August 30, 2010

On GM’s IPO: Taxpayers ‘are poised to get royally screwed’

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 6:31 pm

GovernmentMotors0609Geez, Shikha Dalmia, how do you really feel?

Also note that Ms. Dalmia, in the midst of describing the IPO’s possible valuation at Forbes, pretty much gives away the fact that Ed “We Don’t Want to Be ‘Government Motors” Whitacre more than likely was shown the door for griping (bolds are mine):

(The IPO’s) timing is driven not by the financial needs of the company– or the interests of taxpayers who are poised to get royally screwed–but the election-year needs of the Obama administration.

… in its application to the Securities and Exchange Commission–which, guess what, will come through just in time to make an IPO possible before the November elections!–GM admits that its “disclosure controls and procedures and internal control over financial reporting are currently not effective.” And this “could materially affect our financial condition and ability to carry out our business plan.” Companies include all kinds of outlandish mea-culpas in their IPO applications to cover their derrières in the event of investor lawsuits. However, this one goes to the heart of the information that investors need to determine whether GM is a good investment, especially since it is going public after only two good quarters as opposed to the usual four. If GM can’t guarantee its own numbers, how exactly are investors supposed to evaluate its worth?

… potential investors are likely to take a dim view of the company’s prospects right now, making it nearly impossible for taxpayers who still have somewhere between $40 billion to $60 billion “invested” in it to come out whole. For that to happen, the Treasury’s 304 million of the company’s 500 million common shares would need to average $131 to $197 per share, notes Brad Coulter director at O’Keefe & Associates, a Michigan-based corporate finance firm. That would put GM’s implied valuation at somewhere between $65 billion to $98 billion.

To understand just how absurdly high this is consider that Ford Motor Company, whose earnings are expected to be six times those of GM, has a market value of only $40 billion. “There is no rational reason for investors to choose GM relative to Ford right now,” notes Francis Gaskin of IPODesk.com. But even if investors valued both companies the same that would still represent a 50% loss for taxpayers. It was always unlikely that taxpayers would ever recover their entire investment, but a more auspiciously timed IPO might at least have limited their losses.

Nor is the IPO’s timing good for GM. The company is–rightly–eager to shed the sobriquet of Government Motors. So eager in fact that its outgoing CEO Ed Whitacre launched a campaign this spring misleadingly claiming that GM had paid back its government “loan” in full after returning only $6.7 billion. But even he thinks that the IPO is a dumb idea. He apparently wanted to wait until GM could command a better share price and then have the company go fully public at once instead of in several installments as per the current plan.

Whitacre expressed his misgivings at a recent Management Briefing Seminar in Michigan’s Traverse City, according to Sean McAlinden of the Ann Arbor-based Center for Automotive Research. “And then 48 hours later he was gone,” McAlinden says.

But Whitacre’s departure won’t change the risk–”a big risk in my mind,” says O’ Keefe’s Coulter–that the IPO could turn into a PR nightmare for GM if its opening price is too low.

Read the whole thing.

To be fair, one could argue that Ford might be seriously undervalued; its P/E is currently only 6.2. But even if Ford’s P/E were double that, you still can’t justify your way to a taxpayer-relieving valuation for GM without some form of yet to be defined coercion. It should be interesting.

Lucid Links (083010, Afternoon)

Filed under: Lucid Links — Tom @ 1:04 pm

We told you, but you voted for him anyway, Part 1: Peggy Noonan at the Wall Street Journal

We Just Don’t Understand
Americans look at the president and see a stranger.

Instapundit’s reax: “Of course, if Obama is such a mystery, maybe people in the press — like Peggy Noonan — should have given him closer scrutiny before the election.”

They didn’t. A lot of us on the center-right did. We know him better than so-called “progressives” do. So do most Tea Partiers. That’s why, so far, the elections are shaping up to be what they are.

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We told you, but you voted for him anyway, Part 2: Mort Zuckerman, at US News

The Most Fiscally Irresponsible Government in U.S. History
Current federal budget trends are capable of destroying this country

It’s a nice screed in a sense, but Zuck’s attempted solutions are pretty weak: “We will have to think of ways to reduce the cost-of-living increases on Social Security benefits for wealthy seniors by slowly increasing their Medicare premiums and leaving everybody else’s untouched. We may have to allow the Bush tax cuts to expire, certainly for households earning more than $250,000.” That money needs to be invested in commercial enterprises that will grow and create jobs. Measures such as Zuck proposes might work in a less volatile time, but given the very lack of confidence that Washington will ever reform and keep us from being the next Greece, they’re more likely to lead to capital flight to more hospitable climes, like (it’s hard to believe I’m typing this) Germany and India.

