Monday, December 15, 2008

GM.BAILOUT Contract Clarification 15/12/08 5:15pm

iPredict makes the following clarification to the GM.BAILOUT contract:


Funds from the Federal Reserve System will be considered funds from the US Government.


This is for two reasons. First, the Federal Reserve is an independent agency of the US government, as is the CIA, the CFTC, and EPA and the Securities and Exchange Commission source

Second, the Federal Reserve's bailout of American International Group (AIG) in September and October 2008 is widely understood to be a bailout by the US government source, source, source, source

87 comments:

Lt.Gorman said...

holy moly

Mike K said...

Ah-haaaaa...that puts (yet another) spanner in the works, then?

Anonymous said...

With all these clarifications after the fact perhaps you should consider refunding everyone their bid money by working backwards step by step and consider this a null and void contract. P.S : What happens if Bush dies tonight?...He will not then be able to Ok the bailout, right?...Yep, need another clarification...Clarification #83 or something?

Dibbo said...

If Bush dies tonight I consider that a known risk...no clarification needed.

Anonymous said...

Yeah, but what if his dying wish was to bailout the autocrats?!!..Hahahaha!

Anonymous said...

An Iraqi journalist just gave Bush his shoes in the midst of a news conference! Anything can happen. Hope not.

Anonymous said...

Read all about the IFO's here:
http://www.stuff.co.nz/4793365a12.html or here: http://tinyurl.com/5uu59g

Lt.Gorman said...

"The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more."

http://online.wsj.com/article/SB122930098160805305.html

Holybastard said...

I really don't understand why the stock price for Electoral Finance Act keeps dropping, while its repeal is clearly scheduled to be resumed in February, which is 3 months ahead of the closing time of the stock. Can someone please "educate me"? Thanks.

Anonymous said...

White House considers car bailout options
By Washington correspondent Kim Landers

Posted Mon Dec 15, 2008 8:37am AEDT

'The White House is playing down speculation it is about to announce a plan to prevent the collapse of the troubled American car industry.

The Bush administration is considering ways to provide emergency aid to General Motors and Chrysler, who both say they could run out of cash within weeks.

Administration officials have spent the weekend gathering financial information from the car makers"...Since Bush is ONLY keen to give an EMERGENCY AID, would he want to give MORE than the 4 billion that GM has asked for is the key question as far as this contract is concerened. I doubt it, but could go either way.

Anonymous said...

Theres still a huge amount of uncertainty not reflected in the trading regarding not only the amount but non trivial conditions which will be applied which may or not be being met during the Bush administration as picked up in the earlier Blog:-

Matt Burgess said...
Just confirming that I'm reading this correctly: If Congress approves tomorrow a loan package that's subject to a non-trivial condition that only is met in February, then this counts as the loan NOT being approved under Bush as the condition was not met under Bush. Right?

Correct.

Note however that if, prior to Bush's departure, it becomes certain those non-trivial conditions will be met in February, or those conditions are relaxed prior to Bush's departure, then funds caught by those conditions will be considered 'approved' and contribute to the US$5 billion minimum.

... I'd be a little wary of going to long the way this stock has see sawed!

Anonymous said...

Federal Reserve is an independent agency of the US government

The Federal Reserve was initially a private company formed by the big banking families of the day - Rockerfeller, Morgan etc.

It has government members on its board of directors as well as representatives of the banking families who still privately own the Federal Reserve.

It was initially created after banking panics to provide an elastic currency to the US.

http://www.apfn.org/APFN/fed_reserve.htm

This constant changing of rules is crap! I was hoping someone like the Fed would bail out GM now that it didn't pass in the Senate and shorted as a result. Now if GM is bailed out by a privately owned company it also counts?

HerbieT said...

Indeed the reserve is private, maybe they mean the US Treasury Department?

Mike K said...

RE: The Fed - I agree with Anonymous. While "authorative sources" (viz. Wikipedia) might assert that the Fed is an independent agency of the US Federal Government, in reality it is not. It has advanced almost $1 trillion of liquidity to banking interests, WITHOUT any reference to US Legislature or the Treasury.

Mike K said...

If the Fed is an agency of the US Government, then explain this, Matt:
"Autoworkers say it isn’t fair for the feds to bail out Wall Street but not Detroit, they say.
Elsewhere in the news, Bloomberg has asked the Fed to reveal what it did with the $2 trillion in emergency loans it passed out. Surely, the money went to the Fed’s clients – banks, and financial institutions generally. How? To whom? What were the terms? The Fed wouldn’t say. It refused the Freedom of Information Act petition on several grounds.
“Blank check for banks, pink slips for Detroit,” is how Gretchen Morgenson explains it in the New York Times ."

Anonymous said...

