Apr 10, 2006
General Motors has agreed to sell 51% of GMAC to a financial group fronted by a company named Cerberus, for a total of 14 billion dollars over three years. They say they"re doing this to increase the investment ratings of both companies, and to raise money for GM.
That's ridiculous! GMAC has assets of more than 300 billion dollars – FAR more than this selling price. If GMAC just sold off its loans it would have more than 186 billion dollars! And – according to GM's figures, GMAC is the only profitable part of the company, making around 2.5 billion dollars last year, compared to a more than 10 billion dollar loss for GM as a whole. And yet they sold it for 14 billion dollars?!??!!
The whole deal is nonsense. GM makes its profit from making and selling cars. They may use GMAC as a place to park their profit, hiding it from the workers so they don't have to pay profit sharing. But in any case, according to their own figures, they"d be much worse off after taking the only profitable part of the company and selling it for a song.
So whatever is going on, it's not what they say it is; that just doesn't make sense.
What IS going on? GM has the books – and GM's not telling. From the outside, we can only guess.
Maybe GM does plan on filing for bankruptcy, and by selling GMAC beforehand, they"re shielding it and its assets from their creditors.
Maybe they"re simply taking another step in crying poor, hoping to scare their workers into accepting huge wage and benefit cuts.
Maybe Citigroup, which owns GM's major bank, and which is behind Cerberus in this deal, wants its money out of manufacturing to focus completely on short-term financial speculation. Maybe they"re using this deal to effectively split GM off from GMAC – and not the other way around.
We can't know what's in the minds of these vultures... but whatever they"re doing, they"re up to no good!