Heritage explains a GAO report indicating that GM and Chrylser are not done feeding at the public trough:

A recent GAO report warns that GM and Chrysler may need even more taxpayer money. This comes after GM and Chrysler received the overwhelming bulk of an $81 billion auto bailout under TARP.

The report finds GM and Chrysler may have unfunded liabilities for their pension programs. These obligations could have been terminated if these companies had filed for a typical bankruptcy. They were maintained, however, after the government assumed sponsorship during the most recent crisis. Should these companies be unprofitable, these unfunded liabilities will be unmet by GM and Chrysler as soon as 2013.

We’ve already made one bad decision in not forcing them to go through the proper bankruptcy process the first time.  There’s a fallacious psychological temptation to think that a prior bad investment means that one is committed to keep making more bad investments, but it’s not so.

In poker there’s a common phrase that goes, “don’t throw good money after bad.”  One wrong decision doesn’t force us to make yet more. It’s not too late to cut them off and start saving the public money.

Comments  Print This Post

---

When foolishly given the task of running a business, Congress critters can be counted on to place political interests ahead of business interests.

By a unanimous vote, a U.S. House committee has approved a measure that would restore 2,100 dealers either cut or scheduled to be closed by General Motors Corp. and Chrysler Group LLC.

The vote comes amid growing support in the House for the proposal, with more than 200 cosponsors signed on to a similar bill. Dealers will hold a lobbying event next Tuesday to press for the plan in the House and Senate.

The bill would turn back the clock to before the companies filed for bankruptcy, restoring the 789 dealers cut by Chrysler and 1,300 dealers GM chose to wind down.

…“This legislation, if passed, would put our long-term viability at risk,” said GM spokesman Greg Martin.

Daniel Ikenson at Cato@Liberty calls for a boycott:

What makes these actions evil, and not just stupid, is that Congress really does not care about whether GM is profitable or not. The Henry Waxmans of the Hill only care that GM produces green vehicles, regardless of their exorbitant costs of production and scant consumer demand. And the John Dingells (among whom are included the 200 sponsors of the bill to restore the dealerships) only want GM to provide jobs, regardless of the fact that GM needs to scale back its labor force substantially to even approach the realm of commercial viability. In other words, Congress demands that Americans subsidize GM because GM’s short-term viability is good for their political fortunes.

Enough. Show Congress that you won’t comply and that you won’t be pawns. Boycott GM. Boycott GM until the government relinquishes its grip on the company’s decision making process.

I gave my own reasons for boycotting GM last month.

Comments  Print This Post

---

Chris Moody discusses a GM boycott:

Limbaugh called for it recently, and only 42 percent of Americans who own an automobile made by General Motors say they are going to buy one again. All of this, of course, makes the left so gosh darn mad.

As an urbanite, I own a Chinese-made scooter and a bus pass. But if I were to buy a car, GM would be the last place I look, on principle. For anyone who is not keeping score at home, that includes Chevy, Buick, Cadillac, Daewoo, Holden, Saab, Pontiac and Saturn.

Before we know it, we will hear calls that it is our patriotic duty to buy GM cars, just as it’s “patriotic” to pay taxes. Baloney. It’s my “duty” to find the best product at the best price, and reward the company who makes that product with my patronage. That is how I’ve always done it, and that is how I will continue, whether I’m buying a car or a box of tissues to wipe away my non-existent tears for General Motors.

Comments  Print This Post

---

…is 535 Congresscritters doing the same.

The Edsel was one of the biggest flops in the history of car making. Introduced with great fanfare by Ford in 1958, it had terrible sales and was junked after only three years. But if Congress had been running Ford, the Edsel would still be on the market.

That became clear last week, when Democrats as well as Republicans expressed horror at the notion that bankrupt companies with plummeting sales would need fewer retail sales outlets. At a Senate Commerce Committee hearing, Chairman Jay Rockefeller, D-W.Va., led the way, asserting, “I honestly don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves.”

Supporters of free markets can be grateful to Rockefeller for showing one more reason government shouldn’t rescue unsuccessful companies. As it happens, taxpayers are less likely to get their money back if the automakers are barred from paring dealerships. Protecting those dealers merely means putting someone else at risk, and that someone has been sleeping in your bed.

I’m sure it will come as no surprise to you, my loyal reader, to learn that the most reprehensible of reprehensibles, Barney Frank, has gotten in on the action.

The latest self-appointed car czar is Massachusetts’s own Barney Frank, who intervened this week to save a GM distribution center in Norton, Mass. The warehouse, which employs some 90 people, was slated for closure by the end of the year under GM’s restructuring plan. But Mr. Frank put in a call to GM CEO Fritz Henderson and secured a new lease on life for the facility.

This is why politicians cannot be allowed to make economic decisions.  Even if some actually care to make decisions based on economic merit, the inherent conflict of interest (politicians want to get elected, not make GM a profit) ensures that destructive meddling will occur.  Government Motors is a (another) failure waiting to happen.  I don’t think we’ll be waiting long.

Comments  Print This Post

---

Sometimes it takes a crazy person to stumble upon the truth:

During one of Chavez’s customary lectures on the “curse” of capitalism and the bonanzas of socialism, the Venezuelan leader made reference to GM’s bankruptcy filing, which is expected to give the U.S. government a 60 percent stake in the 100-year-old former symbol of American might.

