gm

In a bit of corporate strategy that would make Bernie Madoff blush, General Motors plans to use bailout money to pay back the $6.7 billion loan it has from the government.

The rest of the $50 billion flushed into General Motors has been converted into equity, meaning it does not have to be paid back. The Wall Street Journal reports (subscription required) that "GM still has $13.4 billion in an escrow account that came from its U.S. bailout, or twice the amount it needs to pay the government back. While repaying the loan promises to further bolster the health of the company's balance sheet, it also locks up cash that could be used to fund operations if the U.S. economy continues to slump, or if GM cannot arrest a severe decline in its sales and market share."

U.S. stock futures followed global markets higher Monday morning as Japan announced its economy grew at a faster-than-expected pace and governments around the world said they would maintain their stimulus policies. Investors are also awaiting a speech from Federal Reserve Chairman Ben Bernanke, GM's first earnings report since emerging from bankruptcy, as well as more economic data, including retail sales and manufacturing.

Japan's gross domestic product grew at an annual pace of 4.8% in the third quarter, its largest expansion in more than two years. This was higher than economists' 2.6% projection. The world's second largest economy relies heavily on exports and demand at home and overseas improved, indicating its trading partners are also recovering.

Speaking at Bloomberg Washington Summit Friday, Steven Rattner, the former head of the government's auto task force, wasn't exactly in the mood for pulling punches.

Referring to his time overseeing the government involvement in the auto industry, he said that "They were some of the worst-run companies I've ever seen in my life," and said there was plenty of blame to go around, including unions and the companies' executives.

Speaking at Texas Lutheran University, General Motors (GRM) chairman Edward E. Whitacre Jr. said that the company would be able to pay back all of its government loans -- soon!

"There is a sense of urgency at G.M. to repay the money we owe as soon as possible," Whitacre said. "Can G.M. pay back its loans? You bet. I can't tell you when but it won't be very long and it's sooner than you think."

Vibe, the urban music magazine, is clawing its way back to life. New owners and editors are trying to make the magazine a success reality again, and they are making the web a priority ... which shouldn't be news but is for an ailing print industry.

The new editor-in-chief, Jermaine Hall, told AdAge that "Vibe.com is really the hub," and that everything needs to point back to the online presence. The print publication will be just one part of the Vibe Lifestyle Network, a move we're also seeing with the likes of Rolling Stone, where the website is being brought back into the fold (and may actually get some resources).

"Treasury's own analysis suggests that the circumstances necessary for the companies to reach market capitalizations high enough for Treasury to fully recovery its equity investments are unlikely," a Government Accounting Office report on the taxpayer-funded bailouts of General Motors and Chrysler found.

The problem is this: In order for taxpayers on General Motors to be made whole, GM will have to hit a market capitalization of $66.9 billion.

The highest GM's market cap has ever been is $57 billion -- and that was in 2000, when circumstances were very, very different.

The five most senior General Motors (NYSE: GRM) executives, along with the 20 next highest-paid employees, are going to see their cash compensation fall $3.9 million (31%) on a year-over-year basis.

The decision was made by the "independent master" that was appointed to set pay and stock levels for those in charge of companies that have received a majority of the funding from the federal government. GM is not on its own, as top execs at GMAC (the company's financing arm) and Chrysler will see their compensation cut as well.

The Wall Street Journal reports (subscription required) that "General Motors Co.'s search for an outsider to replace its chief financial officer is being complicated by the pay restrictions the Treasury Department is imposing on companies that received large bailouts from the federal government, according to people familiar with the matter."

GM is expected to be able to offer its CFO a pay package consisting of a significant amount of stock (Hah!) but a salary of only about $1 million per year -- not much for a company of GM's size and problems. Plus, ya gotta live in Detroit and work with Fritz Henderson.

China has taken its first major step into the U.S. car market as General Motors announced it had finalized a deal to sell off its Hummer truck brand to Chinese auto manufacturer Sichuan Tengzhong Heavy Industrial Machinery.

Under the deal, GM will continue to make the trucks no later than 2010. While a deal has been reached, it is still going to be up to Chinese regulators to approve the deal and decide if the brand can be profitable and fit into the country's overall national strategy to improve energy efficiency.

Mark LaNeve has been dismissed as General Motors' North American sales chief as the company looks to reverse a sales decline that has been driving tanking market share in the North American market. On a conference call with investors, CEO Fritz Henderson said that the company would "benefit from fresh perspective" on marketing in the United States.

For the third quarter of 2009, GM's US market share fell to 19.5% -- down from 22.1% in the prior year quarter.

After an enormous amount of hype and wasted PR-money, General Motors is ending its car-selling partnership with eBay (NASDAQ: EBAY) after dealers reported that the program didn't spur sales and led to a raft of low-ball offers that didn't go anywhere.

By far my favorite quote from the Wall Street Journal coverage (subscription required) of this development: "We thought the program was successful but that this was not the right time," GM sales chief Mark LaNeve said.

The Congressional Oversight Panel reported on Wednesday that most of the $23 billion in taxpayer funds provided to General Motors and Chrysler is unlikely to be repaid. The Congressional Budget Office estimated in June that taxpayers would lose $40 billion of the first $55 billion provided to the auto industry.

The Treasury Department acknowledges that most of the $23 billion provided by the Bush Administration is likely gone forever, but added that there is a "reasonably high probability of the return of most or all of the government funding" provided by the Obama administration.

U.S. stock futures drifted lower Thursday morning, unable to keep Wednesday's momentum aided by comments from the Federal Reserve saying economic activity is stabilizing or improving in most of the U.S. This morning, as investors digest President Obama's health care speech, they also await several reports, including trade and employment data.

[Update: Jobless claims fell last week.]

The Federal Reserve released the Beige Book of economic anecdotes late in the session Wednesday. Economic activity is stabilizing or improving in most of the U.S., the survey said. While the recession may be over according to the Fed and several other economists, albeit with a cautious outlook, the U.S. employment picture will stay bleak well into next year long after the recession ends, even if the worst of the labor market crisis is over, a poll of private economists conducted for the Blue Chip Economic Indicators September survey said.

The General Motors' board is starting its two-day meeting today, and it is believed that the company is going to decide what will happen to the German Opel automobile unit. There are other topics to be discussed, including a new marketing campaign and preparation for a public offering of stock so the automaker can repay the U.S. taxpayers.

Nevertheless, the major news will be the company's decision about Opel -- what should General Motors do? Is it smart for the company to give up a portion of its market share in Europe in order to stabilize American sales? Reuters examined several scenarios General Motors might face.

Sales of vehicles from the new General Motors Co. fell more than 20% in August, compared to the same time last year. Of course, a lot has changed in that year. Customers were flocking away from car dealers at the end of last summer as the recession tightened its grip, consumers tightened their wallets, and car sales and associated activities were in the toilet.

Fast forward a year later: GM recently exited bankruptcy as the "new GM" while having jettisoned quite a bit of the baggage that helped push it over the edge earlier this year. GM is still digging itself out of a hole, and the just-completed "Cash for Clunkers" U.S. government subsidy helped it not have a 40% decline year-over-year compared to August 2008.