By on March 21, 2012

After GM’s  IPO, stockholders looked with great anxiety at the 32 percent the U.S. government still holds in General Motors. Allegedly, the U.S. government wanted to shed that share as quickly as possible, and someone dumping the stock does not make for rising stock prices. Now, GM is sending out smoke signals that a sale is far from imminent. GM’s chief spokesman Selim Bingol wrote in a blog  that “the day will eventually come when the Treasury sells its GM stake. When is anybody’s guess (we have no say in the matter).”

In a perverse way, the GM stock had tanked before the U.S. government could dump it. The low stock price holds the government hostage. “At current stock prices,” writes the Detroit News, “the Treasury would incur a loss of nearly $16 billion on its bailout of GM.”

The stock currently is 24 percent below its $33 IPO price. Says the DetN:

“Given that a sale before the November presidential election would highlight the cost of the government’s rescue of GM, officials say it is unlikely the government will sell any shares before then.”


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94 Comments on “Government Motors On...”


  • avatar
    jmo2

    “the Treasury would incur a loss of nearly $16 billion on its bailout of GM.”

    Seems like a bargain to me. As no debtor in possession financing was available to anyone, especially GM, it would have collapsed into chapter 7 liquidation during the worst financial crisis since The Great Depression taking countless suppliers down with it. Seems like money well spent.

    • 0 avatar
      DenverMike

      @jmo2

      Suppliers don’t just sell to GM or Chrysler. If they do, that’s their problem. Only the strong survive… Hundreds of companies and establishments die everyday that are Not poorly managed. Where’s their bailout?

      Surviving suppliers would’ve grown and hired displaced workers. See how this works? Same goes for surviving auto makers/workers/dealers. Or are you thinking lost sales of GM and Chrysler vehicles would’ve just vanished? “Can’t buy a new Tahoe so I’ll just WALK from now on!!!”??? No one cares that much… especially not fleet buyers.

      • 0 avatar
        Steven02

        Suppliers can’t and manufactures can’t increase production that quickly. Jobs would be cut at suppliers. The manufactures jobs would have been gone. Fewer people would be buying cars.

        Eventually, you are correct. People could get hired by other suppliers and manufactures, but it would have taken time, likely years.

      • 0 avatar
        jmo2

        Your plan worked great back in the 30s, can’t imagine why we didn’t want to try it again.

      • 0 avatar
        DenverMike

        No doubt, not all jobs would’ve come back and the US economy also plays a role as it does in most retail industries but didn’t we end up shuttering plants anyways in the restructuring? Culled dealers by the thousand? Jobs outsourced to Mexico and abroad? Rewarding bad behavior? What has GM learned?

      • 0 avatar
        forraymond

        I’m not sure which business school professor told you that is how life works in the 2010′s, but you should ask for your tuition back.

  • avatar
    GS650G

    It’s only a bargain if you feel you benefited from other people’s money being spent to bail out a private corporation while the investors were made to get behind the unions for ownership of the company.
    The lesson learned here kiddies is if you are politically connected the US Treasury stands willing to preserve your job while other people not only get tossed but pay for it as well.

    • 0 avatar
      kenzter

      See that little 10% sliver up there? Where it says VEBA? That’s the “union ownership” everyone cries about. It’s a healthcare trust fund.

      So the union got 10% of the company to cover their healthcare trust fund. The same trust fund that the government would have been on the hook for. Sounds like a good deal to me.

      • 0 avatar
        GS650G

        Kenzter must not have been a GM investor before.

      • 0 avatar
        indi500fan

        Why would the govt have been obligated to cover the UAW healthcare benefits if GM went through a normal bankruptcy?

      • 0 avatar
        kenzter

        Sorry, misspoke. Agreed, the government would not have been on the hook. But VEBA made the UAW a creditor.
        Anyone dumb enough to own GM stock in 2009 deserved what they got.

      • 0 avatar
        Pch101

        “Agreed, the government would not have been on the hook.”

        Why would you agree with it? It’s wrong.

        If GM or Chrysler had been liquidated, then the pension obligations would have been transferred to the PBGC. The PBGC was already short of funds, and would have probably required a bailout of its own, due to the size of the hit.

      • 0 avatar
        kenzter

        Because the PBGC is for pensions, not healthcare. So I agreed that directly, no the government would not have been on the hook. Indirectly though, they would have in the form of increased medicare claims.

    • 0 avatar
      alluster

      I agree It sucks that our govt. had to bail out GM and Chrysler. However, given the economic situation at that time and how frozen the credit market was, they was little else that could have been done. We can all speculate what could have happened if the Govt hadn’t stepped in. It was highly unlikely that GM and Chry Co, would have survived without intervention, which is a risk the govt. couldn’t take. I only have a beef with how the bailout was executed. Should have been a loan all along with GM’s assets as collateral. $16B is 51 dollars per man, woman and child. The 2.5 Million individuals/families who buy GM vehicles each year save a combined $5B through incentives. Within 3 years, we would have got all our money back that we invested in GM.

      The world’s most powerful nation and the world’s largest economy does need an auto industry of it own unless you want us all to sell pizza’s to each other.

    • 0 avatar
      mikey

      Here in Ontario the far left, labour friendly, provincial government, of the early 90′s let GM of the hook for thier pension contributions.

