Let's all rejoice! The Treasury Department is finally beginning to unload the taxpayers' stake in General Motors after a three and a half year stint of government involvement in the company. While the decision to get taxpayers out of the private sector is the correct one, the move is hardly a cure-all for what ails GM. And despite reports to the contrary, this does not bring closure to all groups that were involved in the unprecedented intrusion of government into the private sector that saw politically-powerful groups like the UAW receive favorable treatment over other classes.
It would appear that there is a bit of a Mexican standoff regarding the sale of General Motors stock by the three major holders. The US government (aka taxpayers), the UAW and the Canadian government have a combined ownership stake in GM of about 50%. If any of these three were to dump their shares on the market, the remaining holders will see a drop in the value of their shares due to the dilutive effect of the new shares hitting the market. Recent stories regarding the mindset of the Canadian government reveal that they will mirror the market-timing philosophy of the US government by hanging on to their stake. The decision may be driven by closed door meetings with US Treasury Secretary, Tim Geithner.
General Motors is making more ridiculous claims on the Chevy Volt by flooding the web with stories of how 100 million electric miles have been driven since the Volt's much-hyped inception. Let's put the boasting in perspective. In the two plus years that it took for Volt drivers to put on 100 million miles, gas-powered vehicles logged over 5 TRILLION miles in the US. It would take only 5,000 cars traveling 10,000 miles a year to log 100 million miles in two years. The Volt has fallen far short of sales goals and has cost taxpayers billions of dollars in subsidies to reach the much-publicized but unimpressive milestone. So, what's the net reduction in gas usage in the US as a result of the Volt's accomplishment? Less than .002%.
Albert Einstein is credited with having defined insanity as "doing the same thing over and over again and expecting different results." Well, prepare for more insanity as General Motors is doubling down on green energy and plug-in cars after the disappointing sales results from previous entries into the field. The politically-motivated hype that we saw, and continue to see, on the Chevy Volt will be repeated. This time the over-hyped vehicle will be a Korean-made, all-electric Chevy Spark.
By any number of indicators, the nation's housing market is in recovery. But that may be the last thing the Federal Housing Administration (FHA) wants to hear right now. Last Friday, the mortgage insurance agency, part of the U.S. Department of Housing and Urban Development, announced the results of an independent annual audit projecting that reserves of FHA's main fund, as of September 30, were $16.3 billion less than its obligations for the current operating year. The estimate, far more grim than what had been forecast only months earlier, has renewed debate in Washington and elsewhere as to the need for a special infusion of funds - i.e., a bailout. It would be the first in the agency's 75-plus years.
"The unbridled growth of crony unionism and government corruption will destroy the United States as we know it." This statement may strike many as sheer hyperbole. But its author, Mallory Factor, a political scientist at The Citadel, knows whereof he writes. His new book, "Shadowbosses: Government Unions Control America and Rob Taxpayers Blind" (New York: Center Street), makes a credible case, and a well-sourced one, that our country may be in the early stages of a ruinous dystopia, courtesy of public-sector unions. In pursuing their interests, argues the author, these labor organizations hold taxpaying citizens hostage to unsustainable wage/salary, pension, health care and other contractual commitments. Municipal bankruptcy filings this year by San Bernardino and Stockton, Calif. may be a mere taste of things to come.
It is being suggested that President Obama's reelection was at least in part helped by the auto industry bailouts, or more accurately, the portrayal of the bailouts by the president and the media. It is therefore important to surmise that the precedent setting auto bankruptcy proceedings saw billions of taxpayer dollars used to not only help the industry, but to fund the reelection of the sitting president that orchestrated the process.
General Motors is criticizing Mitt Romney for running an ad that says GM cut 15,000 jobs under the Obama Administration. The Detroit Free Press reported that GM spokesman Greg Martin (speaking about the Romney ad) stated, "No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the U.S. and repatriating profits back to this country."
Leaving aside for a moment the bigger issue of a taxpayer-supported entity improperly inserting itself in an election, lets examine the facts. A look at GM's annual SEC filings gives a clear picture of how many people were employed by the company both before and after the Obama Administration guided the company through a bankruptcy process.