LATEST : Detroit Free Press newspaper reports that the size, scope and timing of any lifeline to the automakers was uncertain. The White House was interested in two conditions, the paper said. The first was a steep reduction by creditors in automakers' debt, the second was requiring the United Auto Workers (UAW) union to take half the money due for a retiree health-care trust fund in stock, instead of in bonds or cash. According to the size of the deal, the administration may have to seek congressional approval, with the new Congress not set to meet again until January 6 with a boosted Democratic majority following the November 4 elections.
Republican Senator Bob Corker, who was the Senate's pointman for a series of adjustments to the House of Representatives' bailout bill, said the UAW must make pay adjustments. The Workers' union is not keen to do this and say they will consider such conditions in their next copntract round which is due after another year.
"Every car they make, they're at a competitive disadvantage because they are disadvantaged by their labor costs," Corker said Sunday.
In turn, auto representatives accused Republicans of seeking to impose unfair wage cuts.
"We need this money ... this low-interest bridge loan to get us through an emergency situation here, an economic downturn," UAW chief Ron Gettelfinger told CNN, accusing Republicans of politicizing the issue by calling for US manufacturers to bring their pay in line with foreign automakers....So, the deal from Bush may still have some serious hurdles yet.

Anonymous said...

That is interesting. Here is another report out today:
Wall Street fades on auto bailout news
Updated: 07:57, Tuesday December 16, 2008
Selling pressure has undercut early US stock gains, as the market sought clarity over US President George W Bush's bid to rescue US automakers, and ahead of an expected interest rate cut.

Lower US industrial production in November also weakened sentiment on the health of the overall US economy reeling from recession.

All key market-gauging indexes rose at the opening bell but gave up gain minutes later.

The Dow Jones Industrial Average fell 96.29 points, or 1.12 per cent, to 8,533.39, while the Nasdaq composite was down 36.64 points, or 2.38 per cent, to 1,504.08.

The broad Standard and Poor's 500 also dropped 12.62 points, or 1.43 per cent, to 867.11.

Faced with the looming threat of bankruptcy, key US auto companies have fretted, while Bush administration officials study their sputtering finances, but make no moves toward a bailout.

Lt.Gorman said...

Is anonymous having a conversation with anonymous or is it the same anonymous person pretending to have an anonymous conversation?

when the forums launch there should an option to post as anonymous. just for those manipulation moments.

Anonymous said...

How is reporting latest news manipulation? Go long or go short yourself. Makes no difference to me or read the news and bid accordingly. It is your dosh.

Lt.Gorman said...

Sorry you misunderstood

Anonymous said...

WASHINGTON (AP) -- The White House is reassuring General Motors and Chrysler that help is on the way -- it's just taking time to work out details.

President George W. Bush won't give a precise timetable, but says it won't be a long process "because of the economic fragility" of the auto companies. Both GM and Chrysler say they could run out of cash within weeks.

Sen. Carl Levin of Michigan says he expects GM to get $8 billion and Chrysler $7 billion under the administration's plan. He says the Treasury secretary will likely be tapped as a "car czar" to oversee restructuring of the companies.

The administration is considering several options, including money from the $700 billion financial bailout fund. House Speaker Nancy Pelosi calls the fund "the only recourse."

Mike K said...

"Sen. Carl Levin of Michigan says he expects GM to get $8 billion and Chrysler $7 billion under the administration's plan"

Go long!! Go long!! But wait..who is Carl Levin? Especially as a Whitehouse bailout, via the TFAT, doesn't need Congressional approval?

Anonymous said...

A Treasury Department official said the agency and auto company executives continued to review financial and other information, and that no decision had been made. Treasury Secretary Henry Paulson said, however, the government would have to be satisfied the industry could survive and compete in order to receive help. "We would have to assure ourselves that this was a step on the path to long-term viability," Paulson told Fox News. There could be additional provisions relating to equity that would go to the government in return for assistance. Tennessee Republican Sen. Bob Corker, who opposed the bailout but sought a last-ditch compromise in Congress, has encouraged the administration to include tougher conditions.
These could include faster and deeper concessions than planned by the United Auto Workers and an agreement for bondholders to convert a sizable percentage of debt to equity to boost liquidity. There in lies the rub. The CEO's want the cash, but the powerful worker's union is a hard nut to crack. So, nothing is certain. My take is that 50c per share would be the fair price at this stage.

President George W. Bush said...

Hey Guys

I'm thinking of giving $5bn to General Motors later this week and thought you should be the first to know.

God Bless America

George W.

petal said...

I was wondering about the effect of president Bush stepping in with Troubled Asset Relief Program (TARP) funds to provide bridge loans to GM et al for an amount that meets the contracts threshold value, while the US senate decides what to do, would this qualify as a bailout?

I asked Matt who responded to me in this way:

I am unable to give you private advice on this, but in this case I think the contract is clear on this point, I'll leave it to you to work it out. I'll post a clarification if people feel the contract is ambiguous on this point.

Why he couldn’t just tell me yes or no I don’t know, maybe someone here can explain it to me.
Maybe it is unfair for me to think that there was a hope that I would buy stock under a misinterpretation in Ipredicts favour.

