Just another government bailout

By Mustang Bobby

Remember how a lot of people said that bailing out the auto industry was a waste of money and that we should let Detroit go bankrupt?

Yeah, how’d that work out, anyway?

Today, the U.S. Department of the Treasury announced the next step in its plan to sell its approximately 241.7 million remaining shares of General Motors (GM) common stock with the initiation of a second pre-defined written trading plan.

“TARP’s emergency support to GM during the financial crisis was necessary to prevent the collapse of the American auto industry and save more than one million American jobs,” said Tim Massad, Treasury Assistant Secretary for Financial Stability. “Earlier this year, Treasury launched an effort to sell its remaining shares in GM common stock. We are pleased with the progress to date and will continue exiting this investment in accordance with our previously announced plan and timetable, and in a manner that maximizes returns for taxpayers.”

Treasury’s sale of its GM common stock is part of its continuing efforts to wind down the Troubled Asset Relief Program (TARP). To date, Treasury has already recovered nearly 94.6 percent ($396.70 billion) of the funds disbursed through TARP ($419.37 billion). Excluding the housing programs, Treasury disbursed $411.72 billion for all TARP investment programs and has now recovered $414.25 (including the proceeds from sales of all Treasury AIG shares).

In short, the government recovered almost all the money spent on TARP and actually made a profit. Plus it is selling the rest of its GM stock at a profit as well.

(Cross-posted at Bark Bark Woof Woof.)

Mitt, Cheney, and the auto rescue

By Frank Moraes

I like Mitt!

Jonathan Cohn of The New Republic has a very evenhanded column about Romney's position on the GM rescue, "What Romney Wants You (and Ohio) to Forget About the GM Rescue." The title makes the article sound a lot more critical than it is. Let me briefly lay out Cohn's argument:

Romney's New York Times op-ed was far more nuanced than its title "Let Detroit Go Bankrupt" would indicate. He was not calling for the liquidation of GM and Chrysler. What's more, it isn't clear whether he was for or against Obama's decision to rescue the auto makers. During this period, Romney indicated elsewhere that he did support it.

And then came the primary season, and Romney -- quelle surprise! -- changed his position. This is from a CNBC debate:

My view with regards to the bailout was that whether it was by President Bush or by President Obama, it was the wrong way to go. I said from the very beginning they should go through a managed bankruptcy process, a private bankruptcy process.

We have capital markets and bankruptcy...

My plan, we would have had a private sector bailout with the private sector restructuring and bankruptcy with the private sector guiding the direction as opposed to what we had with government playing its heavy hand.

And then he changed his position back during the Michigan primary. And now we hear from him all the time, "Of course I supported the auto bailout!" It's easy to be on the right side of history when you simply change your opinion to whatever history says.

This is not an isolated incident, of course. Consider Obama's position on Osama bin Laden. When Obama said that he would go into Pakistan to get him, everyone attacked him. This included Mitt Romney. But after Obama did exactly what he said he would, Mitt Romney was totally on board. "Even Jimmy Carter would have made that call."

I don't mind inconsistency; I'm one of its greatest practitioners. But there is a real problem with Mitt Romney's inconsistencies. It doesn't come from the shifting tides of his moods and facts. Instead, it comes from his decision about whatever is expedient. But even this I wouldn't mind if he hadn't surrounded himself with all of Bush's people on foreign and domestic affairs. There is no doubt that if Romney is elected president, there will be a group of neocons and "free" marketeers who will play him like a fiddle. And we don't need another Cheney administration.

(Cross-posted at Frankly Curious.)

Job creation at its best

By Richard K. Barry 

I wonder if Romney will just lie now about having said we should let Detroit go bankrupt? I'm waiting for it.

Latest news is that GM is announcing the creation of 2,000 new jobs in Michigan, beginning with up to 1,500 at a new information technology center in Warren.

As The Detroit News reports:

It's unclear where GM would add the other 500 jobs, but the state says the innovation center is the first of three projects the company will announce. 

GM will invest $300 million combined for the three. The state said GM plans no major investment spending on the information technology center; it will be housed in an existing building undergoing renovation on the Warren Tech Center campus. 

The center will hire 1,500 new employees within four years and will add to information technology employment already in Warren, Randy Mott, GM's vice president of information technology and chief information officer, said in a Friday interview.

Good call, Mr. President.

(Cross-posted at Lippmann's Ghost.)

Craziest Republican of the Day: Steve King

By Michael J.W. Stickings

Point of personal insanity!

There's an abundance of craziness in the Republican Party, but it's like our CRD series was tailor-made for the Iowa congressman.

Last Friday, we was CRD for the seventh time, well ahead of anyone else. Today makes eight.