Zuck also voted for Obama. He should have known better. So much of the ruling class was completely, utterly duped.

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The “Obama as Muslim” poll result is not as outrageous as it seems, at least to anyone who aw the following in May’s issue of Israel Today (I have the full PDF, but bandwidth limitations prevent posting it) a couple of months ago:

ObamaAsMuslimIsraelToday0610

The person quoted as having said that on Egyptian TV, Ahmed Aboul Gheit, really is a very high-up Egyptian government official.

Did Mr. Gheit possibly misinterpret what the president told him through an interpreter, or did the interpreter(s) fail to properly communicate when Mr. Gheit and the President “spoke” to each other? Of course it’s possible.

If Obama indeed said what is alleged, was he just saying that he is “Muslim” by birth or ancestry but not by current religious belief? Of course that’s possible.

Is Gheit possibly making it up? Yeah, but that seems much less possible. Not that it could easily be found, but I haven’t located any evidence that Gheit has walked back any of what he said.

Is the Israeli source who watched the broadcast and published the potentially explosive quote making it up? I wouldn’t think so.

I don’t believe Barack Obama currently practices the Muslim faith (which is what the poll question was asking), but people who are aware of the facts above and conclude that he is, or who “incorrectly” answered the poll question based on their knowledge of his ancestry (which, don’t forget, is NOT as is commonly represented) aren’t pulling it out of thin air.

More substantively, there is little doubt that this administration is devoting a lot more than 1% of its attention and clear favoritism towards a group that is less than 1% of the nation’s population, and in sometimes troubling ways. A brief litany is here. The NASA thing was one such annoying example, but what follows is much more disturbing (HT Powerline via an e-mailer)

Coming August 31: ‘Direct Access’ Stimulus Grants for the Muslim Brotherhood

On August 31, this coming Tuesday, the Muslim Brotherhood-associated “Coordinating Council of Muslim Organizations” (CCMO) will bring 25-30 Muslim leaders of 20 national Muslim groups to attend a special workshop presented by the White House and U.S. Government agencies (Agriculture, Education, Homeland Security, Health and Human Services etc.) to provide the groups “funding, government assistance and resources.” The workshop will apparently provide special access for these Muslim Brotherhood organizations: the organizers pledge to provide “direct access” and “cut through red tape.”

Read the whole thing. The associations with terror groups and terror sympathizers will become obvious.

I bet there are a lot of non-”Muslim Brotherhood-associated groups” — like small businesspeople who could actually take on new employees and help bring the economy out of its malaise — who would love to have “direct access” and “cut through red tape” in dealing with the government, or even take on one more of the many functions the government isn’t carrying out too well. But nooooo.

GZM Developer, Imam Have Tax, Financial Issues; Will National Media Care? (Updates: NYT Covers on Pg. A17; NY Daily News Nails Gamal’s Criminal Past)

GZMelGamalAndImamRauf0810Note: This post originally went up shortly after midnight, but has been carried forward because of the content of the updates.

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This past weekend, intrepid journalists at the New York Post and NorthJersey.com released information they unearthed about proposed Ground Zero Mosque “organizer” Sharif El-Gamal and frontman Imam Feisal Abdul Rauf, respectively, that the wire services, the New York Times and the national TV networks would likely have run with by now had the items related to a major church or synagogue.

But since the news has to do with what has turned into the PC crowd’s cause celebre and New York City Mayor Michael Bloomberg’s personal pet project, you may not see these stories covered anywhere else (see Update below).

The arguably more important story of the two concerns the tax problems of Mr. El-Gamal (pictured above via the Post) and his company, because they directly related to the GZM’s property. The story by Isabel Vincent and Melissa Klein went up early Sunday morning:

Mosque big owes 224G tax

The mosque developers are tax deadbeats.

Sharif El-Gamal, the leading organizer behind the mosque and community center near Ground Zero, owes $224,270.77 in back property tax on the site, city records show.

El-Gamal’s company, 45 Park Place Partners, failed to pay its half-yearly bills in January and July, according to the city Finance Department.

The delinquency is a possible violation of El-Gamal’s lease with Con Edison, which owns half of the proposed building site on Park Place. El-Gamal owns the other half but must pay taxes on the entire parcel.

… Before any building can go forward, the developers also must get approval from the MTA because the 2 and 3 subway lines run under a portion of the Park Place property, The Post has learned.

… El-Gamal’s spokesperson insisted to The Post that the taxes had been paid and that the “subway lines do not pose a problem.”

