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  Payback for GM
Reported by The Big Money on Monday, 16 November 2009 (on November 16, 2009)
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Taxpayers, payback begins next month. That's the vow General Motors is expected to make later today, select business press report this morning. According to The Washington Post, GM "plans to pay $1 billion per quarter until the $6.7 billion loan is repaid, according to a source familiar with the matter." The Wall Street Journal, also working on information from a single unnamed source, calculates that if GM begins repayment as early as next month it would pay back the entire loan by mid-2011. "But in a move that could be controversial and risky, the car maker plans to use other money it received from the government to pay back the borrowing," the newspaper adds. Still, some in-flows are sorely needed for indebted Uncle Sam these days. And, G.M. would be making good well before Washington ever expected them too. "GM did not have to pay back the loan until July 2015, and the government did not expect to receive the money before then," The New York Times writes, citing, yep, a single source.
Meanwhile, General Electric is looking to tap Uncle Sam and various other governments around the world for business contracts. According to the WSJ, GE CEO Jeffrey Immelt believes that "over the next three years or so it could bring in as much as $192 billion from projects funded by governments around the globe, such as electric-grid modernization, renewable-energy generation and health-care technology upgrades."
Are U.S. lawmakers protectionist bullies? China thinks so. As President Obama plans his first official state visit to China, the country's Commerce Ministry is already stirring up tension with "unusually blunt" comments about recent U.S. international trade policy, Dow Jones News Wire reports this morning. "We've always known the U.S. and the West as free market economies," Commerce Ministry spokesman Yao Jian is quoted by the news wire as saying at a news conference today in Beijing. "But now we're seeing a protectionist side. This is not a normal U.S.-China trade relationship. We hope the U.S. will continue to (pursue) free trade." The U.S. denies the charge. Dow Jones caught up with U.S. Commerce Secretary Gary Locke in China who shrugged off the criticism, saying "trade disputes with China are a natural part of bilateral trading ties," the news wire writes and they "affect just 1.3% of Chinese exports to the U.S." Staying in Asia, Japan this morning reported some promising news: its economy grew for the second straight quarter in Q3, this time by 1.2% - "faster than economists had predicted," the BBC reports. Still, growth is expected to be sluggish at best for the next few years.
Bristol-Myers Squibb Co. has decided to buck the current Big Pharma trend of diversifying services and instead will focus on its core medical business, the WSJ reports. To do so the drug maker will spin off its Mead Johnson nutrition unit, best known for its Enfamil infant formula, in a deal valued at about $6.5 billion. Bristol-Myers shareholders will be able to swap "all, some or none of their company stock for shares in Mead Johnson. For each $1 of Bristol-Myers common stock, tendering shareholders will receive about $1.11 of Mead Johnson stock," the WSJ writes. Still in the medical news it appears that the nation's drug makers are rushing to line their own pockets before any new healthcare legislation takes affect. "In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts.....By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992," writes the NYT.
The rate that U.S. businesses are filing for bankruptcy finally is on the wane, as credit lines are reopened and businesses greatly grab those lifelines to refinance with new debt, the WSJ reports. But don't get too excited: "Many analysts worry the refinancing wave is just 'kicking the can' down the road, without fundamentally fixing companies' deeper problems. Among weaker companies, about $1.4 trillion in bonds and loans will still come due in the next five years," it writes.
And, finally, don't underestimate the demand for Bernie and Ruth Madoff's former possessions. According to CNNMoney.com, an auction held over the weekend that included Bernie's Mets jacket and Ruth's jewelry, plus family duck decoys, brought in $900,000, a much better figure than expected. Among the lots up for auction, all to benefit victims of his record-breaking fraud, the Madoff Mets jacket went for $14,500 and the duck decoys fetched $11,500. If you missed out this weekend, not to worry. More auctions are planned.
Links: Full news story
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