Obama Administration Continues to Waste 100’s of Billions In US Taxpayer Funds

Time Magazine recently pointed out that the new “GM” or “Government Motors” will employ approximately 40,000 individuals, down from the historical high of 600,000 workers it employed less than a generation ago. Through mismanagement, unreasonable unions and improper Government intervention, 14 out of every 15 jobs at GM have been lost. http://www.time.com/time/business/article/0,8599,1901345,00.html?xid=rss-biztech-yahoo  https://mcauleysworld.wordpress.com/2009/05/28/with-14-out-of-5-gm-jobs-gone-why-is-the-government-spending-100s-of-billions-of-taxpayor-dollars-on-a-company-that-will-employ-less-than-40000/

So, where does the waste come in? The Government continues to spend taxpayer dollars recklessly. Universally, the “price tag” for the Government’s purchase of GM has been estimated (best case scenario) at 100’s of billions of dollars. You might ask, “What is the current market value of GM”?

Clearly, the Obama Administration has not asked this question. Today, May 28, 2009, GM has a “market cap” or “market value” of something less than $700 Million dollars. GM is not worth even $1 Billion Dollars, let alone the $100’s of billions being committed to this “political folly”. With this type of business acumen the entire endeavor is doomed to failure. A “Market Cap” is the “total value” of all of a Companies outstanding stock. At the close of business on May 28, 2009, the total value or “Market Cap” of all GM stock was $683 Million dollars, something  just over 1/2 a Billion Dollars.

So why, exactly, is the Obama Administration paying 200% of GM’s current value to take over the failing company? I have no idea and Congress hasn’t bothered to ask. I can tell you this, no business consortium, no group of private investors would ever embark on such a course of action. No investor group would pay that amount for GM. To do so would result in a Bernie Madoff type “perp walk”. GM’s stock is currently trading at $1.12 per share, yet the Obama Administration is “investing” upwards of $150 a share in taxpayer money in this boondoggle. Only a politician woudl refer to paying 130 times the true value of anything an “investment”.  

You may have heard of Toyota Motor Car Company, a major rival of GM and the most successful car company in the world. Toyota’s “Market Cap” at the close of business on May 28th, 2009, was $137 Billion Dollars. http://finance.aol.com/quotes/toyota-motor-corporation/tm/nys

The Obama Administration is having American Taxpayers pay a “Toyota Price” for  a “GM value”. This is beyond the ridicuolus, it is criminal. The Obama Administration is paying for Toyota and getting GM in return.  

No wonder the Country is in such a mess.

With 14 Out Of 15 GM Jobs Gone Why Is The Government Spending $100’s Of Billions Of Taxpayor Dollars On A Company That Will Employ Less Than 40,000 Workers.

Less than a generation ago, GM employed 600,000 US workers. The GM of tommorow will employ fewer than 40,000. Why is it that the US Government (The Obama Administration) is “buying” this Company with $100’s of Billions of US Taxpayer Dollars today when GM has a net worth (Market Cap) under  $725 Million Dollars. (Market Cap = The price per share of stock multiplied by the number of shares). Today, GM is not worth even $1 Billion, yet the Government will spend hundreds of times that amount for GM. http://finance.yahoo.com/q?s=GM

Just what, exactly, does the government think it is doing. One thing you can be sure of, someone is stealing both the US taxpayer and the Auto Workers blind. How is this for an example: It would only cost $40 Billion to pay a million dollars apiece ($1,000,000) to everyone of the 40,000 GM workers. That is right, a MILLION DOLLARS A PIECE, to 40,000 workers is $40 Billion, well less than half of what the Government will pay for GM. Is there any chance the Government knows what it is doing? What do you think? Didn’t the Government create this mess in the first place?

TIME.com

Government Motors: Can a Reinvention Really Save GM?

By David Von Drehle Thursday, May. 28, 2009

General Motors is in the process of axing 1,100 of its 6,000 dealers. When the march of time, the sins of management and the scythe of a bad economy conspire to bankrupt once great companies, who pays?

Better to break hearts locally than shatter the greater economy — and that’s what the collapse of GM and Chrysler threatens to do, according to the White House auto task force that is undertaking the monumental rescue mission. In the deal being cobbled, GM’s stockholders will be wiped out, replaced as equity owners by the Treasury Department, with 70%, and the United Auto Workers (UAW), with 17.5%. GM’s business in Europe, Opel, will be sold. As many as 14 U.S. factories are marked to close. The iconic Pontiac brand is probably finished. Under a new labor agreement with the UAW, GM’s hourly domestic workforce, which numbered 600,000 at its peak, will drop to 40,000. In other words, 14 of every 15 GM jobs have vanished in roughly a generation.

Holders of $27 billion in GM bonds have refused the company’s debt-for-equity swap, making bankruptcy all but inevitable. For purist capitalists, the lasting significance of GM’s pending Chapter 11 (and Chrysler’s bankruptcy, filed a month ago) is the overwhelming intrusion into the private sector by Barack Obama and his auto task force at Treasury. “The day they fired the CEO of General Motors” — Rick Wagoner was dismissed by task-force co-chairman Steve Rattner in late March — “is a day we will look back on with great regret,” predicts Senator Bob Corker, Tennessee.

Critics of the government’s involvement maintain that bondholders have been punished, union workers coddled and laws flouted in the process. And they worry that should GM emerge from Chapter 11 with the U.S. Treasury as majority shareholder — Government Motors — we will have crossed a frontier separating capitalism from socialism, even though the company will be run by existing management.

Which brings up another sore point among skeptics of the Administration’s actions. Is it feasible now for GM and Chrysler, which made money on pickups, SUVs and minivans, to small-car their way to prosperity? U.S. carmakers have not earned a dime selling automobiles in a decade. “There’s no question it’s a challenge,” a task-force official allowed. “It’s something the domestic car companies haven’t done successfully in the past.” Whether it will work in the future is “a fundamentally significant question.”