And this one's a doozy:

Rep. Steve King (R-Iowa), an outspoken critic of just about everything President Obama supports, is considering introducing a bill that would repeal everything Obama has signed into law.

Yes, everything.

Now, I get that King and Obama don't see eye-to-eye on most things, and that King doesn't much care for what Obama's done as president. But even the most extreme partisans usually acknowledge that the president, of whichever party, has the democratic legitimacy and authority to sign bills into law. Sure, the opposing party may seek to overturn some of those laws, or just amend them, but that's usually as far as it goes. King's proposal goes well beyond that, to the point where he seeks to erase the president from legislative history. (I would note that as much as Democrats disliked George W. Bush, they never ever went this far. Not even close.)

Not only that, but he fails to appreciate how American democracy works. The president signs bills into law, but it's Congress that passes them. Even if he objects to everything Obama has done, does he also object to every single bill Congress has passed that the president has signed, even where Republicans were supportive (which wasn't often, admittedly)? If so, he might as well just take a public dump on the Constitution. And resign in shame.

Again, I don't expect King, a right-wing extremist by any measure, to be on Obama's side on anything, and, sure, I expect him to work to undo certain pieces of legislation. But let's take a look at some of the legislation that would be repealed if King got his way:

-- Lilly Ledbetter Fair Pay Act

-- Family Smoking Prevention and Tobacco Control Act 

-- Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act

-- Ryan White HIV/AIDS Treatment Extension Act

-- Emergency Aid to American Survivors of Haiti Earthquake Act 

-- Caregivers and Veterans Omnibus Health Services Act

-- Daniel Pearl Freedom of the Press Act 

-- Comprehensive Iran Sanctions, Accountability, and Divestment Act 

-- Small Business Jobs and Credit Act

-- Animal Crush Video Prohibition Act

-- Healthy, Hunger-Free Kids Act

-- James Zadroga 9/11 Health and Compensation Act 

-- Food Safety and Modernization Act 

-- United States-South Korea Free Trade Agreement Implemention Act 

So King is apparently against fair pay, in favor of smoking, in favor of hate crime, against HIV/AIDS treatment, against helping the survivors of the Haiti earthquake, against providing support to veterans and their families, against the freedom of the press, against sanctioning Iran, against helping small businesses, in favor of cruelty to animals, against feeding children, against helping 9/11 relief workers, against food safety, and against free trade with a key Asian ally, South Korea.

Maybe he is or isn't any of these things, but his irrational hatred for President Obama, his refusal to allow that the president did anything right, is clearly blinding him to anything and everything but absolute partisanship.

Maybe next week he'll propose shutting down General Motors and firings its employees. Because of course it was Obama who saved the industry from collapse.

Or maybe he'll propose finding Osama bin Laden's body, bringing it back to life through the power of prayer, and reinstalling him as head of al Qaeda. Because of course it was Obama who issued the order to kill him.

And that means it was wrong.

Kissing frogs ... The auto bailout monty

By J. Thomas Duffy

It plays out like something from the old Wonderful World of Disney.

A friendly-looking, white-haired older gentlemen, speaking in a tone of a grizzled, wise-to-the-bone Midwestern small-town doctor, a bit self-effacing, before laying on the con ...

Here, watch it:

GM Repaid Government Loan Ahead of Schedule



Ah, not quite there, Ed, but thanks for coming and playing our game.



It's all a hustle!

Gretchen Morgenson uncovers all three of the Monty Cards in her piece today:

Repaying Taxpayers With Their Own Cash 

Truth seekers the nation over, therefore, are indebted to Senator Charles E. Grassley, Republican of Iowa, who in recent days uncovered what he called a government-enabled “TARP money shuffle.” It relates to General Motors, which on April 21 paid the balance of its $6.7 billion loan under the Troubled Asset Relief Program. 

G.M. trumpeted its escape from the program as evidence that it had turned the corner in its operations. “G.M. is able to repay the taxpayers in full, with interest, ahead of schedule, because more customers are buying vehicles like the Chevrolet Malibu and Buick LaCrosse,” boasted Edward E. Whitacre Jr., its chief executive.

[snip]

Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

[snip]

Mr. Grassley heard back from the Treasury last Tuesday. Herbert M. Allison Jr., assistant secretary for financial stability, confirmed that the money G.M. used to repay its bailout loan had come from a taxpayer-financed escrow account held for the automaker at the Treasury.

Even Snoozin' Larry Summers woke up long enough to work the con: 

What a difference a year makes. Just about a year ago, the American auto industry was on the brink of collapse. Today, General Motors announced that it has repaid its $6.7 billion loan to the U.S. government in full five years ahead of schedule, and Chrysler announced that, after taking one-time charges last year associated with its restructuring, it produced an operating profit in the first quarter of 2010 for the first time since the economic crisis began. The prospect of a faster than anticipated exit from government involvement and a return of most of the taxpayers’ investment in these companies has materially improved. 