      After all GM was “too big to fail”

      • 0 avatar
        carbiz

        As the world’s largest provider of health care and with hundreds of thousands of former employees on their pension plan, there was no way GM was going to survive the bank implosion of 2008.
        As a Canadian, you should appreciate the mess GM was in. Our ‘free’ healthcare is eventually going to overwhelm the treasury because in 1965, Pearson and Co. never envisioned the medical treatments available in 2012, or the million dollar machines hospitals are clamoring for. My friend’s GM-retiree father retired in the late ’70s, died in the mid-80s, yet his widow was well taken care of until 2001.
        The hilarious part is that former GM workers hate GM because they feel abandoned and betrayed; the (knee-jerk/reactionary) public hates GM because it caved to the UAW/CAW’s demands in the cash-rich 1980s. A classic case of ‘Damned if You Do, Damned if You Don’t.’
        Meanwhile, Japan Inc softened up what either Korea Inc or China Inc will eventually destroy.
        Books have yet to be written about how close the world came to an abyss that it may never have recovered from. It took 60 Million dead to finish the last Depression.

      • 0 avatar
        kenzter

        Exactly. My GM employed grandfather died in 1972. My grandmother collected his pension and healthcare benefits until she died in 2008.

      • 0 avatar
        doctor olds

        In 2008 General Motors was providing health care for about 1 1/2 million people at an annual cost well exceeding the $7B off their bottom line of UAW retirees alone.

  • avatar
    aristurtle

    ….aaaaaaaaaaand, we’re off! Let’s see if we can break the record time to 100 increasingly-angry posts of the same rehashed arguments that we’ve all been throwing back and forth on this site since the bailout idea was floated in the first place four years ago.

  • avatar
    86SN2001

    So as expected, the “Government Motors” baseless slam is only used by ignorant people.

    Ok…next story.

  • avatar
    Pch101

    Of the original $49.5 billion put into GM, Treasury, has recouped about $23.1 billion.

    For Treasury to recover what’s left, the stock will have to hit about $53 per share. As of today, it’s a bit over $25, so it has a ways to go.

    That being said, the country avoided a depression. Some folks on the internet might want to pretend otherwise, but there are times when reality bites and hard choices have to be made, even when the choices aren’t particularly pleasant.

    • 0 avatar
      GS650G

      You don’t really think that this action avoided a depression do you? All it (and the rest of the money printed has done) is delay a bigger crash later.

      • 0 avatar
        Pch101

        “You don’t really think that this action avoided a depression do you?”

        As I already noted, “Some folks on the internet might want to pretend otherwise, but there are times when reality bites and hard choices have to be made, even when the choices aren’t particularly pleasant.”

      • 0 avatar
        mikey

        The elected governments at the time,did what they felt was the proper thing to do.

        We all get a chance to express our feeling’s in the voting booth.

        End of story.

  • avatar
    Franz K

    Treasury has recouped $ 23.1 billion

    NOoooooo. The Treasury has in fact LOST $23.77 Billion as of January 2012 , with the numbers rising daily

    Government Motors a ‘ baseless ‘ slam ? Are you looking at the Red piece of the Pie ? Not exactly ‘ baseless now is it

    Add that to the fact that we are GIVING Chrysler to FIAT , have tossed away some $2.65 Billion on TESLA Fisker plus another Billion or so on Bright … along with the fact that GM and Chrysler are all , when you go below the surface , losing money and market share and I think you’ll se any carping done by anyone is full justified . Between GWB’s starting the Automotive Welfare process to ObamaClaus now having us in so deep we’ll never see fresh air again there’s enough for any thinking individual to consider/debate here for a lifetime

    Which is about how long it’ll take for us ever to recoup the so called ‘ Loans ‘ handed out to Chrysler and GM . A lifetime at least . If ever !

    And what have we gained ? A few jobs in a very few areas thats barely made a dent in unemployment .

    Sold our souls to the Chinese to pay for it all

    Are now officially the Automotive laughing stock of the World ( read some overseas news once and awhile why don’t you )

    Yeah you bet . Such a good deal this was . Remember that when your Grand Kids are wondering why Ramen Noodles are the only thing on their Schools Lunch Menu

    • 0 avatar
      mike978

      Just for some facts – it was more than a few jobs gained. I believe it is in the tens of thousands.
      http://www.freep.com/article/20110511/BUSINESS01/105110429/GM-Ford-Chrysler-adding-jobs-near-pre-crash-employment-levels

      Also I thought Chrysler should have been allowed to go bankrupt. “Giving” it to Fiat cost the US nothing and it seems (so far) to have worked much better than most thought. With increased employment and taxes being paid. Whereas allowing it to go under would have incurred some costs.

      • 0 avatar
        highdesertcat

        I wouldn’t say it cost the US nothing. There was that $1.3Billion bribe to Fiat PLUS the initial bail out bucks, the real amount which has not been tabulated as yet.

        As one of the owners of a 2012 Jeep Grand Cherokee that is still part of the Chrysler line-up, albeit a subdivision of Fiat, I see it as many others do: Fiatsler is a foreign company, providing jobs to Americans in America, making cars for Americans in America. Just like Toyota, Honda, Nissan, Hyundai, Mercedes, BMW, Subaru, et al. Not a bad thing, like the UAW has been telling us. Of course, the UAW is now saying that is OK since they are part of a unionized foreign auto maker in America.