At first I thought this response baffling, bordering on ridiculous, but then I thought that maybe I was being a bit hard on Matt because I don’t think he ever imagined that the bailout would become as complicated as it has become, so he has had to modify the conditions of the contract to protect his interest. But is this not a risk he takes after he has submitted the stock for trading? Who does business like this where the conditions of a contract are unilaterally changed after the contract has been entered into?


Forgive him this time, mark it down to inexperience, but I for one think that it would be completely unacceptable if it happened again - the changing of a contract, without unanimous approval of traders, after traders have invested in the contract. I think if Matt wishes to add a condition after having submitted for trade, then traders should be given an option for a refund.

My message to you Matt is that you need to think things through as clearly as you can, isolating the possible outcomes that might disfavour your position BEFORE you submit the stock for trade. Adding conditions to the contract after the trade has occurred is unfair, unethical and I wonder how compliant this action is with contract law.

I have abandoned the stock and therefore and I am not motivated to pursue whether or not a fair trading issue exists here, or merely an issue of respect and cortesy. But others who feel disadvantaged by ipredicts behaviour may wish to look into this.

Babytom said...

Petal: I have to start by saying I have lost just over $800.00 as it stands on this stock after a sure thing turned to doubt over a clarification but...

This contract has been made complicated by the US government backtracking and pussy footing around.

It would be very difficult for Matt to have determined all the possible twists and turns that this has taken.

Matt... I don't envy you!

Anonymous said...

Don't blame Matt for all of this confusion. It is not his fault that there is so much two-ing and fro-ing by the US govt.

Petal - had you have been in Matt's position when creating the contract, you could not possibly have foreseen the possible issues with the clarifications.

Take a minute to think of the relative lack of issues like this with regards to other stocks on iPredict.

Sure, I've lost some money on this stock but I'm not going to go out and blame Matt for my lack of research when it is entirely my fault.

Don't get your knickers in a knot because you've lost some dollars.

Keep up the good work Matt

Lt.Gorman said...

I have to agree, Matt has done a good job and I believe every clarification has been sensible and in line with the wording and intent of the initial contract.

Dibbo said...

I actually think Clarification 6 was clearly misleading and I can see that many relied on this to short the contract or abandon longs - in light of subsequent clarifications I have no idea what Clarification 6 was meant to clarify as retooling money aside there was no other funds committed to the sector. BUT we are all learning and I think the Ipredict team are doing a great job building up the site so we all need to be a little patient - after all, we are talking about hundreds of dollars, not thousands or more.

Would love to see some more contracts Matt...things seem to have gone a bit quiet!

Lt.Gorman said...

i dont think the clarification itself is misleading, it was the accompanying blog post that was the misleading part. (not only misleading, but plain wrong)

Babytom said...

You know what I find ironic?

According to the blog entries, the active traders have lost money whilst (working on the premise where there are losers there are winners) the ones who 'buy and forget' are most likely reaping the benefits!

Gotta be in to win....

Lt.Gorman said...

* i guess its entire purpose was null and void in the end

Pmoney said...

I agree with Dibbo entirely. Apart from the misleading nature of clarification 6, I think Matt has held this contract together fairly well.

More contracts would be most welcome. Ones focused on potential Government action/inaction have proved to be interesting and, despite the difficulties with the bailout contract, it would be good to see more of them. How about, will Fiji expel NZ's high commissioner in the next week? It'd be fun times trying to predict anything Frank Bainimarama might do!

Babytom said...

Bainimarama is even more unpredictable than Bush
...Matt... can your heart take it? :)

PMoney said...

What do you think would be a reasonable starting price for expulsion? I'd suggest $0.4.

petal said...

Thanks Babytom and others for disclosing your ipredict identity. Anonymous, whoever you are - friend or fan of Matt or merely a compassionate individual, I agree that Matt probably could not have foreseen the issues that have arisen over the past few weeks. I believe I said something to this effect "...I don’t think he ever imagined that the bailout would become as complicated as it has become..." and before I proceed to qualify my protestation of any future repeat of this behaviour, let me say that I am all for the success of kiwi start-ups. I think it is fantastic that ipredict seems to be flourishing, I mean that most fervently and I hope that it continues on to be a success story.

That said, ipredict as an entity, that accepts money on a certain set of conditions, should not be able to unilaterally add/modify those conditions to potential disadvantage of the people whose money they have accepted, irrespective of the reasons for such change. Particularly where due diligence could have avoided the need to add/change the conditions.

The company ipredict is essentially packaging and selling risk that both ipredict and traders buy into. When you change/add conditions, you change the risk profile and you consequently change the product. If you were to buy a brand new car from a dealership, and then they delivered a 5 year old vespa would you accept this?

The 16/11/08 Clarification - "This contract will pay $1 only if President Bush approves a bail out." is an example of a modification dressed as a clarification that had nothing to do with two-ing and fro-ing by the US govt, and one that significantly changed the risk profile in ipredicts favour after its retrospective inclusion. How do you excuse this for those who purchased the stock before the modification?

