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The Circle Is Complete: GM Reunites With GMAC

Tyler Durden's picture




 

When it comes to government bailout case studies, the past four years have plenty. One among them is the financial company jovially called Ally - a name which well-paid nomenclature consultants were convinced would inspire confidence and trust. And to an extent they were right - after all we are talking about a firm which several years ago had a far more unpleasant name: GMAC, short for General Motors Acceptance Corporation. It was GMAC which, as one of the various entities on the receiving end of involuntary taxpayer generosity in 2008/2009, received a $17.2 billion bailout. The reason for GMAC's Ally's collapse is that the firm was loaded up to the gills on various subprime and other NINJA auto-financing loans used to purchase cars made by that other spectacular collapse: General Motors, maker of such external combustion vehicles as the Chevy Volt. Over the past several months the Ally CEO, Michael Carpenter, decided to little by little start paying taxpayers back, having sold a Canadian unit to RBC in October for $4.1 billion, and its Mexican Insurance business to Ace Ltd for $865 million. Moments ago the firm just announced it would be selling its international auto-finance businesses, including its operations in Europe, LatAm and a 40% stake in its Chinese JV (a business it previously said it would not seek to divest), for a total of $4.2 billion. The buyer? Another previously bailed out company, and one which still counts the government as its biggest shareholder: General Motors. And so the vendor financing circle is now complete, with GM finally reuniting with its old captive finance units, or at least the international part of them, which were fully owned until GM sold 51% of it to Cerberus in 2006, after which everything went to hell.

From Bloomberg:

Acquiring some of Ally’s assets would help GM offer competitive loans in South America, where about 50 percent of car sales are financed, Jaime Ardila, president of that region for GM, said last month in an interview in Sao Paulo.

There... and every other place where GM is desperate to not only sell the car, but to provide the vendor financing as the locals just can't afford to buy that little piece of America they can't wait to call their own, if only until such time as the payments on said piece stop in 2 or 3 months. 

Another circle which is complete: that of peak credit stupidity, because while not having your own source of loans under the same roof at least provided for some operational prudence, now that GM can once again hand out loans like a drunken sailor to any Chinese or Latino American buyer that wishes to take a Chevy for a ride, and book the revenues immediately, even if the loan will be in default in several months, all bets are now off.

Sadly, as is now the norm, the US taxpayer is about to get reamed even more. Because while the $4.2 billion in receivables will be promptly repaid, what won't be, will be the tens of billions in soon to be delinquent and discharged loans that GMAC 2.0's balance sheet will be riddled with following more horrible decisions by management dead set on pushing sales regardless of the future hit to the balance sheet, and as a result, will soon lead to yet another bailout of Government Motors.

Finally, at least we now know what that $11 billion new revolver which the firm reported closing on just two weeks ago, and which provided for an extra $6 billion in dry powder, will be used for: GM will borrow at LIBOR + basis points, and use the proceeds to fund what will soon be a new international loan book in the tens of billions, which will be used with reckless abandon.

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Wed, 11/21/2012 - 19:29 | 3003524 Seasmoke
Seasmoke's picture

isnt this called LAUNDERING ????????

Wed, 11/21/2012 - 19:45 | 3003553 knukles
knukles's picture

Some things never change.

After all this, GM is now "officially" back to the same fuck up of an organization it always was , sans debt.

Ugly, lousy cars with a finance arm based upon sub-prime lending in home auto and God only knows what fields.

Oh, and they've moved a buncha the shit to China.

Thanks, Washington!

 

PS... Has anybody ever considered why Detroit has become a Ghost Town, a Battlefield?  What was once a healthy industry became  constantly violated by government rules, regulations, mandates, taxes and intervention.

Forward!

Wed, 11/21/2012 - 19:53 | 3003561 Buckaroo Banzai
Buckaroo Banzai's picture

Un. Be. Fucking. Lievable.

Wed, 11/21/2012 - 19:59 | 3003578 nmewn
nmewn's picture

No shit...can you say fascism.

Wed, 11/21/2012 - 20:07 | 3003589 Sofa King
Sofa King's picture

What was that thing Einstein said about the definition of insanity?