        If you compare that to GM? Well, read the comments to decide for yourself if a bailed out GM is a good thing. We should all hope that GM will do well because we, the people, own it, but reality is that Government Motors cannot sustain itself and that it is unlikely, barring divine intervention, that the US Treasury will ever recoup ANY of the bail out bucks.

        What is more likely is that the US Government through its various ways and means will provide a continuing bail out to GM in the future just to keep that 6% of the workforce employed at the expense of the other 94%.

        GM is not a money-generating entity like financial firms and investment banks. At least with banks you have some small chance of getting your bail out bucks back.

        It would have been better to give GM away to China like we gave Chrysler to Fiat, albeit with a $1.3B bribe. Look at Chrysler go now! It will be the dominant cash-cow of Fiatsler by the end of next year.

        What can we say about Government Motors? Maybe another bail out by the end of next year. Volt anyone?

    • 0 avatar
      bikegoesbaa

      I used to be opposed to the bailout, but then they released the CTS-V wagon and all is forgiven.

      If that car existing today means my very likely never-to-be-born grandkids have to ear ramen noodles every day, I’m OK with that.

      Actually, any measure that lets the current population of America continue to live high on the hog and stick future generations with the tab seems like something worthy of serious consideration.

      Also, Why are you Capitalizing Random words? Do you Do tHat to Make thIngs seeM moRe MysteriOus And ConSpiritorial?

    • 0 avatar
      stuart

      What about the Wall Street Bailout?

      You’re claiming $billions lost to GM, Chrysler, and/or FIAT. The Wall Street bailout stands at almost $5 trillion disbursed, and our government is potentially on the hook for lots more:

      http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost

      stuart

      • 0 avatar
        doctor olds

        @Alluster- very well said!
        FWIW- conservatively speaking, a GM collapse alone would have put 400,000 on the unemployment rolls.
        This would have reduced personal income in America by around $24B in the first year alone.
        Worst case loss on the bailout, $13.855B, would barely pay 96 weeks of unemployment for the 400,000.
        Sure seems like a bargain without even contemplating the economic collapse of whole regions that would have ensued.

    • 0 avatar
      alluster

      @Highdesertcat : “Fiatsler is a foreign company”

      Fiat is. Just because Fiat owns Chrysler it doesn’t become an Italian company. Subaru was not an American company when GM owned them, nor was Mazda when Ford owned them. Budwieser is still an American company.

      Chrysler Co.(Chrysler, Jeep and Dodge) is an American company, an American brand, with 100% of products sold in the US made in North America, with 100% of the products designed, developed and conceived by Americans, 100% of product planning, product decisions made by Americans, and most importantly headquartered in America. Tell me if any of this true for Toyota, Honda, Nissan, Hyundai, Mercedes, BMW, Subaru. Toyota does not have westerner’s running any part of its organization. They only have token white guys in superficial roles with no power or say. All the products, designs and planning is done in Japan. They still believe their race to be superior to westerner’s and don’t like to trust us with “important decisions”. WWII has not taught them to bet against Americans. They will do so again at their own peril.

      “but reality is that Government Motors cannot sustain itself ”

      $4.7 B profits for 2010, $9.2B profit for 2011, 9 Million global sales with only half the employees of VW and 2/3rd the employees of Toyota, Operating income and Profits higher than Toyota, Honda and Nissan combined for 2011 calendar year, sales leader in the number 1 and number 2 auto markets. They do have a lot of work still ahead of them, but to call them not sustainable is pulling at straws hoping the company would fail for whatever ideological reasons. I hope everyone wishing for GM’s failure is too old, so they don’t have to be miserable for a very long time. GM will be just fine and is not going anywhere. The sooner all haters learn to live with this fact, the better for them. I would like to know who the import humpers would call out for help when natural disasters or terrorism strikes in their town or city. Lets see if the Japs are going to be bailing out hurricane victims.

      • 0 avatar
        highdesertcat

        alluster, you can choose to believe what you want to believe, but Chrysler can’t do squat without approval from Fiat, Sergio and the Board.

        And all the profits that Chrysler has made since Fiat acquired Chrysler after the bribe go directly to Fiat and do not pass Go.

        We should be grateful that Fiatsler employs Americans, building cars in America, for America. I happen to own a 2012 Jeep Grand Cherokee Overland Summit V6 4X4 my wife drives on a daily basis. IOW, I put my money where my mouth is. I believe that Chrysler will do better than GM in the future.

        And as far as GM is concerned, I wish them well and we should all hope that GM does well so that we, the people, can get some of that money back. But that ain’t gonna happen, ever.

        You might also want to consider that if the money-changers and abetters thought that GM was as viable as you think it is, the new GM stock would not be in the tank, on its way to the toilet to be flushed down the drain.

        At one time I owned a lot of GM stock, several blocks in fact. I sure am glad I got rid of all that in 2007 because now it is worth even less than used toilet paper.

        Don’t blame the Japs for America’s problems. Don’t blame anyone other than Americans themselves for putting politicians in government that favor a national economic policy that makes it more advantageous for American firms to outsource and import under NAFTA.

        We did all this to ourselves, all the good, all the bad, and all the ugly. Don’t blame the domestic car makers for making them in Mexico or Canada, neither which is part of America.

