General Motors To Be Sold to Chinese Government

[Bill Mattocks]

http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54H6AN20090519

GM bankruptcy plan eyes quick sale to government
Tue May 19, 2009 4:59pm EDT
By Chelsea Emery and Tom Hals

NEW YORK (Reuters) - If General Motors Corp files for bankruptcy, as widely expected, its healthy assets will be quickly sold to a new company owned by the U.S. government, a source familiar with the situation said on Tuesday.

The source, who was not cleared to speak with the media and would not be identified, said the U.S. government would pay for the assets by assuming the automaker's $6 billion of secured debt and forgiving the bulk of the $15.4 billion of emergency loans that the U.S. Treasury has provided to GM.

Note: The US government is owned by the Chinese Government, so essentially it is the Chinese government buying General Motors.

 

[Carol]

And I got crap (not from you, Bill) for calling it a bailout bill.

 

[howard]

Note: The US government is owned by the Chinese Government...

Really?

Could you please give us the details?

 

[Bill Mattocks]

Really?

Could you please give us the details?

Happy to:

http://www.treas.gov/tic/mfh.txt

 

[Bob Hubbard]

Well, the Japanese own almost as much.

 

[Bill Mattocks]

Well, the Japanese own almost as much.

I suppose you're familiar with the concept of majority ownership?

I've been trying to learn Chinese. I, for one, welcome our new alien overlords.

 

[Carol]

Ugh. I don't. I'm practically losing my job to the Chinese and some of their dirty business practices.

 

[Bob Hubbard]

Up to a few months ago, it was the Japanese in the lead. Could change in a few more months.

 

[howard]

Happy to:

http://www.treas.gov/tic/mfh.txt

I'm not following your logic here.

The fact that the Chinese government is one of the largest holders of US government debt has exactly what to do with the ownership of GM?

What do the Chinese get if they hold US Treasury debt to maturity? US dollars, from Treasury. What do they get if they decide to sell the debt in the secondary market prior to its maturity? US dollars, from the buyer of the bonds.

What role does the Chinese government, or any other holder of US Treasury debt, have in the management of GM or any of the other private-sector companies that have received bailout funds? None.

The only thing any holder of US debt "owns" is a claim on the US Treasury for the face value of the debt at maturity. If things get bad (in other words, if investors lose faith in the value of US Treasury debt), the secondary market value of the debt will fall, and its yield will rise. But the government will be able to honor the claims of its bondholders when the bonds mature as long as it has the printing presses to print money (or, to be more accurate, the Fedwire system to transfer US dollars to the accounts of the bondholders).

The only way for the Chinese government to own a share of GM is to buy its equity. Investing in US government debt doesn't get them there.

 

[CoryKS]

The only way for the Chinese government to own a share of GM is to buy its equity. Investing in US government debt doesn't get them there.

This. Owning a majority of someone's debt doesn't get you a chair on the Board.

 

[Xue Sheng]

I suppose you're familiar with the concept of majority ownership?

Does not mean controlling interest.

They do not own enough to own anything. They would need greater than 50% and they don't have it. To make it simple look at how much do they own compared to everyone else

IMO, this whole post "General Motors To Be Sold to Chinese Government" is not only wrong but sensationalism.

Anyway China only wants US$$$$ not the country although I am sure they would love to own GM to gain more US$$$$$ they are not really big on buying things they think will loose them money.

Historically, as far as land control goes, China has never been interested in anything that was not at one time, in their opinion, part of China and that goes for the whole 6000 or so years it has been around

I've been trying to learn Chinese. I, for one, welcome our new alien overlords.

Learn Chinese if you want but they are far from our "alien" Overlords.

 

[Makalakumu]

This thread should be about the nationalization of the largest automaker in the world. China has very little to do with this, unless the US government has a fire sale.

 

[Nolerama]

I think nationalizing GM is a good thing for those directly affected by GM's possible closure.

Forget political philosophy. Forget your beliefs on socialism, or capitalism...

Look at the families (dare I say, the city of Detroit?) that would be directly influenced by a sudden closure. What would that do? Why not save them now?

 

[howard]

Does not mean controlling interest.

