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  1. #1
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    Funny Money ...
    It was reported today that GMAC LLC got $5 Billion from the Feds. For this
    money the FEDS get 8% interest and 5 million preferred shares. What this means is that GMAC has to pay the FEDS $400 MILLION per year in interest
    and that the Preferred shares cost $1,000 each.

    Since 85% of GM dealers get their inventory financed by GMAC, for GMAC to make any money, the dealers need to pay at least 9%, which is 3/4 of 1% per month. So if the dealer has a $30,000 in inventory, it cost him or her $225 per month to have the car on the lot.

    Now GM just said you can buy one of thier POS overpriced cars for NO interest. Which really does not mean NO interest, since they just ate it
    and thereby lowered their profit margin.

    If all turns out for the best, this means that given the $10K GROSS profit margin in the $30K car, unless it sells for full price, the GM and Dealers are
    pretty much in an impossible situation ... GMAC has to pay the FEDS $400
    million per year ... out of the $10K gross margin over manufacturing cost ... doing the math they have to sell 40,000 cars just to cover this nut - and they have to do it every year. But since they sold the car on time over say 36 months ... they only get $3,334 of the $10K per year, which means they really have to sell 120,000 cars to the pay bill to the FED each year.

    If the cars do not sell for any reason or they sell for considerably less, it becomes a truly sticky wicket game. And even worse, cars are a depreciating asset. They go down in value until they get scrapped or become collectibles.

    Plus, it's even worse because I did not subtract dealer commission so I am really being pollyanna about it. GM is toast ... just waiting to become bread crumbs. It is not fixable as it exists.

    But the sad part is that the FEDS are throwing our tax money down a rat hole. And the worst of it is the guys chucking the money have all flunked basic arithmetic.

    2009 is off to a good start ...

  2. #2
    Full Member kayecee's Avatar
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    Oh, it's worse than that.... the dumb@ss politicians bail out the dumb@ss companies that can't keep their books solvent.... Joe Taxpayer gets to foot the bill.... but wait.... that's not enough, is it? http://news.yahoo.com/s/ap/20090102/ap_on_go_ot/gas_tax

    I hate to even turn on the news anymore.... every time I do, I feel like I've been financially raped....

  3. #3
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    Remember that political rants aren't allowed, so keep things *unpolitical* please.
    Deborah Carney
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  4. #4
    Life is Supposed to be Fun! Rexanne's Avatar
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    This just BEGS for: BOHICA
    Peace,

    Rexanne

    Rexanne.com
    Loving Everyone's Child Creates Magic


  5. #5
    Full Member kayecee's Avatar
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    Yikes! Sorry Loxly! I didn't call out either political party and didn't realize I was veering over into no man's land. I don't usually comment on these types of threads as much because I have absolutely seen red over this issue. I shall edit my post. *bows respectfully*

  6. #6
    Full Member kayecee's Avatar
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    Uh, well I WAS going to erase the part leading up to Joe Taxpayer... no edit button though... can you do it Loxly?

  7. #7
    ABW Ambassador jodyq's Avatar
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    I think your fine with joe the tax payer.... as long as it is not a plumber?
    Wear Short Sleeves!!! Support the right to bare arms!

  8. #8
    MasterMike HardwareGeek's Avatar
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    Umm you do know that GMAC is not the same as GM although GMAC is owned by GM the money GMAC got has nothing to do with the Money GM is getting.

    GMAC is technically a Bank now and is getting money because of bad loans to people who bought cars they couldn't afford. Which is pretty much what AMEX did recently when they asked to be turned into a bank to get help.

  9. #9
    ABW Ambassador affninja's Avatar
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    I'm a little confused by this, coming from the automotive world. GM sells many more cars than 120,000 / yr, millions in fact. I couldn't find the exact numbers, but even in this poor economy, they'll still sell 7-8 million vehicles worldwide.

    The $10k gross margin number may be optimistic though.

  10. #10
    Full Member kayecee's Avatar
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    Jodyq.... ROFL Actually, I had forgotten about him! I was thinking more along the lines of Joe Shmoe....

  11. #11
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    kayecee your post was ok, it just got close and I figured I'd warn before someone else took it farther
    Deborah Carney
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  12. #12
    Full Member kayecee's Avatar
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    *Whew!*

  13. #13
    ABW Ambassador Joshua's Avatar
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    GMAC is in more businesses than just car loans - They're in insurance, mortgages, real estate, and banking. Right now I'm loaning some of my liquid money to GMAC for a 3.25% interest rate on their high interest savings account. I have a feeling that it's partially the mortgage division that pulled them down, and not just auto-financing. Not selling cars can lower a revenue stream, but bad mortgages can make them lose money.

  14. #14
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    GM sells more cars than 120k for sure ... just that sales of 120k from the total are needed, maybe more, to pay the Feds their interest.

    So, how does this loan really help them ... well it gives them 60 days or so to blow up the company and have the perpretrators walk away with most of the cash.

    If they would have sold me SAAB for $5 Billion, we could have saved the taxpayer a bunch ... now where would I get $5 Billion ... Yo Warren you want to do a kickbutt
    deal? Here's the plan? Get back to me ASAP with yes or no ... if you need help we can
    ask Waleed and the Emirates guys ... plus Bill and George might throw in some.

    Problem is Wagner never returned our email about doing a deal for SAAB. There is money everywhere ... and it is very interested in doing deals, you just have to ask
    and have a plan that is not smoke and mirrors ... keeping asking until you get a yes.
    You just have to get to the guy who can say yes - that is the hard part.

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