This new GM, this small GM, the one that doesn't care about share but cares about sales and quality and maintenance, may actually be what we needed about 20 years ago.
We have been worried about General Motors (OTC: GMGMQ) (Cramer's Take) for the last 20 years -- too big, too bloated, worrisome obligations. We still have the last one -- there's a lot of obligation still, much of it borne by us not by "them" -- but the one thing this reorganization will take off the table forever is, "How bad will the inevitable collapse of GM be for the country?" I say that because the one thing that we know after it emerges from bankruptcy Friday is that GM, at last, NO LONGER MATTERS.
It's just a jobs and welfare program that makes cars and won't ruin the profitability of the industry anymore with cheap financing because it wants to "regain" share from Toyota (NYSE: TM) (Cramer's Take) or Ford (NYSE: F) (Cramer's Take) or anyone else.
Now, here's another point. President Obama's not been a great friend of business or job formation lately, and one reason is that he has injected himself into every single business discussion we can have.
This would be a great moment for the president to say, "I told you we didn't want to run this car company, and now we are going to have good representation on the board of directors so that the taxpayer recoups as much as possible, but we are done helping GM."
That would be terrific because this president has to get himself off the business pages unless he is creating jobs.
Everything else right now is simply a nonstarter.
I am amazed that this GM restructuring could happen so fast. It is overlooked good news, especially if this marks the beginning of the end of the government's involvement in this pathetic industry.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
7-10-2009 @ 10:29AM
Ben Ross said...
I am amazed how Jim can be such an idiot. He does work for NBC.
7-10-2009 @ 12:06PM
beachpaul said...
Yeah, it's amazing what happens when somone in the government actually does what they should be doing: telling big business and the people who work in them that this is going to be the way it is because the way they were doing it sucked. Someone, somewhere, needed to step up and look out for the greater good. It's called regulate. Unfettered sounds great, but, as we have seen, morphs into cannibalism. Greed, uncontrolled, is not good. It is deadly.
7-10-2009 @ 2:02PM
Iridium said...
The GM that emerged from bankruptcy is not General Motors. That corporation is still in bankrupcy and will be there for quite some time. That is why GM would not sell the Pontiac name or any factory to keep the brand alive. The real GM that is still in bankruptcy needs everything they can get thier hands on to liquidate in order to service the creditors that need to get paid as per bankruptcy rules and regulations.
To say GM drove out of bankruptcy is a complete farce. Every single bankrupcy regulation was thrown out the window to create a new corporation free of debt, yet still retaining assets that should have been liquidated to pay creditors, that holds the history and name of the still bankrupt corporation.
Obama essentially used over $80 billion of taxpayer money to create a government run car company. The US bought the rights to use the GM name in bankrupcy court. Obama can say that the US government has no intentions of running the company but the USG and UAW get to appoint the controlling interest on the board. The Canadian government and its union gets the minority stake.
Then you have the shareholders who were completely screwed. All current GM stock stays with the real GM that is still in bankruptcy and the shareholders will get nothing. Right now there is no common stock for the new GM. In a few years the US government will auction off its stake in a GM IPO in order to raise billions to pay for universal healthcare. That is the reason why this was done. I don't know who does the math for Obama but the US government will never get a positive return on its investment.
No American should buy a new GM car. You will just be supporting a government run agenda to put every American under government control. The real GM is gone, on its way to being dead and buried in the real bankrupctcy. To buy a GM car in the future because of some heartfelt love for the brand is simply misguided. If you can't see the real story then I feel sorry for you.
7-10-2009 @ 5:19PM
RON said...
i agree with one thing carmer said. changes should have been made 20 years ago. i worked 40 years in the auto industry, and i said 20 years ago the status qou was unsustainable. kind of reminds me of social security.
7-11-2009 @ 12:22AM
Beltway Greg said...
Back on 6-29 I predicted the mother of all earnings beats for Apple. I'm thinking $1.50+ but I'll settle for $1.47.
7-11-2009 @ 3:46PM
Ken said...
You are right Iridium; it is easy to skate trhrough bankruptcy when you have an execuive branch and judicial branch conspiring to throw out the laws to meet their desired ends. Many, many Americans recognize that this is just a payoff by the democrats to the unions for their support of Bozo Barry in the elections. I will never buy another GM auto; I was going to buy a Cadillac CTS-V, but now it looks like a BMW for me.
Bite me UAW and democrats; I will vote with MY dollars.