Wed, 11/21/2012 - 20:40 | 3003643 A Lunatic
A Lunatic's picture

Relevant to the desired results of course..........

Wed, 11/21/2012 - 22:50 | 3003838 Michaelwiseguy
Michaelwiseguy's picture
Video Update: "Bernanke Loses It"

Ben Bernanke Confronted on Secret Federal Reserve Bailouts

http://www.youtube.com/watch?v=EMY70En6ud4&feature=youtu.be

Wed, 11/21/2012 - 23:06 | 3003854 Enslavethechild...
EnslavethechildrenforBen's picture

How dare anyone question GOD

Thu, 11/22/2012 - 00:06 | 3003917 Careless Whisper
Careless Whisper's picture

@ Michael

Whooooooaaaahhh !!!

Thanks for the link.

Wed, 11/21/2012 - 21:32 | 3003741 kliguy38
kliguy38's picture

nothing insane about this. Just the Casino reopening with a new dealer.....you need to recognise that these events are not out of ignorance but premeditated with the bad debts being shifted to the sheeple. Can you say "shuffle" a new deck

Wed, 11/21/2012 - 22:22 | 3003797 Joe Davola
Joe Davola's picture

Good lord, those 35 financial institutions from 14 countries have got to have the shortest memories on the planet.

Wed, 11/21/2012 - 20:08 | 3003594 Cdad
Cdad's picture

I was just about to say "fascism."  

And this is what we get...this sick company in the market place, f'n things up continuously.  

And I'll remind you that President Zero was so proud of this bailout, he actually had the audacity to bring it up during the debates, and M. Romney was so timid, he actually was put on the defensive for NOT supporting the bailouts...which he went on to claim that he did.

It has gotten so bad in this country, it is just ridiculous.  The culture out there is ignorant...and pretty much gone.

Additionally:

I will also remind you that the one decent thing that GM did in the last three decades was the creation of the Saturn Car company...which was tossed overboard, also to support the dead wood in this company...which later went on to try to reclaim their seriousness about fuel efficiency [which Saturns were known for] by building the f'n Chevy Volt...a car which immediatly priced itself out of the market...and required govt incentives to sell the few they did.

GM should be gone.  Period.  GM is a monument to incompetence.

Wed, 11/21/2012 - 20:38 | 3003636 Deo vindice
Deo vindice's picture

This is the "circle of death" - the snake devouring its own tail.

Wed, 11/21/2012 - 22:40 | 3003788 Michaelwiseguy
Michaelwiseguy's picture

And in other news, TV reporters with backbones;

Take this job and shove it: Fed-up Bangor TV anchors quit on air

In an interview with the Bangor Daily News, she and Consiglio said that they had become fed up with the station's management over the past four years. They described a feud over journalistic practices.

Michaels, WVII's news director, cited "constant disrespecting and belittling of staff" and editorial intervention by higher-ups. "It’s a little complicated, but we were expected to do somewhat unbalanced news, politically, in general,” she added.

“I just wanted to know that I was doing the best job I could and was being honest and ethical as a journalist, and I thought there were times when I wasn’t able to do that,” Consiglio said.

 http://bangordailynews.com/2012/11/20/news/bangor/anchors-away-at-wvii-cindy-michaels-tony-consiglio-resign-on-air/ 

Wed, 11/21/2012 - 23:18 | 3003856 Ident 7777 economy
Ident 7777 economy's picture

It'll be okay.

Give Fox a call.

Seriously ... right Michael?

(What - do you think working for CNN or PMSNBC will make their consciences rest any easier?)

Wed, 11/21/2012 - 23:44 | 3003900 Oh regional Indian
Oh regional Indian's picture

In the end, there will be one Channle to rule them all:

F: 6

O: 15 = 6

X: 24 = 6

Foxy, like Fire Fox?

It's all in the names and symbols.

ori

Thu, 11/22/2012 - 20:39 | 3005398 Ident 7777 economy
Ident 7777 economy's picture

Was that taken from a back issue of Numerology Today?