The issues here are of fairplay and honour. Being fair and honourable means not retrospectively going back and modifying/adding conditions to a contract that changes the risk profile of stock to ipredicts advantage and to the traders disadvantage.

I have not lost money on this stock. For me it is a matter of principle and for the certainty of future trades.

Dibbo said...

Petal - Why do you say the changes benefit Ipredict? They do randomly redistribute money between traders (a bit like being back in Helengrad) but I don't think Ipredict the entity benefits at all. Indeed, Ipredict will be a net loser to the extent that this sort of thing causes traders not to participate.

Anonymous said...

Auto Bailout
Updated: 12/16/2008 10:55:00 AM. The Bailout: Bush Won't Set Timetable for Auto Bailout. Bush administration has not set a timetable to intervene. Administration officials have not told the companies how much assistance they could expect or when they might recieve it. Treasury department officials have reportedly been meeting with the automakers through the weekend to discuss each company's needs. There is strong opposition among U.S. voters to the auto industry rescue bill because of the widespread concern that the envisioned tax-funded bailout would allow the automakers to keep on going without radical restructuring to lower labor costs. The employees at GM and other big automakers are generally seen as receiving relatively good pay and benefits. In fact, the negotiations for a Senate deal broke down because the United Auto Workers union rejected a Republican compromise proposal containing steep pay cuts for its members. That may explain why many Americans believe the only way to ensure radical restructuring of the automakers is to force them to file for Chapter 11 of the U.S. bankruptcy code--a process that permits reorganization under the law, the U.S. equivalent of Japan's Civil Rehabilitation Law.
If GM files for Chapter 11, the wages of its employees will be inevitably slashed. The labor union should face up to this reality and accept wage cuts now to help revive the auto industry bailout bill. The question is will Bush give them money without any preconditions? If not, will the unions accept them now when they rejected them last week?

petal said...

There IS specific reference to president Bush in the long description that I am not certain was not there before, so I think it was wrong for me to say that the 16/11/08 clarification was a modification. This was indeed a clarification and not a modification. Some of the other clarifications do however qualify as modifications.

Dibbo they do potentially benefit depending on the dynamics of the market and the degree to which traders have the opportunity to mitigate any increased risk introduced by a modification to a contract.

I understand that to a degree ipredict is a moderator of this market and i think this is what Matt meant when he said he cannot give me personal advice on this matter – and fair enough, but none the less, have no illusions, ipredict is in this business to make a profit and is very much personally involved in the trading process, but I am not sure how.

I don’t have a issue with clarification that do infact clarify an ambiguous point.
I have an issue with modifications that changes the risk profile of a stock after traders have purchased the stock.

Economist said...

Petal, as I understand it, iPredict makes a loss from all contracts - the extent of those losses is determined by how thickly the market is seeded and how far away the initial price was away from the final payout. The variability of trading in between launch and payout is irrelevant.

iPredict's income is generated by its ability to sign up corporate clients to run private prediction markets to provide better information in business strategy and decision making.

Anonymous said...

...and by the fact that it earns interest on the money that we deposit and on any trading profits we withdraw.

Anonymous said...

Seriously Petal, you need to read the contracts and clarifications a bit more closely. All have been in line with the wording of the original contract.

I'm guessing you're sour grapes because you lost some money. Somehow, I don't think you'd be complaining if you'd gained a whole heap.

Just remember, no stock is a dead certainty. Anything can happen in this world and quite often does. When you buy a stock you have take on a calculated risk but also an unknown risk too. Otherwise, only complete idiots would lose money on it.

petal said...

Thanks very much for the clarification economist. I hope that my assumption is wrong and that your understanding is right.

For this single issue, there are so many other good things that could be said about the way this site is administered. However this issue is an important one.

Traders are exchanging money for a risk defined by a certain set of conditions. Those conditions need to be certain (ie not modified after it has been committed for trade), because those conditions represent the product that traders are buying and selling. If you modify the conditions, then you modify the product, potentially leaving traders with a risk profile they would not otherwise have bought into.

I think that unilaterally modifying the conditions of a stock after it has been committed for trade disadvantages traders that have already bought the stock. This power to unilaterally modify the conditions of a stock after it has been committed for trade should not be within the scope of ipredicts authority as a moderator.

Anonymous said...

U.S. Treasury Secretary Henry Paulson has just said that the Bush administration working on a proposal to make funds available to distressed U.S. automakers would not be rushed. "We need to do this but we need to do it right." The Treasury and the White House are reviewing financial data from the automakers in considering options for a bailout. "What we can do with the TARP (Troubled Asset Relief Program), if we do it, is a bridge (loan) and it will be temporary, but it needs to protect the taxpayer and it needs to have a path to viability," he added. Paulson indicated that the automakers have a lot of work to do to convince the government that they will use the money in a way that will return them to long-term health. "Viability is challenging to achieve, it's necessary to achieve and it's going to have to be financial viability and the viability to build and sell the kind of products that the market wants," he said. "Competitiveness is something that government can't confer on anyone."
So, nothing is certain until the fat lady sings..and sings well.

