal they lent to the company.

"We're concerned that small bondholders like ourselves have been left out of the dialogue," said Dennis Buckholtz, of Warren. "That doesn't seem fair."

GM is offering bondholders 225 shares of stock for every $1,000 in bonds, but analysts say those shares will be diluted when the government and the United Auto Workers get new equity in the company.

GM's plan would give the UAW a 39 percent stake in GM if the union takes about $10 billion in payments to retiree health care trust in stock. The U.S. government would get a 50 percent equity stake in exchange for about $10 billion in loan forgiveness.

That's expected to leave the bondholders with just pennies on the dollar for their 10 percent equity stake. Common shareholders would end up with about 1 percent of GM.

GM has until May 26 to convert 90 percent of its $27.5 billion in outstanding unsecured notes so it can receive billions more in federal aid and avoid filing for bankruptcy protection.

The taxpayers give money to GM, then GM converts that money into worthless stock and the banks keep the money they got...say again?

Word of advice, don't take the money when it's offered, when someone says, " I'm from the government, and I am here to help."

Now let's look at the heavy hand of government at Chrysler which had hedge fund managers accused of ripping off the taxpayer. What a joke, managers who wanted the best return for their SECURED positions were arm twisted by the Al Capone's of government to accept a crappy deal for their investors, just to help the free spenders in our government.

DUMB INVESTING CONTINUES UNABATED-"WE INVESTED" ANOTHER $2 BILLON INTO GM TODAY

The dinosaur, the formerly largest of the car makers worldwide, GM was on life support, with $15 billion or so "invested" already, an investment NOBODY wanted but those in congress who were not investing their own money into the company, but rather deciding to invest our money.

Nobody was stupid enough to "invest" billions into a failed business model, except our elected representatives. I am sorry to have to say it even my Congressman supported that issue, however I did not vote for the guy, so don't blame ME.

Surprise, they ran out of money already, needed more, and the government gladly gave it, again.

Also, the government has committed to give GM billions more to develop "green technology" cars that nobody will be able to afford to buy on credit that does not exist for the majority of Americans due to diminished credit scores.

The electric cars are planned for some time in the future at a minimum cost of $40,000 to $50,000, out of reach of the majority of working people since the average income of the majority of Americans is below that level.

Again, the government is forcing GM to make cars that drivers do not want, cars that have not yet been invented and at prices that they can not afford.- Taxpayers invested another $2 billion in General Motors Corp. this week as the struggling auto giant continued efforts to restructure and avoid bankruptcy court.

GM	1.70	+0.08

The Treasury Department said Friday it lent the additional money to GM on Wednesday to provide working capital. The loan pushes the total amount of GM's government aid to $15.4 billion after the company said it would need more money in the second quarter to stay afloat.

A government report revealed earlier this week that the Treasury was prepared to provide GM with up to $5 billion more in federal loans and Chrysler with up to $500 million more in bailout support as they race against deadlines to restructure.

GM has until June 1 to complete restructuring plans that satisfy the government's auto task force, while Chrysler has until Thursday to finish restructuring and ink an alliance with Italy's Fiat Group SpA.

GM, in a restructuring plan filed with the government in February, had said it would need $2 billion more in federal loans in March and another $2.6 billion in April. But last month Chief Financial Officer Ray Young said the company's expense cuts helped to hold off the need for the March installment.

GM CEO Fritz Henderson said last week that the automaker would need $4.6 billion during the second quarter ( can I add myself to the list with a more reasonable request for $100 million, that will be sufficient for my needs till the year end 2020 for instance). This is a much more reasonable total I I will also throw into the deal the fact that I too will develop a new car, maybe powered by steam for instance).

In addition to the $15.4 billion, the automaker's financial arm, GMAC Financial Services, has received $5 billion in government aid, plus GM received a $1 billion loan to buy more equity in GMAC. This is a new one, getting a loan to buy equity.

GM NEEDS TO FILE A CHAPTER 11 REORGANIZATION ASAP,AND IT WILL SOON ANYWAY, AND GET THIS MISERY OVER WITH FOR THE TAXPAYERS, SINCE WE DO NOT WANT TO "INVEST" IN THE gm STOCK ANYMORE....PLEASE SOMEONE TELL THEM IN WASHINGTON, THAT WE WOULD RATHER NOT HAVE THEM HANDLE OUR "INVESTING" FOR US.

So far our "investments" made on our behalf have not been doing so well...let's see "we" now invested into AIG, the failed insurance company; GM, the failed auto company, CHRYSLER, the failed other auto company, and lots of other failed, failing or about to fail in the future banks, brokerages, and various businesses.