Or was that a product of your original work?

EITHER WAY, I'm sure it adds to your credibility in ways you will never know here on ZH ...

Wed, 11/21/2012 - 20:41 | 3003648 withnmeans
withnmeans's picture

I hate to say it, but things will remain as they are "until that moment hits".

That moment will then knock everything in the stop position.  Cars, food, shipping, farming, you name it, it won't be about any financial CLIFF, that is a can to be kicked to infinity "i.e. JAPAN".

Nope...... It will be $6.00 per gallon gas

 

The only way I see it getting there will be a large war in the Middle East "sooner or later, take your bets"

Good day- Happy Thanksgiving ZHers, and TYLERS too

Wed, 11/21/2012 - 21:02 | 3003686 Midas
Midas's picture

Didn't Ron Paul say Romney's opposition to the auto bailouts cost him electoral votes?  I thought I read that here at ZeroHedge dot com.

Thu, 11/22/2012 - 01:03 | 3003971 Tom Servo
Tom Servo's picture

In the beginning, Saturn was made to make a low priced, no frills, well built car.  It was successful.  Towards the end, they were rolling out a bunch of high priced, frilly, not well built cars...  Hence they fell into the dustbin where they belonged.  The hubris of management IMO.  I drove a POS 99 saturn into the ground right after college... finally offloaded it after we got a mega hailstorm 2 years ago with 175k miles and no major mechanical issues with it....

Thu, 11/22/2012 - 10:16 | 3004338 Cdad
Cdad's picture

I was speaking primarily about the S series Saturn.  By all accounts, the L series was not a success, but many of their other models were, and followed in the S series footsteps, allbeit in a higher price range.  The move to "frilly" and larger vehicles was market based.

I recently bought a used S series for my son.  1999, 144k miles, still runs like it just came off the line, and pure fun to drive with its snappy five speed manual transmission.  Always gets over 30 mpg.  A totally impressive vehicle in terms of its powertrain.  Those cars are still all over the road...20+ years later.  

In later years, union and GM management issues did weigh on the company.  However, my point is that these things could have been overcome if the parent was not hemoraging cash the way it was, and looking for fresh meat to toss to the sharks.  Saturn continued to do business in its admirable way, straight up, no nonsense.  Try getting that from the rest of GM.

However, the point is moot...because GM SHOULD be dead and gone right now...and something more respectable growing up from its sold off pieces...you know...something like Saturn.  It is my opinion that GM will never recover now.  Its brand is terminally damaged by its involvement with the Federal Govt., and because of the way the dead wood of the company screwed shareholds and bond holders, alike.

Die GM...just die already.

Wed, 11/21/2012 - 20:40 | 3003646 New_Meat
New_Meat's picture

unAmerican to purchase or deal with GM.

Don't cha' know.

- Ned

Wed, 11/21/2012 - 20:06 | 3003586 walküre
walküre's picture

Don't know about ugly. Their latest "Malibu" edition looks just as fancy as the Accord, Camry or Sonata. If these cars are selling, why not theirs? Good riddance to their Hummer and Plymouth brands. Cadillac and Buick had a pretty strong come back.

Wed, 11/21/2012 - 20:31 | 3003623 Deo vindice
Deo vindice's picture

Uh, Plymouth was out of Chrysler Corp.

They did drop their Oldsmobile line-up however.

Wed, 11/21/2012 - 21:05 | 3003692 Midas
Midas's picture

I am reluctant to buy GM because of the government.  This is unfortunate because I think the designers are building some of their best cars and they have nothing to do with all these circle jerk bailouts.

Wed, 11/21/2012 - 21:17 | 3003714 walküre
walküre's picture

You could argue the opposite view. Until government stepped in, their cars were mediocre and didn't make the cut.

Pre-government = Aztec and other failures

Keep in mind that .gov is America's biggest spender and consumer anyway. So they buy their own cars. I'd rather they buy their own fuel to be honest but that's never going to happen in America.

