Last week, the Volt, GM's signature hybrid vehicle, turned in a lackluster performance in its first series of road tests by Consumer Reports. CR told Reuters on Monday that "when you look at the finances, [the Volt] doesn't make any sense." The publication went on to note that the Volt was "not particularly efficient as an electric vehicle and not particularly good as a gas vehicle... This is going to be a tough sell to the average consumer."
Famed investor Warren Buffett once said, "If you have to have a prayer session before raising prices by ten percent, then you've got a terrible business." So, what does it mean if your business is slashing prices month over month through discounts and other incentives? Take a look at this graph.
From the 1st quarter through the 4th quarter of 2010, GM's lobbying expenses more than doubled from $1.8 million to $3.89 million - a 113% increase. After all, when the government is your largest shareholder, your company execs will inevitably be spending an inordinate amount of time cozying up to Washington politicians.
Moreover, GM's lobbyist team reads like a who's who of the government bailout business. And why wouldn't it? When you're lobbying Washington to privatize gains for your clients and socialize their losses among taxpayers, you hire those firms with the most experience representing other notorious companies that received massive bailouts by U.S. taxpayers - Fannie Mae, Freddie Mac, Goldman Sachs, AIG and others.
News coverage of General Motors over the past few weeks has painted an increasingly glowing picture, but here's a dose of reality: GM still has not repaid taxpayers for the bailout and it's looking less and less like taxpayers will ever be made whole.
A brief comment of mine was included today in a report by Peter Overby on National Public Radio's All Things Considered. Here's a transcript:
The fight over public employee unions has exploded into a high-stakes partisan war. In Wisconsin and several other states, Republicans want to end collective bargaining with many public employee unions. Two favorite proposals would disrupt the ability of unions to build their political funds. And that would deal a major blow to the Democratic Party.
BP Plc, whose Macondo well blowout in the Gulf of Mexico caused the worst offshore oil spill in U.S. history last year, co-owns the well that was granted the first deepwater drilling permit since the disaster.
BP is Noble Energy Inc's partner in the well, holding a 46.5 percent interest, BP said.
Interior Secretary Ken Salazar appears today before the Senate Energy and Natural Resources Committee. He will hopefully answer questions about his refusal to allow deepwater drilling to resume in the Gulf of Mexico, despite a federal judge twice ruling that the moratorium is illegal.
The BP oil spill was a disaster, but not as big of a disaster as the moratorium that followed. The granting of exactly one drilling permit to Noble Energy this week underscores just how cynical and politicized Salazar's response has been. Last week, Salazar said that he would not bow to "political pressure" to restart drilling, standing reality on its head.
The Wisconsin and Indiana union protests, and the disappearance of union-allied legislators, is an assault on democracy. An election was held in November. There is no Constitutional or legal basis for the union bosses to substitute their decisions for those of elected officials.
We must do more than renegotiate contracts. We must end collective bargaining for public employees, which has warped the democratic system in the states. Right now, when the two sides sit down, it's the union negotiating with the union-backed politicians. Taxpayers are not at the table. It's the old story of a concentrated interest of the unions vs. the diffused interests of taxpayers at large.
We need paycheck protection for public employees, allowing them to opt out of paying union dues. My father was a public school teacher in Massachusetts for forty years. Not only did he not wish to be represented by the Massachusetts Teachers Association, he was forced to bankroll causes that violated his political and religious beliefs.