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?
Government Motors: Can a Reinvention Really Save GM?
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.
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?
Filed under: Auto Industry, Auto Industry Bailout, General Motors | Tagged: General Motors, Government To Own "The New GM", Governmental Insanity - Obama Administration to pay $100's Of Billions For GM., The GM Bailout |