Every investment was into a DUD, that should have failed on its own or been able to reorganize using our bankruptcy process for an orderly business re-organization.

If we did not have to invest into these duds, we would still have $2 trillion in cash to be invested into something that was not a dud, for instance.

Don't you need an investment adviser or broker license to made investment decisions for "us"? None of these guys have one, oh that explains it then.

We are getting advice as to what to invest in by rookies.....that's the problem why we are only investing into the worst possible stocks!

BUSINESS HATES SOCIALIST POLICIES AND MICRO-MANAGEMENT BY GOVERMENT SLACKERS

First there was the fear spread by our President advising that there is a CRISIS, in just about every aspect of our economy.

(Photo of government mandated future transportation.)

In fact there was a speech I no longer remember in which I believe that he used that word more than 20 times. Everything was a CRISIS, and he had the answer to that CRISIS, to every matter defined as a CRISIS.

Now keep in mind that everything in our economy was defined as a CRISIS, no matter what it was; bank capital shortages, bad loans, predatory lenders, high oil prices, low oil prices, no inflation, high inflation, high government deficit spending, the falling dollar, growing unemployment, GM rescue, insurance companies writing new policies or paying old ones, new organizing rules for unions, executive pay, Mexico free trade...on and on and on.

Everything was a CRISIS; nice scary talk by our fearless leader.

But, have no fear fellow Americans, there was a one size fit all solution to every conceivable CRISIS. That solution was to spend, spend and spend your children s and grandchildren's future income.

The solution was needed and immediately necessary, it had to be voted on right away, without reading, without further comment-TRUST ME, was the mantra of our fearless leader.

And so, as we all remember, the CONGRESS voted on a massive bill which nobody read.

It is expected that its present total impact will be a minimum of $12. 5 TRILLION over its life. That by the way is the value of the entire output of all the goods and serviced of the USA, in a year.

That is approximately equal to almost the output of all the G20, members ( for instance Russia's total output is $1.5 Trillion).

However, there was catch, a catch that nobody knew about because nobody read the bill. In fact I tried to see it in final form and as much as I tried all I got was certain versions on the Internet, making it difficult to decide which was the final bill.

The final bill, the one that Congress voted for, contained a few surprises that in effect were that the government would now run the businesses that took any money from the government.

Now keep in mind, that our new President, (as described by Joe Scarborough on his morning TV show today) has never had a job at a business, has never had to run a business and deal with the myriad of government meddlers ranging from local zoning to licensing, to all the other matters of daily managing of a business. he never had a paycheck from a real business, never.

Now he was going to tell the most sophisticated financial institution in the world how to run their business. He was going to tell them how to wind down their derivatives, and he fired the CEO of GM on the air, by saying so. The board of directors did not fire him, our President did!

Then, the government advised that GM would be building cars for which technology was not yet invented for, while stopping the realistic expansion of the availability of electricity, and outright stating that electric rates would rise dramatically for all users due to their mandates and initiatives.


The government (make that Barney Frank and Chris Dodd) also proposed what salaries, what bonuses would be paid to recipients of government money, and special taxes of 90% were proposed on bonuses.

Now something is starting to happen. The recipients of the government money, now read the bill-they read the conditions of doing business with the devil , sorry I meant the government.

The recipients want to give back the loans, or pay back the loans early and are being arm twisted to not pay the loans back!

In a free market, business attracts key employees by offering attractive pay, or bonuses or other perks to get the best people. In a new government run business model, such incentives do not exist.

For instance under the government model, a successful business that offers a $1 salary to an employee and unlimited bonus tied to financial performance, is penalized as he will be taxed at crazy confiscatory rates on his bonus.

For instance, the new employee making $1 billion in profits for the employer, and being rewarded with a bonus of 5% of the profit or $50 million, would have to pay 90% in taxes, under the government program of being employed by a recipient of government largess.

On the other hand, the government does not impose such a tax if the employee was paid $50 million in a guaranteed salary, and $1 in bonus!

So working for a government, at a company which has received government funds can be a better deal for a slacker, since his salary is guaranteed. But all the highly motivated employees will work elsewhere.

The government is using a Socialist type of compensation-equal pay for all slackers, as usual, and that is starting to become clear to businesses who want to be free of the government restrictions on how to run a business.

The banks, the companies taking government money are learning the hard way to Not do business with the government as they will be burdened by the usual slow moving and non-motivational policies of a bureaucracy, and will make that business not competitive with others.