        You are entitled to your beliefs, but if you hang on to them you are going to follow all those who did before you into the same poorhouse.

        Maybe you should buy a new GM product today and focus on getting more Americans to buy GM products because at the current rate of sales, GM will be broke again at the end of next year.

        Don’t forget about GM’s fiascos outside of the US. GM is losing money faster in Europe than anywhere else and GM is forced to hold on to Holden because they can’t sell it. Nobody wants it.

        Anyway, if you do some deeper research into GM you’ll find that GM’s liabilities, debts and lack of global sales are weighing it down and that the next couple of years are existential to GM.

        But Obama will be re-elected, for sure, and he will find a way to keep GM alive until he leaves office, all at the taxpayers’ expense, of course. Handwriting on the wall.

    • 0 avatar
      doctor olds

      @Franzk
      wrt “…numbers rising daily.”
      - Treasury has not put a dime into GM since the bankruptcy recapitalization.
      @highdesertcat- You are sadly misinformed if you believe GM global sales are weak. GM ended last year over 2 million ahead of Toyota and almost a million ahead of second place VW. They are approaching double the size of 5th place Ford, globally. Most significantly, the company has nearly $30B in cash and almost no debt. Those are the real facts. GM is very strong and will get stronger. The operating results speak for themselves- $9.2B operating profit ranks among the highest profit every for any automaker in the world.

  • avatar
    Darkhorse

    I’m so sick of this subject. People, it’s a sunk cost that happened 2 years ago. As much as I think the GM bailout was wrong, I’m over it. Move on please.

    • 0 avatar
      mikey

      @ Darkhorse….Yeah we all tired of it. Lets not forget TTAC wouldn’t be here were it not for the domestic hate.

      As they say “it pays the bills”…. eh?

      • 0 avatar
        jkross22

        Oh for crying out loud. Since when does rewarding failure equate to hating Domestics?

        I guess if you were in the tank for the bailouts from the start, it would be hard to see this issue objectively. Candidly, I’m relieved that GM is treading water, which is what it’s doing. But let’s not get too excited about that company’s prospects. It’s still the tired swimmer amongst very competitive players, and it’s declining stock price is one signal of that.

      • 0 avatar
        carbiz

        Yeah, GM should have taken it a billion dollars at a time like Toyota has over the past 35 years……….

  • avatar
    KixStart

    Let’s review the decision to provide emergency financing to GM the way the President and his advisers would have considered it:

    If we don’t do this, the recession may worsen as GM fails and the businesses that depend on cash flow from GM operations collapse. That could be an additional million out of work, maybe more, and might throw a few more cities into bankruptcy. Supplier problems could cripple the “healthier” auto manufacturers, too. It is possible that pretty much every auto factory in the US and all upstream businesses could grind to a halt. The unions wouldn’t necessarily appreciate us sitting on our hands but but we remain more friendly than the Republicans, so union campaign conributions, votes and support are secure (union membership is only 12% or so of the workforce, anyway, and not all union members are individually friendly). And it’s not like we can be faulted for not doing something that most people don’t realize we can do, so the unions really have no reason for anger. We also don’t cast ourselves as pawns of the unions. Politically, we’re golden as we increase the likelihood of economic collaps.

    On the other hand, if we do this, there will be political repercussions, as we’ll be cast as being in the pocket of the unions. Politically, this will suck hugely but if we save this business and the other businesses that depend on it, we may slow, stop or even reverse the current recessive trend.

    I’m absolutely delighted that they chose “Try to Save the Economy in Spite of Political Blowback” over “Try to Win the Esteem of Right-Wing Free-Market-At-Any-Cost Trash-Talking Anti-Obama-and-Anti-Union D!ckHeads.”

    • 0 avatar
      michal1980

      Thats an interesting sping.

      How about:

      The unions voted for me, I need to pay them back.

      Much simpler.

      • 0 avatar
        KixStart

        No, you don’t have to “pay them back,” you just need to keep them thinking you’re a better friend than the other guy. The Republican War on Labor takes care of that.

      • 0 avatar
        jkross22

        Kix,

        War on labor owned by the Republicans? Hah. Tell me about how illegal immigrants living 20 to a house have displaced whole generations of other minorities who no longer can earn a living due to the cheap prices illegals accept.

        It’s a race to the bottom, and you can thank both parties and their sycophantic supporters for that.

        Funny how with the bailouts it was all about blue collar, American jobs, yet to save these companies, they’re offshoring all the jobs they can to conserve cash.

      • 0 avatar
        doctor olds

        @michal1980- You condense Obama’s prime motivation well.

        That does not mean saving the auto industry was wrong. GW Bush knew that, too.

        Folks outside the business really don’t begin to comprehend the fragility of the industry in 2008. Suppliers were on the verge of or in bankruptcy already because of the recession and lower industry sales.
        The Detroit 3 share 95% of the same suppliers, and even the transplants share 65% of the same suppliers.
        All it takes is for one supplier of one component to go down, and production of every vehicle that uses that component will stop. Every single part must be available to build and ship a vehicle. Targetted UAW strikes at one or two oxygen sensor plants proved this by stopping nearly all of GM’s productions several years ago.