This turnaround wasn’t an accident of history. It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler – and indeed the auto industry – a lifeline, if they could demonstrate the will to reshape their businesses and chart a path toward long-term viability without ongoing government assistance.

Holy Long Con, Batman!

Even Bernie Madoff, sitting in his prison cell, had to give himself a few headslaps after reading this today.

He was in the wrong racket.

If he only hooked into the government money pipeline ...



He had to be thinking about General Motors, taking over the Myra Langtry role in The Grifters with the government playing Roy Dillon: 

Roy Dillon: Maybe I like it where I am. 

Myra Langtry: Well, maybe I don't! I had ten good years with Cole, and I want them back! I gotta have a partner! I looked and I looked and believe me, brother, I kissed a lot of fucking frogs, and you're my prince! 

But Gretchen spanked 'em all: 

Of course, there is much joy in Mudville when a recipient of government aid repays its obligations. And it is also natural that the administration is keenly interested in reassuring taxpayers that losses on their bailout billions will be smaller than expected. Still, employing spin and selective disclosure is no way to raise taxpayers’ trust in our nation’s leadership. 

Pucker up, everybody!


Bonus Riffs

Mike "Mish" Shedlock: Oh Please, The GM Bailout Was A Failure, And No The Taxpayer Hasn't Made Money

What's Good For Tesla Motors ...

Top Ten Cloves: Great Things About Obama Taking Over General Motors

Breaking News! GM Cancels UAW In Favor of Adopting Huffington Post Business Model ...Celebrities, Auto Enthusiasts and Bloggers To Build Cars For Free ...Huge Spike In Profits Forecast




(Cross-posted at The Garlic.)

Annals of wingnuttery -- a continuing saga

By Mustang Bobby

Here's another brilliant idea from the right wing: boycott General Motors:

"In the effort to reverse this lurch beyond the farthest left fringe of previous Democratic statist urges, individual Americans have a role to play. They have to say no to GM products and services until such time as the denationalization occurs," says Hugh Hewitt. He acknowledges that this is a serious step that could hurt people currently working for GM: "But there isn't any alternative, every dollar spent with GM is a dollar spent against free enterprise. Every car or truck purchased from Government Motors is one not purchased from a private car company that competes fairly against all other car companies."

Where Hewitt makes his point as a seemingly reluctant and composed agitator, Rush Limbaugh makes no bones about what he wants in his own praise of the idea. The most amazing thing here is that Limbaugh appears to be openly admitting that the purpose of this is economic and political sabotage -- to prevent President Obama from succeeding at something.

Limbaugh reassures any GM workers who might be listening that the boycotters aren't angry at them. "They don't want to patronize Obama. They don't want to do anything to make Obama's policies work!" he explains. "This is an untold story, by the way. Of course, the government-controlled media is not gonna report anything like this but there are a lot of people who are not going to buy from Chrysler or General Motors as long as it is perceived Barack Obama is running it, because people do not want his policy to work here because this is antithetical to the American economic way of life."

Even for right-wing wackos, this is amazingly stupid on so many levels that you just have to wonder at their ability to cram so much idiocy into one package; it's like a piñata of asshattery.

In the first place, boycotting GM and Chrysler would basically undermine efforts to get them back in business so they can pay back the taxpayers for the money that's been lent to them. The faster they recover, the sooner we get our money back. Second, crippling the car companies would only make the economies of the cities and states where the companies have plants even worse, leading to more layoffs and higher unemployment, not just in the auto industry but every other business in town. You close a car plant, you kill off jobs, which means people can't buy stuff, which kills off other businesses that have nothing to do with GM or Chrysler. Oh, and it would also kill off the car dealers who haven't already been terminated. (And thus completing the nefarious scheme by President Obama to close Republican car dealers, too.)

Mr. Hewitt and Mr. Limbaugh make no bones about their motivation. It's not because of some philosophical difference between free-market capitalism and government assistance; they want this president to fail because they don't like him. They don't care if it hurts the economy or the people who work for GM or Chrysler; they have a point to make.

Remember when the conservatives championed the small-town values and blue-collar workers as the "silent majority," the people they really cared about? This shows you how much they really mean it.

(Cross-posted from Bark Bark Woof Woof.)

Told you so

By Mustang Bobby

Chris at Scale Your Organization wraps up the GM/Chrysler dealership problem:

Here’s a quiz for you: who has more retail outlets — Starbucks or General Motors (GM)?

