Wish I Could Dump My Investment In General Motors (courtesy the Federal Gov't)

By
Mortgage and Lending with SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

Centralized vs. Free Market decisions

There's a "one size fits all" commercial on TV currently, where people decide on a purchase (car, pet, etc.) only to be told that they can't buy what they want, because they have to buy what someone else chooses for them.

It reminds me of our government investing our money in General Motors without our agreement.  (The Federal Reserve, whose charter doesn't include manufacturing automobiles, holds 500,000,000 shares of General Motors.) You thought you were in the real estate business?  You're in the automobile business too!

GM Silverado inventory glut at 122 days

Flush with your money (not theirs, not their investors) General Motors produced many more Chevy Silverados this  spring than any economist [not on the government payroll] would have deemed prudent, and they're still on the dealers lots.

They're likely to stay there, too.  The economy doesn't support their production numbers.  At the current rate of sales, it will be November before the current stock is sold.  According to Bloomberg this morning, there's a 122 day inventory of average sales for this model at GM.

Ford F-150 sales inventory at 79 days

By comparison, Ford Motor Company, which has zero Government investment dollars, is selling their inventory of F-150 pickups in 79 days, and the F-150 outsells the GM Silverado. 

From 2002 until 2010, GM posted similar inventory numbers for its pickups.  The SNAFU came when the government got involved, and GM managers could make production decisions without putting their jobs on the line.

REAL ESTATE IMPLICATIONS

The longer it takes for our economy to wring out excesses and get back on a solid footing, the worse it will be for agents and lenders trying to survive in this artificially deflated real estate market.

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender

NMLS #223495

SUNSTREET MORTGAGE LLC ~ Correspondent Mortgage Bank
Offices in Mesa, Tucson, Sierra Vista & Nogales

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Comments 14 New Comment

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Rainer
119,227
Daniel J. Hansmeier

Our current Government has to be the worst in History. I hope it gets better from here or we wont have any choices we like.

July 05, 2011 11:36 AM
Ambassador
716,652
Mike Jones
Mike Jones NMLS 223495
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

Daniel,

There's one choice you can make to improve matters.  VOTE!

Mike in Tucson

July 05, 2011 11:37 AM
Rainmaker
591,122
William J. Archambault, Jr.
The Real Estate Investment Institute

Mike,

How do you "dump" a stock with no value?

I just wish we could write it off! The tax rate wouldn't matter if we could write off government losses.

I drive a Ford, it offered what I wanted and has proven to be ultra dependable. Just like all my former Fords, Mercuries and Lincolns.

Bill

July 05, 2011 11:52 AM
Rainmaker
548,223
Than Maynard
Broker - Licensed to List & Sell - 405-990-8862
Coldwell Banker Heart of Oklahoma

Gov was too busy protecting the unions to pay any attention to how it would effect the rest of us. Too big to fail, BULL! They could have failed restrutured and been in much better shape than they are now.

July 05, 2011 12:06 PM
Rainmaker
1,885,167
Roy Kelley
Roy and Dolores Kelley Photographs
Retired Real Estate Broker, Maryland Blogger

Very good post.  Thanks for sharing these statistics.

 Blooming for you!

July 05, 2011 12:07 PM
Rainmaker
706,271
Juli Vosmik
Scottsdale/Cave Creek, AZ real estate 480-710-0739
Dominion Real Estate Partners, LLC, Scottsdale, AZ

Mike, I haven't seen the commercial you referred to, or at least, don't recognize it.  However, your stats are VERY informative and eye opening. 

I have one question - didn't GM pay back every penny of the "loan?"  Or, are the stock options yet another part that I didn't follow?  Hmmmmmm, guess I'm going to have to do some research on this situation.  Thanks for the heads up. 

July 05, 2011 12:17 PM
Ambassador
716,652
Mike Jones
Mike Jones NMLS 223495
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171)

Juli,

We're not talking about loans; it's a separate issue.  The government bought and still holds voting stock in GM.  It's now worth much less that what we [the taxpayers] paid for it, and GM wants to purchase it back at the lower price.  I hope that doesn't happen!

Roy,

Thanks for stopping by!

Than,

I'm with you!

Bill,

Drive a Ford?  Me, too!

Mike in Tucson

July 05, 2011 12:25 PM
Rainer
63,700
Brett Reichel
MLO 210215
Pacific Residential Mtg., LLC - NMLS 1477 / WA CL-1477

Don't kid yourself - GM will buy it back cheap....

July 05, 2011 01:33 PM
Ambassador
438,317
Deb "Alayne" Brooks
940-500-4010 Wichita Falls Real Estate
Alayne Brooks, Re/Max Elite Group, Wichita Falls Texas

Mike, I think Than above hit the nail on the head. We are our own worst enemies.

Deb

July 05, 2011 01:46 PM
Rainmaker
1,670,344
Lou Ludwig
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO
Ludwig & Associates

Jim

GM is being managed by committee, and the fox (union) is in the hen house leading the way. It may not end up well for GM and the stack holders.

Good luck and success.

Lou Ludwig

July 05, 2011 02:38 PM
Ambassador
706,261
Mike Frazier
Dyersburg Tn Real Estate
Carousel Realty of Dyer County

I too drive a Ford and glad not to be driving a gob'nent motors car!

July 05, 2011 03:52 PM
Rainmaker
576,036
Patricia Feager, MBA, GRI, Cert Negotiations Expert, Military Relo Prof
The Little REALTORĀ® That Could
Keller Williams Realty

Oh my, this is quite shocking, and yet it doesn't surprise me at all. Somethings gotta give and somebodies got to go. I think the whole government needs to go bye-bye before we self-destruct!

July 06, 2011 12:40 AM
Rainmaker
563,876
Mike Saunders
Lanier Partners

Mike - hadn't seen the commercial, but, I am in agreement, we should never have made GM a GSE, look how well that worked with the Post Office, Fannie & Freddie.

Juli - the "paper" answer is yes. The real answer is no regarding paying back the "loans". The taxpayers handed GM over $49 billion. Only $6.7 billion was a "loan", the rest was investment. Now, GM did pay back $6.7 billion plus interest. However, even that is questionable. Obama gave GM an over $13 billion "slush fund" in an escrow account so that GM could have working capital. This is what GM is using to pay back the loans. Best estimate, after everything clears the books, the taxpayers will lose over $17 billion on this deal. Probably even more because that estimate is based upon sale of stock at some elevated price.

July 06, 2011 11:38 AM
Ambassador
1,859,287
Judi K Barrett
Broker/Owner, Integrity Real Estate Services -IDAB
Judi Barrett~Integrity Real Estate Services~Idabel, Oklahoma

The whole matter stinks to high heaven and the smell is not going to go away any time soon.  The sins of the fathers....

July 06, 2011 11:34 PM
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Mike Jones

Mike Jones NMLS 223495
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