General Motors And Private Investment: Don’t Partner With The Federal Government

The General Motors (GM) debt for equity deal reveals a genuine danger to private investors.  If you are considering investing in some other turnaround, be very careful if Uncle Sam might get involved.  An editorial in today’s Wall Street Journal presents some estimates of how much different creditors to GM will receive.  I’ve charted these estimates (and they are not hard figures, just estimates):

From an investor’s viewpoint, this is very scary.

From a public policy viewpoint, the GM results will scare off potential investors, leaving even more trouble for the federal government to try to clean up.

From a business strategy viewpoint, be cautious about your business relationships (either as customers or vendors) with entities that may soon be run by the federal government.

Subscribe by RSS Subscribe by Email