        There is no doubt that letting even Chrysler, the smallest of the three, fail would have caused the failure of suppliers, dragging down not only the Detroit 3, but virtually all of the transplants, as well. The impact would have been job losses in the millions.

  • avatar
    SherbornSean

    People forget that the federal communist government HAD to save GM to keep the production lines open for all the black helicopters that follow you everywhere.

    • 0 avatar
      Educator(of teachers)Dan

      And printing the barcodes for the back of highway signs to tell the UN troops where to invade and who to round up.

      • 0 avatar
        acuraandy

        @Dan:

        ‘And printing the barcodes for the back of highway signs to tell the UN troops where to invade and who to round up.’

        There’s a little sarcasm in there, i’m sure, but tell that to the citizens of Kosovo…just sayin’…:)

  • avatar
    Russycle

    $16 billion? Boy, for that kind of money, we could have stayed in Iraq for another 3 weeks.

  • avatar
    Lokki

    GM had to be bailed out. There are multiple reasons – the pension problem is but one. Pensions are guaranteed by the Pension Benefit Guaranty Corporation (PBGC) which is privately funded by pension plan contributions. The idea is that if a pension plan fails, the PBGC will pay a (usually reduced) pension benefit. The PBGC has never received Government funds. However the obligations of GM are so large that even with reduced (and for GM retirees, drastically reduced) pensions, it would have bankrupt the PBGC requiring a Govt bailout.

    https://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation

    Then there is the fact that although GM did not do so profitably, they did make millions of cars annually. Even with many of the cars made overseas, there were still hundreds of thousands of jobs that would have been lost from the demise of suppliers, transporters, dealers, mechanics. There would also have been great disruption in the automobile market as survivors scrambled to split the market share that used to belong to (a dead) GM. Car prices would have almost inevitably gone up as supply fell.

    So, yes, it was necessary. What was NOT necessary was the way the bankruptcy was handled. The company had several major financial liabilities: expensive labor contracts, massive legacy costs for pensions and health care, and an outdated and overgrown distribution system of dealerships that needed to be streamlined. A Chapter 11 re-organization would have given GM an opportunity — perhaps its only opportunity — to cut loose this dead weight. Instead, the Union got 17 percent and was placed before stockholders and got to keep their labor agreement.

    This part was not good. One wonders if such an “unusual” agreement would have been made if the UAW had not been such major contributors to the party in power.

  • avatar
    Jeff Weimer

    This is one of the reasons (the others were fuel economy, fuel economy, fuel economy, and 6-speed manual) I bought a Chevy Cruze last year. If we don’t buy their cars and make them profitable enough for the government to unload it’s shares, they’ll never leave.

    This Hobson’s choice will continue to haunt GM and the federal government and make it hard if not impossible to do what evil right-wingers like me want most – get the eff out of something they had no real business being involved with.

    • 0 avatar
      michal1980

      Why should failures of companies be rewarded?

      We should reward well run companies, not those that have political connections (on both sides), in this case the UAW and democrats

      • 0 avatar
        carbiz

        Then buy a Hyundai, or a Toyota, and watch your country slide into Third World status. Since the late 1960s, while the Left and Right argue about ideology, America has unerringly lost its leadership in various strategically important industries. Where was your computer made? What about your Smartphone? Almost nothing is built in North America anymore.
        The peanut gallery is cheering for America to fail. What is truly sad is that many Americans are so determined to punish GM for whatever perceived sins of the past that they are willing to jeopardize their entire way of life over it.
        May you get EVERYTHING you wish for.

      • 0 avatar
        michal1980

        carbiz…

        so I should buy crappy products, made by lazy workers, ran by incompetent management, just because they happen to be based in the country I live in?

        wow. Talk about stupid logic.

      • 0 avatar
        acuraandy

        @michal1980:

        ‘so I should buy crappy products, made by lazy workers, ran by incompetent management, just because they happen to be based in the country I live in?

        wow. Talk about stupid logic.’ Can anyone say, ‘British Leyland’?

        As the FORMER owner of a bailout-era GM product (that was among the worst i’ve ever owned), BIG +1. :)

      • 0 avatar
        bikegoesbaa

        “Almost nothing is built in North America anymore.”

        You may want to double-check your source on that.

        It’s a common misconception that American manufacturing has declined over the last 50 years or so.

        This is not the case.

        America manufactures significantly more now than we did in whatever arbitrary “golden era” you are pining for. Look it up.

        America is still the world’s largest manufacturing nation. Some sources say China caught up over the last two years or so. Even so, with China having ~3x the population this is neither surprising nor problematic.

        Can you provide a reference that supports your claims?

        Manufacturing *employment* has fallen, but that’s a separate variable from manufacturing *output*.

      • 0 avatar
        bikegoesbaa

        Also, you are aware that both Toyota and Hyundai manufacture significant numbers of cars in the US along with Nissan, Honda, Subaru, BMW, Mercedes, and even Mitsubishi?