Wed, 11/21/2012 - 22:34 | 3003814 CaptainObvious
CaptainObvious's picture

I'm reluctant to buy GM, because I once did buy GM, and that car was the biggest hunk of shit and I had to repair it every two weeks.  I only buy Toyota/Honda/Nissan now.

Wed, 11/21/2012 - 22:44 | 3003827 nmewn
nmewn's picture

I'm reluctant to buy GM because I was forced (by government) to buy it the first time. When my ole 98 GM truck dies (and its getting close) it won't be replaced by another GM product.

Consequences.

Wed, 11/21/2012 - 23:43 | 3003898 Midas
Midas's picture

May I suggest a chevy Volt?  Save some money and wait for the fire-sale!

Thu, 11/22/2012 - 03:25 | 3004072 Tommy Gunner
Tommy Gunner's picture

I buy Japanese and German.  I would NEVER buy a US made piece of shit

Wed, 11/21/2012 - 21:12 | 3003709 walküre
walküre's picture

lol .. crappy either way

Wed, 11/21/2012 - 21:53 | 3003773 Deo vindice
Deo vindice's picture

Not to mention redundant.

No difference between a Dodge or Plymouth mini-van other than the emblem.  A sheer waste of marketing $$$

And Oldsmobile was simply 'Cadillac light' for most models. (Mind you Buick / Pontiac exchanged a lot of design and parts too).

Ford was at least smart enough to drop the Mercury pickups which were Ford with a different tail-gate.

GM would be smart to do the same with their GM / Chevy trucks. No appreciable difference.

Wed, 11/21/2012 - 20:11 | 3003598 vast-dom
vast-dom's picture

just be a good sheeple eat your turkey and shop till you drop on friday.

Wed, 11/21/2012 - 21:03 | 3003689 dirtyfiles
dirtyfiles's picture

I tought after they change that big chrome front grille it masked everything...

Wed, 11/21/2012 - 23:07 | 3003853 El Tuco
El Tuco's picture

Any state that invites or embraces the Auto Industry in is going to be fucked sooner or later. Look at what they did to Michigan and Ohio. They come in and get all these tax breaks with the promise of jobs. They then contaminate the whole fucking place. Then they ask for money to stay or they will close down the factory and move somewhere else. It never stops with these assholes and at the end of the day the whole fucking state pays.

They just fuck everyone up where ever they go. Cocksuckers......

Thu, 11/22/2012 - 05:03 | 3004106 Seer
Seer's picture

Yes, this is the FORMULA.  Unfortunately people don't realize that they're setting it all up for another round by clamoring to "bring back" jobs to the US.  People won't get it that it's inevitable (because anyone flying a US flag overseas is going to have to dodge bullets) and they'll embrace cutting off another arm to give to TPTB so the can rack up another round of huge subsidies ("tax breaks") in order to bring back the jobs.  And in all of this people will still believe that it's humans that do the work... MORE automation will occur, LESS jobs...

Wed, 11/21/2012 - 19:59 | 3003579 BeagleOne
BeagleOne's picture

Same thing with AT&T. Broken up to get rid of the monopoly, then put back together through deregulation and ignoring antitrust merger laws...

Wed, 11/21/2012 - 23:12 | 3003860 Ident 7777 economy
Ident 7777 economy's picture

Ignoring the elephants (Verizon, MCI et al) in the room are we?

You notice how well POTs lines vs Cellullar vs Skype are working out?

Thu, 11/22/2012 - 05:19 | 3004116 Ginsengbull
Ginsengbull's picture

Nothing is as reliable as a plain old telephone line.

 

I still have rotary dial.

Thu, 11/22/2012 - 20:41 | 3004745 Ident 7777 economy
Ident 7777 economy's picture

I did till the 12th of this month (no TT even! Had strictly *pulse* dialing for almost 3 decades! Refused to pay the fee for DTMF dialing which is just a 'software' and billing option change in the CO (central office) anymore) ... I will rely on 2m plus I've taken up operating 160 and 80 meters since about a year ago .. if cellular (and skype) totally implodes I've got that as 'fallback'  ...

 

Wed, 11/21/2012 - 22:36 | 3003817 beachdude
beachdude's picture

"external combustion vehicles as the Chevy Volt..."
Lmao!

