The auto bailouts are now being touted by President Obama as a "success" even though the taxpayer is about to take at least a $10 billion hit when the government sells its remaining GM shares. There is, however, a missing dimension in this debate. It is the moral one.
Prior to General Motors filing for bankruptcy in June of 2009, I was involved as a GM bondholder advocate for a group called the Mainstreet Bondholders. Attempts were made by my group to bring about fair negotiations for creditors of GM, attempts that were ignored by the Obama Administration's Auto Task Force, headed by Steven Rattner. The Task Force stated that their goal was to restructure GM outside of bankruptcy as they laid out a "take it or leave it" bond exchange offer that was supposedly designed to keep GM out of bankruptcy.
As General Motors gambles on ramping up production of the Chevy Volt, a couple of new reports point to headwinds for demand of electric hybrid vehicles, like the Volt. A new British study disputes the perception of eco-friendliness of electric vehicles. The study takes into consideration driving, manufacturing and disposal and undermines the case being made for a rapid introduction of electric vehicles as a means to address environmental concerns.
Delay, waste and corruption are nothing new to subsidized housing programs. An expose of the U.S. Department of Housing and Urban Development's HOME Investment Partnerships Program published in the May 14-17 Washington Post has reinforced the longstanding view of agency critics that too much money is going to line the pockets of developers who either are shady or in over their heads.
NLPC has filed a formal Complaint with the Federal Election Commission (FEC) against Lois Frankel and her campaign committee. Democrat Frankel is running against incumbent Republican Rep. Allen West in Florida's 22nd Congressional District. Frankel is the former mayor of West Palm Beach, and announced her candidacy on March 21. She is opposed in the Democratic primary by businessman Patrick Murphy.
The Complaint alleges that Frankel reported more than $250,000 in income but failed to report virtually all of the expenses connected to fundraising or other campaign activity. The costs that apparently went unreported include direct mail, telephones, web hosting, a post office box, and the pay for a consultant named Brian Smoot. Click here to download a 6-page pdf of the Complaint.
There are some big rumors circulating about the finances of bailed-out General Motors. The first of these is that GM is considering repurchasing Treasury's stake in the automaker and were circulated by sources who, according to a Bloomberg report, "didn't want to be identified." The message was that GM is so cash-rich that they were considering buying back shares from Treasury, thus eliminating the government overhang on the company. This stance raises questions about past actions at GM. Why did GM issue $2 billion of new stock to help fund pension plans if they have adequate cash to do so? Why did GM's wholly owned finance arm need to issue half a billion dollars of junk bonds for "general purposes" if they are so flush with cash?
General Motor's CEO, Dan Akerson, wants higher gas taxes and the price of a gallon of gas to increase closer to $5 a gallon. Are you kidding me?! The comments were made in an interview with the Detroit News. Regarding government imposed fuel efficiency increases Akerson stated, "You know what I'd rather have them do, this will make my Republican friends puke, as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas. People will start buying more Cruzes and they will start buying less Suburbans." With comments like these, Akerson might make average Americans and GM investors "puke" along with those Republicans.
"Baseball, hot dogs, apple pie, Mao Zedong and Chevrolet." That could be GM's new slogan if recent comments by CEO Dan Akerson are taken to heart. Akerson shared a somewhat bizarre vision for GM in an interview with the Detroit News when he stated, "Whoever comes after me; it's going to be a more important appointment than mine because he or she will have to carry on a cultural revolution here. It's just like the Communist Party in China in the 1960s, there has to be a cultural revolution here." These comments come just weeks after the Washington Times reported GM's sponsorship of a Chinese Communist Party propaganda film.
A report on the Businessweek Web site Thursday illustrated how Chevrolet, General Motors’ subsidiary which gets most of its media love these days over the hyper-sensationalized electric Volt, is building its “Green-cred” in ways other than by the vehicles it manufactures.
But just as with the tax credit program for the Volt, in which dealers were discovered to be selling the vehicles to other dealers who then claim the $7,500 credit for themselves, all is not what it appears to be.
Today's jobs' report raises worries that the US may be headed for a double dip recession. Jobs creation was much lower than expected and the unemployment rate rose to 9.1%. And where is President Obama? Traveling to Ohio to brag about how many jobs were saved by spending billions of taxpayer dollars to bail out the auto industry. Oh well, Nero fiddled, Obama campaigns. While Obama tries to convince the majority of people who will be voting in 2012 that auto bailouts are a wonderful thing, individual investors in General Motors should consider the specific risks the company faces if the economy does not improve.