      • 0 avatar
        carbiz

        Well, I’m glad you guys have read all of the Toyota Star’s talking points.
        As the former salesperson at a 56 year old GM dealership that was closed because the owners were making to much money at their import stores, the 1,000+ vehicles I sold (kinda trumps the 5-15 you’ve bought in your life) were far from crappy. I used to do back-to-back test drives with customers over at our Toyota store. Let the customer decided and they did – buying the GM.
        Buying North American is IMPOSSIBLE in many cases now. I spent 2 months trying to find a window air conditioner that was made here. My dishwasher may be a Whirlpool, but it is made OVER THERE. My family never owned anything but Zenith TVs = the last American manufacturer to hang on. Now owned by LG, I believe.
        You are confusing American shell companies that basically exist as a head office in Atlanta, and all the rest is OVER THERE. Just like you sleep at night driving a Hyundai because it is thrown together in some backward State where $13 an hour is a King’s ransom, but the patents, intellectual property and profits go OVER THERE.
        You’re merely proving my point. The Fifth Columnists and the ’0h-my-mommy’s-Citation-Sucked’ crowd have nearly succeeded in wiping out the ‘arsenal of democracy.’
        Good luck.

      • 0 avatar
        bikegoesbaa

        No, I am talking about real manufacturing.

        Again, do you have *any* reference for your claims that America manufactures less now than in the past?

        What era do you consider to be the “good old days” of manufacturing in the US?

      • 0 avatar
        mcs

        “Almost nothing is built in North America anymore.”

        I buy Massachusetts made sneakers – New Balances made in Lawrence MA. My air-conditioner is a Tyler TX made Trane, my next bike will be a Massachusetts made Parlee or Seven. I have a new stand mixer made by Kitchen Aide in Greenville Ohio. The micro-controllers I buy for use in my product prototypes are manufactured in the Detroit area (it’s amazing to see a circuit board not stamped made in China).

        Sure, everything above is fairly expensive, but it’s good stuff and well worth the extra money. It’s not that hard to find good quality US made product, just don’t expect to pay bargain basement dollar store prices.

  • avatar
    mikey

    Just to clarify…The nine percent owned by the Canadian government is shared by the province of Ontario, and the feds.

  • avatar
    TonyJZX

    and yet this is really a drop in the ocean compared to what was given to the banks… where’s your anger there?

    • 0 avatar
      bikegoesbaa

      Probably on a webpage that cofuses on discussions of banks and banking related subjects. This one’s about cars.

      Do bank bailouts justify manufacturing bailouts?

      Iceland let their banks collapse – how did that work out for them?

      • 0 avatar
        Terc

        Iceland is doing better than Portugal, Spain, Italy, Ireland or Greece. Which isn’t too bad considering that Iceland endured a default which those other countries have, so far, avoided.

        http://www.bloomberg.com/news/print/2012-02-20/icelandic-anger-brings-record-debt-relief-in-best-crisis-recovery-story.html

        “Iceland’s $13 billion economy, which shrank 6.7 percent in 2009, grew 2.9 percent last year and will expand 2.4 percent this year and next, the Paris-based OECD estimates. The euro area will grow 0.2 percent this year and the OECD area will expand 1.6 percent, according to November estimates.”

        So 2 percent is not enough to recover their losses, but it’s more than enough to return them to their pre-boom trend line, which is a lot better than Portugal, Spain, Italy, Ireland or Greece. It’s also estimated that Iceland will balance its budget by 2013.

      • 0 avatar
        jmo2

        Iceland? Hum, let’s look up cities in the US with populations larger than Iceland – I seem to find Santa Ana CA and Aurora CO. Not sure what conclusions you can draw from counties the size of small US cities.

      • 0 avatar
        Pch101

        Iceland controls its own currency. Iceland’s inflation rate is currently 6.8% and the value of the krona against the dollar has fallen by about 50% since 2008.

        In contrast, the PIIGS are beholden to German policies that favor low inflation and a strong euro. The PIIGS are in trouble because they don’t control their own currency, so they are unable to inflate away their debt.

        With a weak currency, the Icelanders are also not in a position to buy imports as they were before. This may be good for their balance of trade and allow them to build GDP growth, but their people will pay the price by being unable to either make what they want nor import what they can’t make. The pain isn’t over yet.

      • 0 avatar
        Terc

        I did a poor job explaining myself. I didn’t mean to imply that everything has turned out so rosy for Iceland that we should have followed their example and let our banks fail too; I meant only that if there is a claim that Iceland’s experience of letting banks fail brought on disaster, I think it is unproven.

      • 0 avatar
        Pch101

        “I meant only that if there is a claim that Iceland’s experience of letting banks fail brought on disaster, I think it is unproven.”

        Iceland has a fairly high inflation rate and a currency worth half of what it was just a few years ago. For an import-dependent economy such as Iceland, this weak currency will result in many consumer goods being out of reach of the average citizen. (It is also part of what contributes to the starting sticker price of a Corolla being over $28,000.)

        Meanwhile, many of its consumers are still buried in debts that they couldn’t discount with the banking collapse, because the loans are owed to European banks and are denominated in euro or pounds. Not exactly a resounding success, although given its circumstances and its small population, it had no choice.

    • 0 avatar
      michal1980

      two wrongs make a right?

  • avatar
    msquare

    Maybe somebody mentioned it already and I glossed over it, but the Treasury hasn’t lost anything unless they sell right now. If they don’t have to, they shouldn’t. Just like any other investor with any other investment, you buy low and sell high.

    • 0 avatar
      SherbornSean

      Wait a minute — the government could MAKE money on its investment in Detroit? Oh dear, what with unemployment falling every month, and the economy roaring back, and the war in Iraq concluding, what exactly is everyone complaining about?