The Post revealed this month that El-Gamal owned only half the site.

The news about Imam Rauf (picture above is an AP file photo) comes from Peter J. Sampson and Jean Rimbach at NewsJersey.com (“Ground Zero Imam has history of tenant troubles; N.J. apartments in need of repair”). In addition to the problems noted in the headline, it seems that Rauf has experience squeezing money out of the political system:

The Muslim cleric at the center of the proposed mosque and community center near Ground Zero is also a New Jersey landlord who got more than $2 million in public financing to renovate low-income apartments and has been beset for years by tenant complaints and financial problems.

Imam Feisal A. Rauf won support for his Hudson County projects from powerful politicians, among them Robert C. Janiszewski, the disgraced former county executive. He also was awarded grants from Union City when U.S. Sen. Bob Menendez was mayor.

… Rauf forged ties with Fred Daibes, the prominent waterfront developer and bank chairman. Additionally, Rauf is a onetime business ally of a Daibes associate who sued the imam for alleged mortgage fraud. The 2008 suit was quietly settled in June.

The revelations about Rauf, who lives in North Bergen, add another dimension to the public profile of a man both lauded as a builder of bridges between diverse religions and cultures and vilified as being insensitive to the survivors of the Sept. 11, 2001, terrorist attack by proposing a mosque near the World Trade Center site.

… Page after page of municipal health records examined by The Record show repeated complaints ranging from failure to pick up garbage, to rat and bedbug infestations and no heat and hot water.

Cynthia Balko, 48, of Union City — a longtime tenant of Rauf’s — said she’s had to live with rats, leaks and no heat: “I don’t have anything nice to say about the man.”

She finds it hard to believe Rauf’s going to build a world-class Islamic community center, with fitness facilities, auditorium, restaurant, library, culinary school and art studios, as well as a Sept. 11 memorial and space for Muslim prayer services.

“He can’t even repair the bells in the hallway. He doesn’t take care of his properties. But he’s going to take care of a mosque?”

The biggest tax involved in all of this may be on the establishment press’s cover-up mechanisms.

So far, they’re holding. As of shortly after midnight Eastern Time, three stories at the Associated Press time-stamped with Monday’s or Sunday’s date that mentioned the Ground Zero Mosque, which the AP refers to as the “Park51 project” (here, here, and here) had no reference to either gentleman’s difficulties. The New York Times also had nothing beyond the AP items just noted.

So far, they’re holding. As of shortly after midnight Eastern Time, three stories at the Associated Press time-stamped with Monday’s or Sunday’s date that mentioned the Ground Zero Mosque, which the AP refers to as the "Park51 project" (here, here, and here) had no reference to either gentleman’s difficulties. A search on "Park51" at the New York Times returned nothing beyond the AP items just noted.

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UPDATE: A BizzyBlog commenter informed me that the Times has a story on Rauf and the GZM that it published online last night, and which appears in today’s print edition on Page A17 (“Imam Says Politics Has Stoked Controversy Over Center”). I missed it because the project name of “Park51″ is not in Michael Grynbaum’s article (nor is the word “mosque”).

Grynbaum included the following about the property tax issue:

Even as the project’s developers collected $10,000 at a fund-raiser this weekend, they were working to settle an outstanding property tax bill of more than $200,000 on the site where the center is expected to be built.

Representatives of the real estate concern run by Sharif el-Gamal, the developer on the project, said they had delayed the payments while negotiating with the city for a lower tax.

Mr. Gamal plans to buy the land from Con Edison, the current owner, which has said the transaction would proceed as long as Mr. Gamal agrees to a price set by an appraiser.

But a local property tax dispute may pale next to the bigger challenges faced by Mr. Gamal, 37, a relative novice in the New York real estate world, as he embarks on what is likely to be a difficult and protracted round of fund-raising.

That’s nice. Only 21 more such fund-raisers, and they’ll be out from under that problem. Then Mr. Gamal can start working on the 10,000 additional fund-raisers needed to finance the project’s $100 million cost.

There’s also this about Mr. Gamal, who is 37:

His late-blooming real estate career came after a difficult youth: Mr. Gamal pleaded guilty to at least six misdemeanors in his late teens and early 20s, including charges related to disorderly conduct, drunk driving and attempted shoplifting. He was once arrested for soliciting a prostitute in Manhattan, according to a law enforcement official.

In 2005, Mr. Gamal was arrested after he punched a man who owed rent to his brother, who is also a property owner. Mr. Gamal later settled the matter for about $15,000.

