Quote Of The Day: Ed Whitacre's Big Lie Edition
It’s a bit early in the day to be crowning a QOTD, especially considering there are sure to be plenty of juicy quotes coming out of the NAIAS today. Still, this one deserves a special place at TTAC for the sheer bold-faced shamelessness of its untruth.
I think (the government bailout was) well placed, and I think they’ll make a lot of money. GM’s on its way back. We’ll be back. The government’s made a good investment. We appreciate their support. We’re glad they’re here.
So said GM Chairman and CEO Ed Whitacre to reporters from the Detroit News today. As I recently explained in an op-ed in the NY Times, unless GM’s market cap soars to its highest level in history (a pipe dream if ever there was one) the taxpayer losses on the GM “investment” will be in the billions. Even the government estimates losses on the GM and Chrysler bailouts to reach $30b. Whitacre surely meant that a GM IPO will generate some kind of money for the Treasury’s 60 percent stake in GM, but the way it came out makes it sound like the bailout will be a positive investment for the government. That’s an impression that GM desperately needs to foster in order to have a chance at emerging from government control. Too bad it’s just an old-fashioned fib.
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While we are on the topic, any idea about how much money would have been lost if GM did go chapter 7? How about the taxes from the people it employees? Or the sales taxes from the cars that are being sold? When GM turns a profit, and that is taxed, what will it do then? So, in 5 to 10 years, this could be a good investment for the gov't. Remember, as much as we are taxed, the IPO is only the beginning of the pay back to the gov't.
This is sooo cool... Ed is paying back all the GMAC money and anything forgiven during the bankruptcy... With Interest!!!
+1 lw Just re-read Edward's quote: that IPO won't even be a start to "pay back". It's fantasy to believe that any tax revenue from GM's "profits" will ever make it to pay back the government. They have to make a profit first and you don't do that putting $4o00 on the hood of every car you sell. And since the last time GM made any money on it's automotive operations[ rather than it's mortgage finance arm]was, oh I don't know, 2001-2002, I'd like to see the evidence that this magical thinking has any chance of becoming reality in even 5-10 years. A stretch even for the GM fan boys to make. Especially since nothing has been said about the bail out money benefitting the buyers of GM's cars with higher quality and more desirable products. All we've heard is what's good for GM and the UAW. Screw the public. Just shut up and keep paying the bills. Whitacre: liar. Perfectly apt use of the word. Profit and pay back to the US taxpayer: never going to happen, as EN so clearly pointed out
As a Cadillac-GMC-Buick-Chevy employee speaking on my own, don't forget how many state governments would be in deficit spending modes if Chrysler and GM were not bailed out. The cost of all those unemployment checks for all of the suppliers and mom-and-pop service businesses around the plants/ offices in addition to the big OEMs would be staggering. Instead of losing just 7 million jobs in the past two years, the US would have lost 10 M, probably.