“Hey, Obama has just nationalized nothing more and nothing less than General Motors. Comrade Obama! Fidel, careful or we are going to end up to his right,” Chavez joked on a live television broadcast.

Hilarious.

Comments  Print This Post

---

The primary benefit of a free market system is that it rewards companies that are capable of meeting our needs and demands, while punishing those that do not.  Economist Joseph Schumpeter famously referred to this process as “creative destruction.”

The collapse of General Motors and Chrysler is evidence of the process in action.   As Greg Mankiw recently noted on his blog, the 2009 Consumer Report ranked Chrysler dead last, recommending zero percent of tested cars for purchase.  General Motors came in next to last, with 17% recommended.  At the top was Honda with a score of 95%.

Standing in the way of this capitalist process was the administration’s of both George W. Bush and Barack Obama.  Obama in particular has above and beyond in his counterproductive effort to prevent GM and Chrysler from facing the consequences of producing shoddy products.  He  opened the corporate welfare spigot in a flawed effort to save the floundering companies, but to no avail.  Like the grim reaper, the bankruptcy of capitalism knows when the time has come for a business to be put to rest, either to be reborn again as a new company (even if it’s under the same name), or for good.

Democrats who pushed for a passage of corporate welfare bills to prop up the automakers portrayed bankruptcy as an unacceptable course.  Gov. Rendell flat out called it “a disaster to put them in Chapter 11.”  Obama seemed to share this aversion to bankruptcy when he asserted a need to “figure out ways to put the pressure on the automakers the way a bankruptcy court would.  Demand accountability, demand serious change, but do so in a way allows them to keep the factory doors open.” Yet despite the efforts of Obama, the GM and Chrysler of yesterday that ranked at the bottom of the 2009 Consumer Report will finally be laid to rest.  Having finally realized that the best way to “put pressure on the automakers the way a bankruptcy court would” is to let an actual bankruptcy court do it, Obama should now get out of the way and let the capitalist process make the ulitmate decision on the survival of their new incarnations as well.

Comments  Print This Post

---

As Government Motors heads for bankruptcy, embattled CEO Barack Obama stubbornly holds on and is refusing to relinquish his post.  The NYT is answering questions on the impending bankruptcy, but managed to avoid the most important ones.  But that’s ok, I’ll pick up the slack for them.

QUESTION. Doesn’t this bankruptcy prove the bailouts were a waste?

ANSWER. Of course.  But don’t expect anyone to admit it, because that would tarnish the image of the Messiah.  Instead, the press will treat the bankruptcy of GM, as they did with Chrysler, as if they were part of Obama’s plan from the get-go.  In the meantime, don’t mind the government man behind the curtain taking a majority stake in GM.

QUESTION. Doesn’t it prove Obama’s socialist inclinations that he took a majority stake in GM?

ANSWER. Of course.  But since we all know therejust can’t be any  socialists in America, and certainly not in government, we’re going to pretend otherwise.

Comments  Print This Post

---

This Washington Post story confirms what we already knew, but the left refuses to admit: Obama has assumed control over private sector businesses.

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing as the company seeks to shrink and reemerge as a global competitor, sources familiar with the discussions said.

The move comes as the administration prepares to lift the nation’s other faltering car company, Chrysler, from bankruptcy protection as soon as next week, industry sources said.

The American experiment with freedom and free enterprise is over.

Comments  Print This Post

---

Scott Sperling, co-president of private equity firm THL partners, writes in todays Wall Street Journal that “Obama’s Auto Plan Is Capitalism at Work.”

Mr. Sperling is ignorant of the ideology of which he speaks.  Capitalism’s creative destruction, which he cites to support his argument, is a process of spontaneous order, not central planning.  Letting Chrysler and GM go bankrupt without government meddling would have been an example of this process, not what Barack Obama is doing.  For while the President’s policies are destructive, they are anything but creative.

Comments  Print This Post

---

Despite large infusions of taxpayer dollars, General Government Motors is expected by industry experts to file for bankruptcy.

For General Motors Corp., the task at hand is so difficult that experts say a Chapter 11 bankruptcy filing is all but inevitable.

To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10 percent of its risky stock. On top of that, the automaker must work out deals with its union, announce factory closures, cut or sell brands and force hundreds of dealers out of business — all in three weeks.

“I just don’t see how it’s possible, given all of the pieces,” said Stephen J. Lubben, a professor at Seton Hall University School of Law who specializes in bankruptcy.

GM, which is living on $15.4 billion in federal aid, faces a June 1 government deadline to complete its restructuring plan. If it can’t finish in time, the company will follow Detroit competitor Chrysler LLC into bankruptcy protection.

Think back to the beginning of the U.S. government’s incursion into the automotive sector.  We were told bankruptcy would be the end of the world.  The entire U.S. auto industry – nay, all of manufacturing – was going to collapse and never return.  The govenrment, however, was uniquely positioned to save GM and Chrysler from bankruptcy.

Both of these claims was blatant hogwash.  The government never could stop the slide into bankruptcy, nor, as we will soon learn, would that inevitable outcome result in the death of U.S. automakers for all time.

The government lied, automakers died.  When will this administration admit that is is caught in a quagmire? Bring our tax dollars home!

Comments  Print This Post

---

Sorry, no posts matched your criteria.