“I regret many things that I did in my youth; I have not always led a perfect life,” Mr. Gamal said in a statement issued Sunday by his spokesman.

In 2005, Mr. Gamal would have been roughly 32 years old.

UPDATE 2: It turns out that the Times is also playing catch-up on Mr. Gamal’s criminal history. On Saturday, James Fanelli at the New York Daily News covered that topic (“Park51 developer Sharif El-Gamal has a history of run-ins with the law”). Holy moly (so to speak). Read the whole thing (“Sharif El-Gamal has a history of at least seven run-ins with the law, including a 1994 bust for patronizing a prostitute.”).

Cross-posted at NewsBusters.org.

Positivity: Glenn Beck’s Rally to ‘Restore Honor’ Gathers Half a Million Americans, Makes History

Filed under: Positivity — Tom @ 5:56 am

beck-crowd-APVia Deacon Keith Fournier at Catholic Online (HT Instapundit):

8/29/10

The crowd easily exceeded 500,000 people

On Saturday, August 28, 2010, a massive crowd of people gathered in Washington, D.C. for a “Restoring Honor” Rally. The Rally was called by Glenn Beck, who has captured the heart of many Americans and raised the ire of some in the main stream media. The sheer numbers demonstrated that the rally had support well beyond the persistent efforts by some in the media to marginalize it.

On Saturday, August 28, 2010, a crystal clear, sunny day in Washington D.C. a massive crowd of people gathered for a “Restoring Honor” Rally. The Rally was called by Glenn Beck, the popular radio and television personality who has captured the heart of many Americans and raised the ire of some in the main stream media.

The sheer numbers demonstrated that the rally had support well beyond the persistent efforts by some in the media to marginalize it as a “tea party” event. Of course, in their condescension these same people used that term in a disparaging manner. The crowd easily exceeded 500,000 people. The event stage was set up at the base of the steps of the Lincoln Memorial. However, the massive crowd stretched along the Lincoln Memorial, on both sides of the reflective pond stretching all the way to the Washington Monument.

An opening song, reflecting on the aftermath of the tragedy of 9/11, was written for the event and beautifully performed by a woman named Angelica Tucker. It set the theme: “We must rebuild our lives, our strength, and our hearts. not just the buildings we lost.” It was followed by an eloquent prayer by Evangelical Bishop Harry Jackson of Washington’s Hope Christian Church who is emerging as one of many men of courage, honor and character unafraid to speak and live the truth in our day.

The address given by Dr. Alveda King, the niece of Dr. Martin Luther King, secured this heroic and inspiring woman’s place in American history. This is the 47th anniversary of her uncle, the late, great Christian minister and human rights hero, Dr Martin Luther Kings’ famous “I Have a Dream” Speech. He would have been proud of his niece. She is an heir of his legacy and certainly has his extraordinary gift for prophetic rhetoric which can rouse the heart of a Nation.

This was a masterful and inspired speech, given on the day when the Nation honors one of our greatest Americans. Dr Alveda King candidly and honestly declared that “our material gains seem to be going the way of our moral losses” but then insisted “We are Not without Hope!”. She referenced the iconic words of her uncle, adding “I Still Have a Dream”. She roused the crowd and called the Nation to unity through the restoration of the guiding principles which inspired her uncle’s heroic life and death and informed the American experiment.

The pundits who condescendingly sought to marginalize the event for weeks before it happened – going so far as to attempt to paint it with allegations of racism – should have been ashamed. The stage was filled with men and women of color, who, with the raucous support of the hundreds of thousands gathered, affirmed our solidarity as Americans. Dr. Alveda King reminded the crowd that we are ” united by blood as one race, the human race.”

The address given by Glenn Beck followed, calling the Nation to ‘Wake Up’. He told the hundreds of thousands gathered in the Nation’s Capitol that it was time to “Start the Heart of America again.” Framing his address with copious references to the founders and founding documents he used the backdrop of the Lincoln memorial and the Washington Memorial to accentuate his message. He honored the heroism of the founders and the genius of the American experiment. However, he also acknowledged the limitations and the scars of those who helped found the American experiment. This was the most significant part of Beck’s address. He repeatedly explained to the crowd that scars and mistakes are invitations to learn, change, grow and improve – insisting that this is true for people and for Nations. He is correct.

He invited the crowd to continue the “unfinished work” which Abraham Lincoln referred to in his Gettysburg Address, telling those gathered to make a choice for the future. He proclaimed it is “…what we do from here that matters. This is the point of choice!” …

Go here for the rest of Mr. Fournier’s column.