Anonymous said...

Weasel words from Paulson, on behalf of the administration..."products the market wants to buy", ha! Who, in 2001, changed the tax rules so that those huge Dodge SUVs (with 5 litre gasoline engines)and the like, qualified for a TAX KICK-BACK becuase they were classified as "commercial"? Why wouldn't you go and buy a vehicle that gives you back $5,000 - $7,000 off your tax bill?
Now, gas prices are high, no-one has any money, credit is getting like rockinghorse poo, and the US auto industry is being pilloried for not "providing products the market wants to buy", when it has been doing precisely that - till now.

Nothing to do with the Bailout, I know. Sorry.

Anonymous said...

In a letter to Bush today, several Republican senators said the administration should insist on strict conditions to force major business reforms.

"Absent such restructuring, we do not believe any amount of money will succeed in saving these companies," the letter said.

A report by Moody's Investors Service said on Tuesday that government help paired with prepackaged bankruptcy was the industry's most likely restructuring scenario.

Moody's said there is about a 70 percent chance of a prepackaged bankruptcy coupled with government assistance, and just a 25 percent chance of a government bailout without a bankruptcy.

petal said...

Anonymous (11:36 AM), you may wish to put into practice your own advice and read my previous post more closely. I did not lose money on this stock. In fact I made money on this stock. Possibly like myself, you have made some incorrect assumptions that has lead you to wrong conclusions. Some of us do actually care about how other people are affected by issues that may not affect us personally.

Anonymous (11:36 AM), you say no stock is a dead certainty which suggests that the essential point has escaped you. Of course no stock is a dead certainty, but the basis (ie the conditions that defines the contract) for your decision to buy into a risk (stock) needs to be certain before you go ahead with the purchase. If there was no certainty about the conditions of the stocks contract (ie if your frame of reference kept shifting) , how do you know whether to buy or short sell, or when to sell if you already bought? There would be nothing but unknown risk.

Anonymous said...

Mat - I'd be interested, as I'm sure some others would be too, in how large the GM Bailout pool is, and what proportion are, currently, long and what short.

Anonymous said...

Matt

Might be a silly question but can you confirm that a managed bankruptcy option with the administration contributing the require amount satisfies the contract? I see nothing that rules it out.

I'm not 100% sure that bankruptcy and bailout really go hand in hand, but with the ins an d outs of this contract I would like to be sure before taking a position!

Anonymous said...

Having 'bankrutcy' as a condition for the financial loan/help is not a 'bailout'. Other conditions such as reduction in jobs, restructuring etc are.

Anonymous said...

That [at17/12/08 6:27 PM] is my opinion ofcourse. Will await Matt's clariication.

Anonymous said...

House Speaker Nancy Pelosi, D-Calif., said "something will have to happen imminently" but requirements for restructuring should be attached to the funds.
"Otherwise, we're just giving life support, rather than a lifeline for viability into the future," Pelosi said. White House spokesman Tony Fratto told FOX News Tuesday that Bush administration officials are taking their time to make sure the right solution for the auto industry is chosen. "We're going to take the time we have available to get the right policy decision and make sure these firms are making the tough decisions and concessions necessary to become viable firms," he said. White House officials said they are keeping President-elect Barack Obama and his advisers informed of the discussions. If administration officials choose not to provide the money now, the Obama team could wait for the new Congress, which will have stronger Democratic majorities. But the delay could risk bankruptcy filings by GM and Chrysler. Levin said he expects the Bush administration's plan to help the Detroit automakers will be similar to the previous deal the White House reached with congressional leaders. That plan was passed by the House last week but blocked by the Senate, mainly by Republican senators, after the United Auto Workers union balked at making up front wage concessions to take effect sometime next year.

Graeme said...

I'm sure the US federal mint will be printing money 24/7 in time for a pre xmas bailout

jojo said...

December 16, 2008, 8:35 PM
GOP Senators Write Bush To Oppose Using TARP Funds For Auto Bailout
Posted by Scott Conroy. CBS news: Seven Republican senators signed a letter sent to President Bush on Tuesday, urging him not to use Troubled Asset Relief Program (TARP) funds in a bailout of U.S. automakers. The senators wrote that absent restructuring, they "do not believe any amount of money will succeed in saving these companies." The letter was sent by Senators Jim DeMint (R-South Carolina), Jeff Sessions (R-Alabama), John Ensign (R-Nevada), Tom Coburn (R-Oklahoma), John Cornyn (R-Texas), Mike Enzi (R-Wyoming) and Saxby Chambliss (R-Georgia). Read it in full below:
December 16, 2008. Dear Mr. President, We are writing to urge you not to use Troubled Asset Relief Program (TARP) funds to bail out the automobile industry. Last week, the Senate rejected a legislative bailout after the United Auto Workers (UAW) union refused to agree to changes necessary to help the Big Three automakers become competitive. According to news accounts, your Administration is considering providing TARP funds to the automakers without requiring the UAW and the automakers to make sufficient reforms. Absent such restructuring, we do not believe any amount of money will succeed in saving these companies.