If you listen to all the late night comics with their shtick on Starbucks and how there’s one on every corner, you think you know the answer. Well, you’d be wrong. Starbucks has about 6,300 company-owned stores and GM has almost 7,000 dealerships. Wow…

Now this is just a little unfair, Starbucks has another couple thousand franchise locations inside places like grocery stores and theme parks. And GM owns virtually none of their stores. But the fact that the numbers are even in the same ball park is stunning to me.

[...]

I think this excess of dealers is one good reason for the problem. Too many dealers chasing too few customers. And it leads to a fetid culture of sleeze-ball sales tactics, terrible service, and lousy margins. It’s little more than vultures preying on the few customers there are.

Starbucks has nothing in their store that costs over $250, and the vast majority of sales are under $10. I don’t know for certain, but I would have to imagine that their average transaction is in the $5 range. This just begs for a lot of outlets, to make the impulse purchase easy.

GM, on the other hand, probably has an average transaction around $10,000. I don’t know many people who decide on a whim to just drop by the Cadillac store and pop for a new $60,000 Escalade. Or stop in for a quick brake job. Why on earth do they need so many stores (or brands, but that’s another story)?

All excellent points, but what makes it even more interesting is that he posted this almost two years ago, on June 18, 2007, long before General Motors and Chrysler faced bankruptcy.

Now that the automakers are slashing dealerships -- and also impacting the local economy where the dealerships are located -- the question arises as to what would have happened if GM and Chrysler had listened to Chris back when they were in better shape? Could they have staved off their current situation?

Probably not. State laws -- not to mention the auto dealer's lobby -- jealously protect the franchise contracts for dealers, and if GM or Chrysler had decided on their own to start cutting out losing stores, they would have either faced a blizzard of lawsuits or paid through the nose to cancel the contracts. For example, when GM decided to kill off Oldsmobile in 2000, it cost them almost $2 billion to do it, and a lot of that was for paying off the dealers that had to either close or re-configure their stores. I'm sure there's someone today at GM wondering about the cost-benefit of shuttering Olds ten years ago versus the cost of keeping it running but reducing the number of models.

Ironically, the only way for GM and Chrysler to get out of their dealership contracts is to declare bankruptcy; clearly a Hobbesian choice when they were more solvent than they are now.

(Cross-posted from Bark Bark Woof Woof.)

The future is now

By Carl

One wonders if GM really did need a bailout:

US carmaker General Motors is joining with scooter maker Segway to make a new type of two-seat electric vehicle.

The prototype, which will be debuted in New York, is aimed at urban driving. GM aims to start making them by 2012.

The vehicle, named Puma, can go as far as 35 miles on a single charge. It will use lithium-ion batteries.

See guys? If you had started on this path thirty years ago, even using just one percent of your annual revenues, you could have been poised to corner the market on this kind of vehicle. Instead, you find yourself piggybacking on someone else's idea.

There had been rumours in the tech press for months that Segway was poised to announce a new product that would complement its futuristic Segway Personal Transporter, which failed to capture much more than the imagination of people nationwide, likely because of its cost ($5,000) and its niche marketing ("Is it for sidewalks or streets?").

The P.U.M.A. (Personal Urban Mobility and Accessibility) would essentially be a scooter with a top speed of 35 miles per hour, but far cleaner and far safer, with a nav system and a sensor array that would identify obstacles and steer around them, essentially driving itself.

It would also be far cheaper, about the third of the cost of a car (let's say $10,000), and ideal for uses on college campuses and for traffic enforcement agents (you know, meter maids?). It would eventually find its way to suburban homes as station cars, and even into the city as a day-to-day vehicle that can be crammed into tiny parking spaces.

The first and most obvious market for this vehicle is the Asian market, where cars haven't penetrated yet to the extent they have in the west and where cities the size of Chicago seem to pop up overnight. We'll see them here eventually now that the national attention has been focused on green technology and improving the national infrastructure.

There are few things as damaging to the infrastructure and environment as the internal combustion engine, with its thousands of mini-explosions for each trip it takes. This vehicle weighs 300 lbs. A car weighs 6 times that. You do the math.

The PUMA can be put into production immediately, as the technology is off-the-shelf for Segway. The only question would be how quickly can a dinosaur like GM ramp up its production lines to make this machine.

Aye, there's the rub and has been for Detroit for a long time. Flexibility has never been a key component in the US auto industry and to be sure, the dinosaurs who sit on the boards of directors haven't been strident in their advocacy of becoming more nimble, with the effective result being a dinosaur who can rollerskate a little.

That's sad for a nation that has always prided itself on invention.

(Cross-posted to Simply Left Behind.)