These hopes float on the audacity of deficit spending. By the time taxpayers are done cleaning up the books of the two companies and refilling their tanks with enough cash to keep them going — along with their finance arm, GMAC, and their key suppliers — the public price tag will exceed $100 billion. Add billions more in subsidies for researching and developing green technology and still more billions in tax credits to motivate buyers to go green. If someday GM and Chrysler become consistently profitable, the government loans will be repaid and both companies restored to total private control. The operative word being if.

http://www.time.com/time/business/article/0,8599,1901345,00.html?xid=rss-biztech-yahoo

AND JUST WHAT HAPPENS IF THE GOVERNMENT DOESN’T RUN GM SUCCESSFULLY? 100’s OF BILLIONS OF ADDITIONAL TAXPAYER DOLLARS TO KEEP THE COMPANY AFLOAT? HOW ABOUT THE MILLIONS OF AMERCIANS WHO DON’T WORK FOR GM BUT ARE RUNNING OUT OF UNEMPLOYMENT BENEFITS NEXT MONTH? WHO IS LOOKING OUT FOR THEM? 

GM To Announce 14 Plant Closures, Monday June 1, 2009

GM to announce 14 plant closures MondayAP

DETROIT – The news no one wants to hear is coming Monday morning to General Motors Corp. factories across the U.S.

The troubled auto giant will identify 14 factories it will close by the end of 2010 as part of its restructuring plan, according to a person briefed on the plans.

The announcement could coincide with GM’s all-but-inevitable bankruptcy protection filing, expected to come by Monday.

Factory-level union leaders have not yet been told which plants will be shuttered, but four vehicle assembly plants will be among those to be closed, along with parts stamping, engine and transmission factories, said the person, who asked not to be identified because the plans have not been made public.

GM has said it plans to close 16 more U.S. factories by the end of next year, shedding 21,000 jobs. Two have already have been announced — an engine plant in Massena, N.Y., and a parts stamping plant near Grand Rapids, Mich.

United Auto Workers union officials in Detroit have been telling plant-level officials that the company will make the announcement rather than the union, according to the person.

GM spokeswoman Sherri Childers Arb would not comment on Thursday.

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_gm_plant_closures

Government Update: 1 Out Of 8 Mortgage Holders Are Now Delinquent Or Are In Foreclosure

12 percent are behind on mortgage or in foreclosure

AP

NEW YORK – A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn’t expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_foreclosures

Government Corrects Unemployment Numbers – 17 Straight Weeks With Over 625,000 New Claims. Continuing Unemployment Claims Set All Time Record

As unemployment benefit extensions begin to expire in the 1st week of June 2009, millions of unemployed Americans will start falling through the cracks this next month. Will the Government claim a “drop” in the unemployment numbers just because the workers have exhausted their benefits?

WASHINGTON (AP) — The tally of newly laid-off people requesting jobless benefits fell last week, the government said Thursday, a sign that companies are cutting fewer workers.

But the number of people continuing to receive unemployment benefits rose to 6.78 million — the largest total on records dating back to 1967 and the 17th straight record week. The figures for continuing claims lag behind initial claims by one week.

The Labor Department said the number of initial claims for unemployment insurance dropped to a seasonally adjusted 623,000, from a revised figure of 636,000 in the previous week. It was below analysts’ estimates of 635,000. THE GOVERNMENT HAD ORIGINALLY REPORTED THAT 570,000 NEW JOBLESS CLAIMS HAD BEEN FILED LAST WEEK – CLEARLY AN INTENTIONAL UNDERREPORTING IN ATTEMPT TO “SPIN” THE REALITY OF THE CONTINUING RECESSION AND JOB LOSSES IN THE US ECONOMY. 

Auto-related layoffs elevated the jobless claims numbers in recent weeks, but a Labor Department analyst said no states said their claims figures were affected by job cuts in that sector last week. THE CURRENT NUMBERS DO NOT REFLECT THE ANTICIPATED AUTO RELATED JOB LOSSES EXEPCTED IN THE NEXT 60 DAYS.

The four-week average of initial jobless claims, which smooths out fluctuations, dropped slightly to 626,750. That figure is about 30,000 below the peak for the recession reached in early April. The real question to be asked, “Will these numbers be revised again, upward and above the “peak” monthly job loss number of 656,750 just 2 months ago?  Has there really been any improvement, or just political spin on the real numbers? The fact is this, people are not returning to work, new intial jobless claims remain above 625,000 per week. 

Do you remember Candidate Obama telling us last year that we were experiecing “the worst economy in the history of the world!  “Still, new claims (2009) remain far above levels in a healthier economy. Weekly initial claims were 378,000 a year ago.” During the first 3 months of 2008, a total of 240,000 jobless claims were filed, compare that with the 1,900,000 filed during the 1st 3 months of 2009. During the 1st 6 months of 2008, the US economy was adding jobs not losing them!                                  http://econoindicators.com/2008/04/adp-employment-report-april-2008/

And the relentless rise in continuing claims for jobless benefit means the unemployment rate, which reached 8.9 percent in April, will rise in May, economists said. Many economists expect the rate to approach 10 percent by the end of this year. THE UNEMPLOYMENT RATE THIS TIME LAST YEAR? The National Unemployment rate for April 2008 was 5.0%. Year to year, the unemployment is almost twice as high as a year ago. (An increase from 5% to 9%).                                                                   http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000  

Even if layoffs are slowing, jobs remain scarce. A net total of more than 5.7 million jobs have been lost since the recession — the longest since World War II.

http://finance.yahoo.com/news/Initial-jobless-claims-drop-apf-15368339.html

 

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