Sincerely,

Jim DeMint

Jeff Sessions

John Ensign

Tom Coburn

John Cornyn

Michael Enzi

Saxby Chambliss

Anonymous said...

'A profit or a small loss in the hand now is worth two in the Bush'..(pun intended)..The time has come.

Anonymous said...

Holy Barstard - Sorry that was me "learning" - had asked my mate in the govt if it would go through before march the 1st. Now I can read I think I'll do much better next time, thanks.
Petal - I think that there is only one true answer for all your questions, "The market will decide".
I made heaps on this stock, then "learnt" a whole lot away. My only request is for more highly uncertain stocks, (Fiji quick stocks a must!), because it's more FUN.
This little web site of Matt's is the best value for money entertainment I got.
P.S. I'm going short because Bush is ritually unclean after that shoe passed over his head.

petal said...

For entertainment value, it is a great website.

Lt.Gorman said...

i get the feeling the administration is waiting to see if GMac can become a bank

Anonymous said...

Good call, Lt.Gorman - GMAC made more money from financing than GM made from manufacturing, over the last several years. And GMAC, if designated as a BANK, would, going on recent events, get an immediate bail-out! But, would it qualfiy under the terms?

Lt.Gorman said...

Cerebus owns 51% of GMAC, i think GM owns the other 49%.

So theoretically it would help both GM and Chrysler. GM would still need to receive a cash injection in order for it to pay its suppliers.

Anonymous said...

WASHINGTON (Dow Jones)--U.S. President George W. Bush said a plan to keep the
U.S. auto makers from collapsing needs to be wrapped up "relatively soon."
"I'm looking at all options," Bush told Fox News Channel in an interview to
be aired later Wednesday. "Two principles by which I'm making this decision [are]
- you know, one, a disorganized failure, disorganized bankruptcy or disorderly
bankruptcy...could cause great harm to the economy, beyond that which we're now
witnessing. And that concerns me.
"And the other point is that I'm not interested in really putting good money
after bad. So it's an issue that I'm thinking through," he said.
Fox released excerpts of the interview.
The administration is expected to soon unveil its plan to give General Motors
Corp. (GM) and Chrysler LLC government loans to avert bankruptcy. The money is
expected to come from the Treasury Department's $700 billion financial market
rescue package, though the details haven't been finalized.
"I'm thinking...it needs to get done relatively soon," Bush said.
Asked if he's worried that history will view him as the Herbert Hoover of the
21st century, Bush said he will be seen as someone who "put the chips on the
table" to stave off an economic meltdown.
"I'm a free-market guy," he said. "But I'm not going to let this economy
crater in order to preserve the free-market system."

-By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256;
henry.pulizzi@dowjones.com

jojo said...

The most significant statement by Bush is this : "And the other point is that I'm not interested in really putting good money
after bad. So it's an issue that I'm thinking through,"

Anonymous said...

FROM ABC NEWS : The White House said a decision on whether to provide an emergency loan to Detroit automakers is not imminent and suggested it's not definite either. "We're not going to be rushed into it just because there's pressure from the media ... on us to do something rash," White House press secretary Dana Perino said. Although the White House had recently given strong indications that an automotive bailout was likely, Perino repeatedly used the word "if" today. "If we're going to use taxpayer financing to assist the automakers, all stakeholders are going to have to come to the table and be willing to show that they are capable and willing to make really tough decisions about the way forward," Perino said. "We need them to become viable, competitive firms in the future. And in order to do that, concessions are going to have to be made by stakeholders," she said. At another point, she emphasized, "We will do it if we decide to do it." Administration officials are considering a range of options that fall into three categories. The administration could provide a short-term fix to keep the companies afloat until next year. They could also opt for a government-forced restructuring that would aim to accomplish what Congress failed to do, such as calling for a car czar, labor concessions and creditor concessions. The administration could also turn to "an orderly bankruptcy." "One of the options here is allowing the companies to go into a disorderly bankruptcy," Perino said. "That's one of the options that's least favored by the president. Put it at the bottom of the list, because he does not think that in the current weakened state of our economy ... we could sustain such a body blow." Nevertheless, Perino said Bush is still trying to determine whether the industry is willing to make the changes that will allow it to be viable. "I don't think there's any possible way that this president would agree to allow taxpayer financing to go toward firms that are not willing to make tough decisions to become viable and competitive in the future," Perino said. "I just do not think that will happen."

Anonymous said...

No help there "We will do it, if we decide to do it". Ha!

"Good money after bad"...? Short some more at this ridiculous price?

jojo said...