      • 0 avatar
        acuraandy

        @SherbornSean:

        The US taxpayer will be lucky to break even with the bailouts, let alone ‘make a profit’ (to call it an ‘investment’ in disingenuous). Additionally, with the exception of North Dakota and Montana (due to oil/NG exploration), the US economy is NOT ‘roaring back’.

        Personally my YTD income hasn’t risen in almost 5 years. Just sayin’…

      • 0 avatar
        acuraandy

        @SherbornSean:

        The US taxpayer will be lucky to break even with the bailouts, let alone ‘make a profit’ (to call it an ‘investment’ is disingenuous). Additionally, with the exception of North Dakota and Montana (due to oil/NG exploration), the US economy is NOT ‘roaring back’.

        Personally my YTD income hasn’t risen in almost 5 years. Just sayin’…

      • 0 avatar
        Brad2971

        Just out of simple curiosity, are YOU, PERSONALLY, feeling better about your economy? Or your neighbors’, for that matter? Because if the Administration can’t explain (for lack of a better word at the moment) that the economy is “roaring back” in any credible manner, that Administration will be packing the moving vans this time 9-10 months from now. REGARDLESS OF THE SUCCESS OF THE GM BAILOUT.

        So far, the “explanations” aren’t taking hold. Not necessarily saying the data are wrong, just saying people aren’t feeling it.

    • 0 avatar
      Terc

      Unfortunately, the Treasury won’t sell their GM stock based on whether it’s a wise investment strategy, they will most likely sell when it’s politically expedient.

  • avatar
    acuraandy

    “Given that a sale before the November presidential election would highlight the cost of the government’s rescue of GM, officials say it is unlikely the government will sell any shares before then.”

    The very same reason Obamunist and UK PM Cameron will not release the strategic petroleum reserves until about August. The US automaker bailouts, as well as crude oil prices, are a political football, nothing more.

    The caveat is that us ‘working class/poor’ in the US will have to pay up the nose for it in the interim. What a crock of shit.

    P.S. Herr Schmitt, what does a gallon (or whatever the Chinese equivalent is) of gasoline cost in China at the moment? Just wondering…

  • avatar
    Corky Boyd

    The govenment won’t sell before the election because they don’t want to realize their loss. GM doesn’t want them out because they will need (very shortly) a bailout of their European operation. They are between a rock and a hard place.

    They aren’t selling enough cars in Europe to break even and they can’t close plants because of their union agreements until 2015. So for the next 3 years they will have to go through a cash burn close to what they were doing in the years leading up to bankruptcy.

    So you and I will have to subsidize them again. I guess it’s nice to have a sugar daddy in the White House.

  • avatar
    TexN

    1) I am an American
    2) I love my country, am fed up with my government and elected officials
    3) I was against the bailouts, but it’s over and done
    4) I get to vote my conscience during elections
    5) I get to vote with my wallet when I purchase vehicles, and I will NOT EVER buy GM or Chrysler again

    I’ve emotionally moved on. Hopefully others will move on when they’ve made their peace with the events of the past few years.
    Tex

    • 0 avatar
      obruni

      Hey Tex.

      If you are against buying Chrysler or GM products because of bailouts, are you going to avoid Ford, Toyota, BMW and Nissan as well?

      In 2008 & 2009 Ford received $14 billion in support from the Federal Reserve and the Dept of Energy. Toyota received $5 billion from the Fed, BMW received $4 billion. Nissan received $1.6 billion from the DOE.

      I am also curious….have you moved your bank accounts away from the national and regional banks? Changed your insurance policies? Stopped buying anything made by GE?

      GE Capital received close to $70 billion in debt guarantees in 2009.

      • 0 avatar
        TexN

        As a gross oversimplification, I’ll say that the “support” you’ve referenced doesn’t quite equate to the bankruptcy wash that our Government pulled with GM and Chrysler. Again, gross oversimplification, but that’s a position that I can live with.

        Your point is well taken and valid, though.

      • 0 avatar
        jkross22

        obruni,

        GM, Ford, Chrysler, Toyota, BMW, Fiat, Nissan,… I’m sure they all received federal tax support or credits from their home governments or the US to help their businesses along and to develop new tech. We have not heard about those governments (and as a result, taxpayers) serving as the fluffer for a faux bankruptcy a la GM.

        Chalk and cheese.

    • 0 avatar
      icemilkcoffee

      Yes, it was so horrible that the government rescued a big industry and saved 1000′s of jobs. That’s just so horrible. For good measure I also avoid flying with any american airlines because they all took the post 9/11 airline bailouts. I refuse to do any banking with any american banks since they all took the 2008 TARP bailout. Actually all of them are guilty of participating in the government FDIC program since the 30′s anyways. So I boycott those banks. I also have boycotted Chrysler for 20+ years because of the Reagan era bailout. I boycott Harley Davidson because Reagan bailed out that company by slapping a 75% tariff on 750cc+ japanese motorcycles. I have boycotted all american made pickup trucks ever since the US government slapped a tariff on all import pickup trucks. I also boycott Intel and AMD because the US government bailed them out in the 80′s with the semiconductor pact that limited japanese chip imports. I boycott IBM because it was heavily subsidized by the US government and defense department at its inception. I boycott all grains grown in America because the grain growers have benefitted from government bailouts since the 30′s. I also boycott the internet itself because it was a socialist invention by the US government, and the web browser a socialist invention by the european governments. I need to stop now because I am boycotting the internet.

