Pressie Obama is making a big deal about his government's huge bailout of near-bankrupt General Motors in 2008. He offers it as indisputable evidence that using tax payers to save a failing company works: jobs are protected, industry is buoyed, and everybody benefits.
The reality is very different from the political spin. And commercial reality is eventually brutal: it does not fool itself or others forever, unlike politicians. You can dress mutton up as lamb in politics every day, because you can fool all of the people most of the time. But markets--that's another story. While markets may fool themselves and you for a good long time, in the end the truth comes out; reality actually does eventually intrude into the specious narratives, and a cleansing enema takes effect. Governments, however, think and acts as if they can keep spinning the fairy tale forever.
So GM is a great example of what big government and big industry can do when yoked together in partnership. Not according to the share market.
GM's stock is bottom feeding. GM shows all the signs of needing another bailout in the future--if it is to survive. More fiscal debt coming up. More waste. More pork barrel politics.
The moral of the story is simple: when governments expand their mandate beyond what has been ordained and commanded by the Almighty the fruit is not just misshapen, it is quickly rotten to the core.
Here is Michelle Malkin's take:
Obama’s Failed Auto Bailout
The Democrats will pretend it was a success.
By Michelle Malkin
General Motors--a failed business, propped up by the government, acting like it's a commercial success, noting big time around the world--all on the bent back of the taxpayer. Nice.Charlotte, N.C. — Cue Fanfare for the Common Man and rev up the Government Motors engines. Wednesday is Great American Auto Bailout Day at the Democratic National Convention. Party propagandists have prepared a prime-time-ready film touting the “rescue’s” benefits for American workers. UAW president Bob King will sing the savior-in-chief’s praises.But like all of the economic success stories manufactured by the White House, the $85 billion government handout is a big fat farce. “I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” Obama bragged on the campaign trail. Here’s the inconvenient story they won’t tell you:
GM is once again flirting with bankruptcy despite massive government purchases propping up its sales figures. GM stock is rock-bottom. Losses continue to be revised in the wrong direction. According to the Detroit News, “the Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That’s 15 percent higher than its previous forecast.”
The claims that GM paid back its taxpayer-funded loans “in full” — a story peddled in campaign ads narrated by Hollywood actor Tom Hanks — were debunked by the Treasury Department’s TARP watchdog this summer. GM still owes nearly $30 billion of the $50 billion it received, and its lending arm still owes nearly $15 billion of the more than $17 billion it received. Bailout watchdog Mark Modica of the National Legal and Policy Center adds: “In addition to U.S. taxpayers anteing up, Canada put in over $10 billion, and GM was relieved of about $28 billion of bondholder obligations as UAW claims were protected. That’s an improvement of almost $90 billion to the balance sheet, and the company still lags the competition.” While the Obama administration wraps the auto bailout in red, white, and blue, it’s foreign workers and overseas plants that are reaping redistributive rewards.
GM has increased its manufacturing capacity in China by an estimated 55 percent after the bailout, according to industry watchers. GM’s Dan Akerson crowed at the Beijing auto show earlier this year: “One of our aims is to help grow a new generation of automotive engineers, designers, and leaders right here in China.” The U.S. auto giant’s ventures with the Communist regime include Shanghai OnStar Telematics Co., Ltd.; GM China Advanced Technical Center; FAW-GM Light Duty Commercial Vehicle Co., Ltd., in Harbin, Heilongjiang; FAW-GM’s Changchun plant in Changchun, Jilin; FAW-GM Hongta Yunnan Automobile Manufacturing Co., Ltd., in Qujing, Yunnan; and Shanghai Chengxin Used Car Operation and Management Co., Ltd.
In Europe, the UAW’s appointee to the Government Motors board of directors, Steve Girsky, recklessly pushed the feds to hold on to GM’s failing German-based Opel AG. The Great American Auto Bailout has been subsidizing this hemorrhaging enterprise while Obama has failed to deliver on his 2008 campaign promise to salvage plants like the one in GOP vice-presidential candidate Paul Ryan’s hometown of Janesville, Wis. According to Forbes magazine, “GM Europe, comprised mostly of Opel and its sister brand, Vauxhall, lost $617 million in the first half of 2012, on top of a $747 million loss in 2011 and a $1.8 billion loss in 2010. In all, GM has lost almost $17 billion in Europe since 1999.”
While Team Obama lambastes GOP rival Mitt Romney for outsourcing, Government Motors is now planning to invest $1 billion over the next five years — not in America, but in Russia. That’s on top of $7 billion total in China, close to $1 billion in Mexico, and $600 million for a shirt-sponsorship deal with Manchester United, the British soccer club.
The DNC will put a rank-and-file U.S. autoworker on stage to back up Big Labor’s cheerleading of the deal. Rest assured, this human shield will not tell viewers how Obama and the union bosses colluded to pervert bankruptcy law and shaft some 20,000 nonunion Delphi auto-parts workers. The forgotten victims saw their pensions erode by up to 70 percent; their health benefits disappeared. The first lady is radio-silent. Here in Charlotte, Obama consigliere Valerie Jarrett ducked questions about the Delphi injustice from the Washington Times.
Only in a fantasyland where America has 57 states, “jobs” is a three-letter word, and bailouts are “achievements” does Obama’s rescue math add up. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry,” Obama vows. God help the American worker.
— Michelle Malkin is the author of Culture of Corruption: Obama and His Team of Tax Cheats, Crooks & Cronies. Her e-mail address is malkinblog@gmail.com. © 2012 Creators.com
For the record--is it likely that a change of government in the US will allow GM to go to the wall? No. When Democrats do crazy and illicit things, it's shockingly reprehensible. When Republicans do it, it's OK because we are the good guys. Right. You betcha.
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