If Bush does offer them money, indications are that he won't make it easy on the companies or the workers. He will not just offer it on a platter as a Chrismas gift, I don't think. He will demand very drastic measures from them which they may find difficult or indeed impossible to accept. Will be interesting to see the outcome.

Lt.Gorman said...

"The White House and the Treasury are deep into negotiations with General Motors and Chrysler over reorganization plans that could result in freeing up more than $14 billion in emergency loans to keep the companies afloat through the first quarter of 2009, according to industry executives and a senior administration official."

"In an interview on Wednesday on CNBC, Mr. Paulson said the auto bailout talks were now his primary focus, but he declined to say if the money promised by the White House would be disbursed before Christmas. “The autos will get the money as quickly as we can prudently do it,” he said."

Also more speculation of an orderly bankruptcy and GMAC becoming a bank.

Good reading

http://www.nytimes.com/2008/12/18/business/18auto.html?ref=business

Anonymous said...

That same NY Times report on that link also states: "Legal experts said, however, that speculation was growing that the White House and the Treasury were exploring that idea, which would be unusual. It would require the advance cooperation of the autoworkers, bondholders, suppliers, dealers and other stakeholders, who would all have to agree to concessions.

The private-sector financing for such a package would total about $25 billion for both companies, legal experts said, with the Treasury providing a guarantee by adding about $5 billion from the financial rescue fund."

Lt.Gorman said...

yeah... for an orderly bankruptcy...

the article is all over the place really, as they all seem to be, due to lack of information. at the start it states:

"But the official indicated that the administration was inclined to do more than just keep G.M. and Chrysler alive until President-elect Barack Obama takes office, saying, “Giving them enough money to limp along doesn’t solve anything.”

I guess one side is speculation and the other is anonymous officials.

Anonymous said...

Yes, given the conditions of this contract and the uncertainty so far, I feel that the punters here, both sellers and buyers are taking a big risk at the prevailing prices here. The price should really be hovering around 50 to 60c I think.

Kingkarl said...

If you believe the contract is overpriced then buyers are obviously taking a bigger risk than short sellers.

If you think there is a 50-50 chance of the bailout, then sell, because you only stand to lose 20% and you have the possibility of making 80%.

Anonymous said...

More from ABC news:
In their own letter to the president, more than two dozen House lawmakers also voiced their concerns about using TARP money.
"Tempting as it is to step in with a federal bailout, American taxpayers cannot afford to save every company facing financial peril," the letter from the House lawmakers said. The House members also argued that "The legislation allows the $700 billion to be used for leveraging 'financial institutions,' which auto manufacturers surely are not. Congress never voted for a federal bailout of the automobile industry, and the only way for TARP funds to be diverted to domestic automakers is with explicit congressional approval."
Ironing out what concessions will be required of the car companies and the workers in any potential deal is a sticking point. After the House passed its measure one week ago today, an effort to do so failed in the Senate when Republican senators insisted on sharp cuts for unionized autoworkers. UAW president Ron Gettelfinger said today in a statement to ABC News. "The UAW has made difficult and challenging concessions in 2005 and 2007 negotiations, and we recognize that more may be required. However, we expect that the other stakeholders -- the board, management, suppliers, dealers and creditors -- must do their part as well, and they have some catching up to do."

jojo said...

Bailout not certain: December 17, 2008. The White House has switched to playing down prospects for an imminent rescue package for US automakers and instead suggested a deal involving taxpayers' money will require major concessions from the parties involved. "We're not going to be rushed into it," presidential media communications secretary Dana Perino declared. Perino said the administration was still working on the package and needed more information from all those involved, including lawmakers and the industry. Concessions, she said, were needed exchange for a rescue package. Perino did not specify what was wanted, or from whom, but added: "I don't think there's any way this president would agree to allow taxpayers' money to go to companies unwilling to make tough decisions to become viable and competitive."

- Sapa-AP-

Anonymous said...

Matt

Does an Prepackaged or managed Bankruptcy count as a Bailout under the terms of this contract? Sounds like a contradiction to me yet this seems to be what may be the outcome.

Mike K said...

Whitehouse comms is anything BUT clear. Perino opened her statement with "I don't think there's any way this president would agree to ....". Surely this is only her OPINION, and not in truth a "communication" from the Administration, which august body probably still has NOT A CLUE what they'll do. This stock should be priced at $0.50 and stay there until some INFORMATION is divulged.

Keaton 'Method' Johnstone said...

Just thought I'd stir up the pot a little...

1. iPredict makes a loss through the deployment of this public market. This doesn't really need to be discussed further. There is no mass conspiracy. We bank on the effectiveness on the public market, as a marketing tool for the business side of things, private internal markets. Same software, different contracts.