As in the case of GM, we saw a failure of the company to exist on its own and causing an even greater and more expense bailout than a pure bankruptcy reorganization would have provided, not to mention that it is now a government run zombie company.

Socialism and free enterprise just do not mix, and the sooner our government gets it, the sooner will we see an economic recovery in the USA.

COMPETING WITH $.69 HOURLY WAGES IN INDIA AND $.74 CENT HOURLY WAGES IN CHINA

Our fearless leader, President Obama has recently said in a speech, that ..." we will emerge from ...this...stronger than ever."

He was saying that due to his STIMULUS package, and the fact that the US Economy will "turn around", it will be stronger than ever.

Too bad that he did not take ECONOMICS 101; he would have known better than to make such a contradictory statement.

Let us do a short analysis of the "prediction" that was made.

The President wants to raise taxes on employers generally;

on the bad oil companies he wants their profits;

on multinational corporations headquartered in the USA he wants to punish them;

raise the FICA tax to infinity; force health insurance coverage and expenses on everybody;

wants soldiers to pay for their own medical treatment; wants to triple the cost of electricity;

wants to bail out only the losers in industry; wants to saddle the employers in costly industries to keep operating with loans from taxpayers;

wants to limit income and levy 90% taxes on excess earnings; wants every business to be unionized;

wants illegal aliens not to be rounded up; wants us all to buy American more costly goods only;

stopped free trade with Mexico in violation of the Treaty;

wants to force GM to make cars that nobody wants to buy; wants to use clean coal (a techology that has not yet been invented;

Need we say more?

How are any of these initiatives going to make the USA stonger?

The workers in the USA, are competing with wages of $.69 cents an hour in INDIA, and $.74 cents an hour in China. How are they going to emerge stronger, exactly?

To be perfectly honest with you, I and all of us, would rather pay $.99 cents for a comb from China or India, than the same comb being manufactured in the USA, by a UNION organized company, with wages and benefits at $75 an hour, and a $10 price for the comb.

So let's get real. We want prices to be as low as possible, that will only happen through global sourcing, which is a natural progression.

TATA MOTORS, an Indian auto manufacturer, just announced that their new car will sell for $1,995 at the dealer.

In the USA, due to the endless mandates, rules, regulations and needless litigation, $1,995 is the price for the airbags in a USA built car.

Again, I would rather buy the INDIAN manufactured car at $1,995, than just an airbag to inflate in the USA for the same amount.

We need to stop focusing on the wage rates, but rather help our businesses compete in the global marketplace on other products.

But instead, our government is consistently suing our most important industies, exporters, etc....they wanted to collapse Microsoft, Exxon, AT & T, the nuclear industry, they want to stop oil exploration and stop coal production.

The government wants to protect industries which operate in unsustainable cost structures, instead opf fostering devevopment of new indusrties that the entrepreneors are so cable of in the USA.

What would happen if the USA levied a simple 10% tax on businesses?

What if they gave out tax credits for employers who hire new employees?

What is a new business paid no taxes for the first 5 years?

Instead, the government is doing everything possible to force businesses to move its production overseas, and then it complains that the production moved overseas.

Let's see, if my worker cost me $.69 cents an hour, or $75 dollars an hour, where will I hire new employees?

Only the government would argue with that....so if we do not wake up soon, we will be paying those wages here, because people will have few options for employment. Learn Chinese...oh wait, you do not have to since Chinese schools are teching English so the next gebneration of Chinese, will be English speaking.

In the next decade, the largest English speaking country in the world will be CHINA.

Can you guess which will be the largest Spanish speaking country in 2050?

GM and FORD Opening China Plants, Closing US Plants

We need billions, please give us billions, is the cry from General Motors and the US auto industry.

Ok, that worked for GM it may get $25 billion? or as they say, if they do not get the money to stay afloat another few months to pay the salaries of the overpaid executives there, it may cost the government $100 billion in a bankruptcy.....let them fail, already and stop this nonsense.

What the Washington crowd does not understand or even ask, is that GM has auto manufacturing facilities all over, including.....China, where it is probably the largest builder of cars.

GM has invested $3 billion into a new plant there, Ford has invested similarly into two plants.

So while the US plants are closing, and using up wads of money to stay afloat only to delay the inevitable, the China plants are growing.

Will the new funds also go to support the China operations ?

There are no limitations on the use in the company's operations of the billions given them as a loan....

There was a great line in the movie FORREST GUMP....."stupid is as stupid does."

Our congress spending our money...maybe there should be a rule that they have to put in their money into the loan too ?

I wonder if that would result in a different result????