They do not own enough to own anything. They would need greater than 50% and they don't have it. To make it simple look at how much do they own compared to everyone else

To clarify:

Even if the Chinese government held more than 50% of all outstanding US government debt, they would not have one iota of control over GM or any other recipient of bailout funds.

In order to have a measure of control over any company, you have to purchase its equity, not its debt. Even the holders of GM's private-sector debt generally have no voice in managing company. Their claims are typically general claims on the future cash flows of GM, specifically, claims on GM's ability to service its debt. If GM defaults on its debt, the creditors have specific legal rights that are set forth in the debenture agreement underlying the debt. Normally,their remedy in the event of default is to pursue relief in the bankruptcy courts.

I agree with another poster, the initial post just seems sensationalist. It's certainly detached from reality.

 

[Carol]

Why are we giving GM billions upon billions of dollars when they are going to outsource American jobs anyway?

Concern rises over GM's plan to import Chinese cars

UAW contests GM outsourcing


GM leaves U.S. workers by the wayside as it accelerates operations in China

Even taxpayer funded GM will be sending more jobs overseas

If the government is going to spend billions on GM to save the families depending on its plants then GM should keep those jobs here and the government should receive billions of dollars worth of vehicles in return...instead of bailing out the executive's golden parachute for taking these jobs abroad.

Or perhaps we should just throw in the towel now. Despite how manufacturing jobs are the economic trigger for so many supporting occupations, manufacturing in the United States is regrettably becoming a thing of the past.

 

[CuongNhuka]

I suppose you're familiar with the concept of majority ownership?

I've been trying to learn Chinese. I, for one, welcome our new alien overlords.

I beleive Denmark actually owns the most of our debt. It's one of the countrys in North Europe, cann't remember for sure which one though.

 

[Xue Sheng]

I beleive Denmark actually owns the most of our debt. It's one of the countrys in North Europe, cann't remember for sure which one though.

Denmark is a country

 

[Bill Mattocks]

I beleive Denmark actually owns the most of our debt. It's one of the countrys in North Europe, cann't remember for sure which one though.

If you look at the link I provided, it is from the US Treasury and it says China owns most of our treasury bills (debt).

This was not always so - look at the timeline. Japan owned the most for quite some time, but as our problems worsened, China stepped in and bought big time.

http://www.treas.gov/tic/mfh.txt

 

[CuongNhuka]

If you look at the link I provided, it is from the US Treasury and it says China owns most of our treasury bills (debt).

This was not always so - look at the timeline. Japan owned the most for quite some time, but as our problems worsened, China stepped in and bought big time.

http://www.treas.gov/tic/mfh.txt

I wasn't talking about just National Debt. If you include private debt, and foreign ownership of US based companys it becomes Denmark. I cann't recall my source, but I'll look.

 

[Bill Mattocks]

I wasn't talking about just National Debt. If you include private debt, and foreign ownership of US based companys it becomes Denmark. I cann't recall my source, but I'll look.

http://en.wikipedia.org/wiki/United_States_public_debt

If you look at direct foreign ownership of US companies, China is often not even on the map.

http://www.treas.gov/offices/international-affairs/cfius/docs/CFIUS-Annual-Rpt-2008.pdf

You may be thinking of Sovereign Wealth Funds:

http://en.wikipedia.org/wiki/Sovereign_wealth_fund

The largest SWFs with assets over $100 billion are designated the Super Seven funds: Abu Dhabi Investment Authority (ADIA) ($875 billion); The Government Pension Fund of Norway ($350 billion); Government of Singapore Investment Corporation ($330 billion); Kuwait Investment Authority ($250 billion); China Investment Corporation ($200 billion); Singapore's Temasek Holdings ($159.2 billion); and the Stabilisation Fund of the Russian Federation ($158 billion).

If you look at the CIC, it becomes more clear.

http://en.wikipedia.org/wiki/China_Investment_Corporation

http://www.eeo.com.cn/ens/finance_investment/2009/03/06/131432.shtml

[FONT=宋体]China's sovereign wealth fund, China Investment Corporation (CIC), has distanced itself from the toxic financial assets abroad. Instead, it is now exploring new investment fields, such as the real estate and resource industries.[/FONT]
[FONT=宋体]CIC recently published a recruitment advertisement on its website looking for professionals in real estate and other alternative investments, such as private equity.[/FONT]