2. I just stumbled across this *cough*

3. Clarifications occur for .. two? .. reasons. Many upon Many e-mails come from you folks, many which have valid concerns, many that don't. But when you add up how many e-mails you get about a certain ambiguity, it needs to be addressed, even if it's trivial like the proper definition of a "Billion". If no one had raised this concern with us, there is a good chance we would never have had anything to clarify. Another reason for clarifications, is the sheer nature of the market we are dealing with here. Prediction markets predict the future. The future always holds uncertainty. If all of a sudden Yosemite park, erupts into a super volcano, and blasts apart the North American continent, well, Matt would have to post yet another clarification stating something about how natural disasters reflect the opposite point of view of half our traders and although North America is slowly sinking into the inner mantle of the earth, I'm pretty sure iPredict would have some clarification stating something someone didn't like.

Although the above demonstration obviously is not an issue right now, it could be tomorrow. We need to respect the concept of risk when making predictions.

Not to say I like any of this, but really there is no way we can truly have an interesting prediction, is by having people on both sides of the fence. If we all believed they would get bailed out, it would sit at 1$ since the start. Whats the point of prediction there? Now if the price is floating around 50 cents? There's uncertainty. Just as much money on both sides of the fence. Which means, like all games, someone is bound to lose.

I hate losing money too. I lost 5 Bucks on this, until I saw all of you going nuts, and made 5 bucks back :P
I've closed myself off this stock though, heaps of potential for swinging stuff round here though. Imagine if we had allowed people to deposit up to 100 grand... oiph.

*note* This does not reflect the opinions of iPredict. Just me.

Anonymous said...

Latest from Reuters

GM, Chrysler close in on deal for US loans: sources
http://www.reuters.com/article/ousiv/idUSTRE4BI0PY20081219

Maybe we wont have to wait long now for the endgame...

Anonymous said...

LATEST NEWS : NEW YORK (Reuters) - Treasury Secretary Henry Paulson on Thursday offered mixed signals on the chances of a bailout for troubled automakers, saying failure is not an option but adding that any bankruptcy should be "orderly." His tone suggested there was lingering doubt within the Bush administration on how to deal with the teetering industry.
He added: "If the right outcome is bankruptcy, then it's better to get there through an orderly process." Paulson also appeared reticent. "This is a time when it makes sense to be prudent," he said. In addressing broad issues of the financial system, Paulson said the U.S. supervisory system was broken and required an overhaul that could see the Federal Reserve emerge as a mega-regulator that would have power over all large financial institutions. The remarks echoed those by President-elect Barack Obama, who promised on Thursday to strengthen financial regulatory agencies and crack down on runaway "greed and scheming" in an effort to restore stability to a reeling U.S. economic system.

Holybastard said...

I just have one question for Matt Burgess. If the $5 billion loan were transferred to GM, and, then later withdrew by the Bush administration because the company was not viable, will the contract still deemed satisfied? Thanks.

Anonymous said...

The funds will be drawn from the Treasury's 700 billion dollar Troubled Asset Relief Program (TARP). The companies will provide warrants for non-voting stock, accept limits on executive compensation and perks and give the government priority to other debts, to the extent permitted by law.

An additional four billion dollars from the TARP will be available in February, contingent upon congressional approval of the second portion of that program.

The automakers will have to take steps to demonstrate their viability by March 31.

"The automakers and unions must understand what is at stake and make hard decisions necessary to reform," Bush said. "We intend to send a clear message to everyone involved in the future of American automakers."

He added that restructuring the industry would "require meaningful concessions from all involved in the auto industry."

Among the "targets" established by the loan would be a two-thirds reduction in debt by exchanging debt for equity, more flexible work rules and cuts in wages to make the companies competitive with foreign manufacturers established on US soil.

"The loan will be automatically called by the government and will be repaid in full if certain conditions are not met" by March 31, a senior administration official said.

"The most important one is that the firms must be viable."-------So, the question still remains: What if the conditions are not met? Would it still be considered a bailout?

Lt.Gorman said...

It's still a +$5bill transfer regardless of when and why they have to pay it back

Anonymous said...

bugger. gotta hate the active order feature when your too slow to react to news :(.

Holybastard said...

I believe this contract can now be closed at any time.
The proof is here:
http://www.ustreas.gov/press/releases/hp1333.htm

Lt.Gorman said...

need some new contracts round these parts....

Anonymous said...

Matt had said there would be some every couple of days leading up to Xmas - that plan obviously didn't work out. Pretty important to ensure that there are plenty of tradeable contracts else people will not visit the site and hence liquidity dies completely.

Anonymous said...

Hi HB

As I read the terms (Appendix A), this cannot be accounted as "judged" till the second advance ($5.4 bn, 16 Jan 2009) has been actually made. At this point nothing has been paid, and the first hand out on 29 December is for only $4.0 bn. If the subsequent advances are not made, for whatever reason, then the shortrs may well score.

Pmoney said...

I too remember Matt saying there would be new contracts every few days up until Christmas - maybe the iPredict team all went on holiday early?

Anonymous said...

No new stocks, that's true, but a few nice new 'features'. Thanks Matt.