Capping off an amazing turnaround, General Motors has returned to the stock market, trading now at around $35 a share after wiping out investors and filing for bankruptcy in the last two years. For a company that received mouth-to-mouth resuscitation from the government not so long ago, the IPO feels like a big success. But is it? Here are some of the reflections as the icon of American industry staggers back into respectability.
- Comparisons Are Odious "On this day when GM returns to public markets," predicts Business Insider's Joe Weisenthal, "you'll hear some squawking about how unfair it is that the company was stripped clean of debt, while Ford still has its big legacy overhang." Though "there's something to that," he admits, "Ford was bailed out too. It never got a direct cash injection or a pre-packaged bankruptcy, but the bailout of GM and Chrysler prevented a cascade of follow-on bankruptcies of suppliers, many of which supply Ford."
- Good Job, U.S. Government--Now Let the Private Sector Take It From Here "Although the process of saving the company often skirted the law and was too painful to watch--we hope never again to witness the White House firing and hiring private sector chief executives--presidents Bush and Obama got this one right," judges the editorial board of The Detroit News. "GM likely would not be here today without the intervention. We shudder to think what that would have meant for Michigan."
- Nonsense "What exactly is so remarkable," asks John Berlau
at The American Spectator, "about a company coming back to life after a
$65 billion taxpayer bailout, additional billions in tax breaks not
available to other companies, and even an amazing 'sovereign immunity'
exemption for this IPO from anti-fraud securities laws and lawsuits?"
He wishes people would stop treating the GM IPO as "proof positive that
that the auto industry rescue and much of the rest of Obama's economic
policies must be good for the country."
- The View from the Ground "Closed plants occupy an outsized amount of psychic space," muses Paul Clemens in The New York Times. "New G.M. will no doubt have a successful stock offering, for which we should all be grateful. But for many workers, in cities and towns across the country, that initial success--on computer screens, or stock exchanges, or wherever it is that I.P.O.’s exist--is going to be outweighed by the plant closing down the road."
- Don't Forget the Cars Ultimately, this IPO is about what Wall Street thinks of a "new balance sheet," says progressive Mary Wheeler. "What remains to be seen is whether the cars produced in two years by the development process implemented by Ed Whitacre and Dan Akerson will sustain and increase the value of cars in showrooms to match the $33/share value pitched by the banksters."
- Auto Bailout vs. Bank Bailout The auto bailout appears to be a smashing success. That might be because it wasn't a bailout, argues finance commentator Barry Ritholtz. "It was a bankruptcy reorganization that eliminated the most toxic aspects of a century old rust bucket of a company." His conclusion:
If you want to understand why we should never have bailed out the banks, just look at the differences between the Auto and Banking industries. One is healthy, with a likely cost of near zero. The other remians a debacle, whose costs are inacalculable are likely to be an economic drag for years if not decades.