      • 0 avatar
        jkross22

        icemilk,

        So as long as the bailouts go to big industries, you’re okay with them? I see.

        According to D & B, From 2007 – 2010, small business failures in CA increased by 40% from prior years. No bailout for them. It was the worst failure rate in the country, 69% higher than average.

        Where are the bailouts for these folks? Some of these people were folks that got laid off from the too big to fail club. What about those thousands of jobs? Right… they weren’t lining the pockets of their friendly neighborhood politicians like the unions and big business did.

        The opposite of “Too big to fail” is “Too small to matter”.

  • avatar
    doctor olds

    If GM Stock was sold at yesterday’s closing price of $25.29, a loss of $13.85B would be realized, roughly $45 per American, and double that amount per taxpayer.

    Since the top 10% pay 70% of taxes, the average cost for 90% of Americans is a one time, whopping, $15 hit in the worst case, a bit less than $30 per taxpayer.

    There are plenty of issues to criticize in the cronyism excercised by the Auto Task Force in the structure of the deal, but the cost is quite trivial.
    It is not clear why folks don’t understand that GM is performing very well, with operating profit over $9B last year despite Opel losses. They have well over $30B in cash generated by the business, more than enough for fixing Opel and product development. Government has not spent a dime beyond the amount used to capitalize the new business, and there is no reason to expect that to change.

    • 0 avatar
      jkross22

      If someone paid off my mortgage, my wife’s student loans, my credit card bills and my car loan and my investment line of credit for my small business, I’d be sitting pretty, too. Claiming GM’s profit as evidence of sloughing off of GM’s old ways is quite a stretch. I’ve yet to see the evidence that GM has been rehabilitated. Ask those bondholders how they feel about GM’s profits while they got shafted just a short time ago. I’m sure they would be sympathetic to your perspective.

  • avatar
    Geekcarlover

    Maybe I’ve misread this, and a few other articles about it, but the problem with the GM stock price seems to be a warped circular logic. The price is low because private investors won’t buy because they fear the government will dump it’s shares and crash the price. Government won’t sell because the price is too low because private investors won’t buy.
    Someone has got to take a hit, and I doubt any investment firm is going to go bankrupt “for the good of GM.”

    • 0 avatar
      Hildy Johnson

      Or, the government could declare that it will sell no more than a moderate number of shares per year. It really makes little difference to them whether they sell of the shares within 1 year or 15 years.

      • 0 avatar
        Brad2971

        A variation of this is going on at the Federal Reserve vis-a-vis their AIG holdings. The Fed, early in 2011, tried to sell large amounts of subprime and other CDOs (Collateralized Debt Obligations-backed by subprime mortgages) on the open market. That open CDO market tanked to near early 2009 levels in the face of such an attempt.

        The Federal Reserve then parceled out the sale in tinier pieces. The CDO market is up by double-digits since last years’ lows.

    • 0 avatar
      Pch101

      “The price is low because private investors won’t buy because they fear the government will dump it’s shares and crash the price.”

      The price of GM stock isn’t particularly “low.” It’s just below the price that the Treasury effectively paid for it.

      That’s another way of saying that Treasury paid too much for it. In order to make the bankruptcy work, the government had to convert some of its debt into equity. But given that there was a limited amount of equity to take, it could only take so much of it, which left the government in the role of needing to overpay if the bankruptcy was going to succeed.

      Over the long run, stock prices are a function of expected future earnings. For GM’s stock price to go up in a sustainable fashion, the company has to make more money.

      The main problem for the short run value of the shares is that the car market is highly cyclical. Investors find it hard to get excited about auto stocks when the economic data is mixed. The US needs to return to a boom cycle, plus GM is going to do a good job of making money on car sales, before the stock is going to have any hope of doubling in value. It could take years for Treasury to hit breakeven.

      • 0 avatar
        obruni

        it would have been better for the Gov’t if its shares were in a seperate class, such as preferred.

        GM could then buyback the preferred stock over time, and private investors would not have to fear dilution as much.

  • avatar
    Mike Kelley

    The media are crowing about GM’s present “success” as proof of Obama’s competence at picking winners. Give me a break. GM’s viability will only be proven if it can handle the next major downturn in car sales.

    Worrying about a few billion bucks seems sort of silly these days, since our government is now spending about $1.3 trillion more than it takes in every year. Here is a good article and video about the hole we are digging:

    http://www.zerohedge.com/news/simple-problems-too-much-us-debt

  • avatar
    carbiz

    While the armchair critics are arguing ideology, Korea Inc is plotting how to take away Japan Inc’s pie that they already took away from YOU.
    Just as you Americans are being punished for your stupidity and selfishness (or do you think the few trillion that Asian banks and citizens own of you is not going to cost you at some point?), the Japanese consumer are going to take it up the a$$ for all their suffering over the years: Toyota is thanking them for their sacrifice by moving their jobs to Thailand and Vietnam.
    Frankly, as my city is being bought up and paved over by Asian ‘investors,’ I’d rather pay double for an item built by a North American company and made here. DOUBLE.
    Because, in the long run, we’re all going to pay anyway.


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