Wed, 11/21/2012 - 19:35 | 3003536 phoolish
phoolish's picture

HaHaHaHaHaHaHaHa.

 

Shoot Me Now.

Wed, 11/21/2012 - 22:14 | 3003789 Tsunami Wave
Tsunami Wave's picture

To quote Barry and Joe:

"Bin Laden is dead.... and GM is alive!!!!!"

Wed, 11/21/2012 - 20:08 | 3003538 THE DORK OF CORK
THE DORK OF CORK's picture

Only in Norway is elec vehicles a success.

 

en.wikipedia.org/wiki/Electric_car_use_by_country#Norway

1. Cheap hydro elec power

2 . A oil / capital rich society

3.  extreme goverment tax breaks

4.   use of bus lanes by all elec. vehicles.

 

http://www.youtube.com/watch?v=CvPuymTO6oo&feature=plcp


http://www.youtube.com/watch?v=mXfFyyUjOEE

It does increase the countries internal redundancy to a small degree given its extreme power surplus.

 

Light simple elec vehicles such as the Twizy in France or Belgium (cheap Nuke power)  can work if you have the above conditions and live in compact towns where the local stores , rail station , work place etc is close at hand.

http://www.youtube.com/watch?v=l23_pVkJufI&feature=plcp


 

Thu, 11/22/2012 - 05:23 | 3004119 Seer
Seer's picture

Norway's a SMALL country with a SMALL population.

Hydro isn't forever: dams have a limited life-span (100 - 150 years)

And, of course, oil is finite (Norway's production peaked in 2001; NG production is what's keeping them positive in trade).

Pretty sure that Norway can carry on a bit longer following the big collapse, but they won't be able to drive away the problems that the future will bring.

"Light simple elec vehicles such as the Twizy in France or Belgium (cheap Nuke power)  can work if you have the above conditions and live in compact towns where the local stores , rail station , work place etc is close at hand."

Bicycles work better.  I've been to most of the Nordic countries (Belgium included), and traffic can be pretty difficult there too (much worse in Southern Europe from what I've heard).

Thu, 11/22/2012 - 08:18 | 3004156 THE DORK OF CORK
THE DORK OF CORK's picture

@Seer

its population is growing larger through immigration.

I would have not started from this suburban matrix but we are where we are as we like to say in Ireland.

The fixed costs of suburbia and the market state are well fixed !!!!!!!

I don't think elec. cars can replace infernal conbustion cars but if your house is outside town yet less then 10 -20 miles from most of your business it makes sense for now.

It of course will not work in Ireland where most of the base load is nat gas powered. (transformation losses)

 

 

 

 

 

 

Wed, 11/21/2012 - 19:38 | 3003542 slackrabbit
slackrabbit's picture

GM sells GMAC to GM...yep you cannot make this stuff up!

Wed, 11/21/2012 - 20:36 | 3003631 Deo vindice
Deo vindice's picture

"GM sells GMAC to GM...yep you cannot make this stuff up!"

You could ... but then because truth is stranger than fiction, no one would believe you.

We really are living in an economic twilight zone where substance is almost impossible to differentiate from adumbrations.

Wed, 11/21/2012 - 19:42 | 3003548 LetThemEatRand
LetThemEatRand's picture

In order to maintain our current kleptocrat system of highly paid CEOs whose entire business model is to outsource manufacturing jobs so as to reduce input costs without regard to the obvious end result which is that the middle class can no longer buy what they are selling, it is essential in the short-term to offer more government "funded" (borrowed) cheap credit to replace middle-class income.  The debt turns into cash for the CEO's the day the loan is signed.  When that system inevitably fails, the CEOs will keep the cash and the bill to repay the debt will belong to taxpayers.   A conspiracy nut may think it's all part of a plan.....

Wed, 11/21/2012 - 20:15 | 3003602 augustus caesar
augustus caesar's picture

I would say that for some odd reason you seem to think that big business and government are two separate entities.

But then given your past posts I wouldn't want to imply you were capable of thought in the first place.

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