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.
Who: Obama-Biden campaign. Where: Michigan and Ohio What's going on: So much has been said about Mitt Romney's willingness to lie his ass off about nearly anything if he thinks it will help him win the election. His campaign has said that they would not allow themselves to be influenced by fact checkers. He might as well have said he would not allow his campaign to be influenced by the truth. Romney knows he needs Ohio to win the election, He knows Michigan would be a major victory, so he simply starting telling people that because of Barack Obama's efforts to save the auto industry, Chrysler would be shipping jobs to China for the production of its Jeep line. Not a word of it is true and Chrysler has said so. Steve Benen talked about this today, citing a couple of newspaper pieces:
The New York Timeseditorialized today, "It's bad enough to be wrong on the policy. It takes an especially dishonest candidate to simply turn up the volume on a lie and keep repeating it." What's more, the Toledo Bladechastised Romney today for "conducting an exercise in deception about auto-industry issues that is remarkable even by the standards of his campaign."
The Obama campaign has an ad calling Romney out on his latest lie: "Cynical." I'd say this is what desperation looks like, but Romney has run his whole campaign like this.
Vice President Biden on Romney's auto industry lies: "This guy pirouettes more than a ballerina."
By Michael J.W. Stickings By now you've hopefully heard about what Jonathan Cohn calls Romney's "desperate, deceptive gambit" in Ohio. Basically, conservative outlets were pushing a completely false story about Chrysler moving its Jeep production to China. Romney then "scared the bejeezus out of Ohio autoworkers" at a rally in Toledo last Thursday by pushing the story himself. Alas:
The story turns out to be wrong. As Chrysler made clear the very next day, in a tartly worded blog post on the company website, officials have discussed opening plants in China in order to meet rising demand for vehicles there.
But instead of backing down, the Romney campaign doubled down (as it usually does when it gets caught lying). Because it already had an ad in place repeating the lie -- an ad targeting Ohio -- an ad, needless to say, blaming President Obama for destroying the domestic auto industry: "Obama took GM and Chrysler into bankruptcy, and sold Chrysler to Italians who are going to build jeeps in China. Mitt Romney will fight for every American job." This is completely insane, of course, but par for the course for Romney. Everything in that sentence is either misleading or outright false. Read Cohn's entire piece for an explanation, but basically: Far from, and indeed the opposite of, destroying the auto industry, President Obama rescued it, saving "at least a million jobs," including many in Ohio. Finally, though, it appears that even the media are treating this as a lie too far. As Brian Beutler writes: "In news articles, tweets, and other media, members of the national press, usually reluctant to criticize campaigns directly, have taken Romney to task for running a misleading TV ad creating the false impression that Jeep will ship jobs to China because of President Obama's auto rescue." And the Obama campaign is firing back as well, including with a new ad and this from Vice President Biden:
This guy pirouettes more than a ballerina. Now he says -- seriously, think of what he's saying within two weeks. I find -- I've never seen this in public. I've served with eight Presidents. I have never seen this in my public life. Within two weeks, he's running an ad in this state saying that President Obama made the companies go bankrupt; is now -- gave the industry the Italians, who are selling it to the Chinese. Whoa. As we say in my faith, bless me, Father, for I have sinned. I mean, what are you talking about? I have never seen anything like that. It's an absolutely patently false assertion. It's such an outrageous assertion that one of the few times in my memory a major American corporation, Chrysler, has felt obliged to go public and say, there is no truth. They said, Jeep has no intention of shifting production of its Jeep models out of North America to China. Chrysler Corporation, which is highly unusual, said, a careful and unbiased reading would have saved unnecessary fantasies and extravagant comments.
Ladies and gentlemen, have they no shame?
Romney will say anything, absolutely anything, to win, it seems. But he can't run from the truth.
Here, watch it... Romney is desperate to win Ohio, and as we've seen throughout this campaign, just as we saw during the Republican primaries, he's willing to do or say anything for votes.
It's all part of what I've been calling his relentless deluge of dishonesty.
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.)
By Michael J.W. Stickings
(Another installment in our extensive " Behind the Ad" series.) Who : Obama for America (OFA). Where : Ohio -- television. What's going on:I'll let the Obama campaign explain:
The people of Ohio know the clear choice they face in this election. OFA's new television advertisement, "Made in Ohio," features Ohioans who know just how important President Obama's rescue of the auto industry was for them, their families, and their communities. They know too how it felt to hear Mitt Romney promise to let the whole industry collapse. That is why Ohioans understand that this election is about two fundamentally different visions of an economy: between moving America forward by building the economy from the middle class out, or taking us backward with a top-down approach.
Yes, the economy continues to struggle, but President Obama has done a remarkable job, pulling the economy back from the brink of catastrophe, and putting in on the road to full recovery, by investing in America's future through such decisive actions as saving the auto industry, helping homeowners in dire straits, and injecting much-needed stimulus to spur demand and productivity. The job isn't done, but the president's policies are working, and working well. Just look at the unemployment rate, which went down in 41 states last month. Jobs are up, exports are up, and the future looks brighter because of President Obama's leadership.
In contrast, Mitt Romney is absolutely the wrong choice -- for Ohio, and for America. He'd take the country back to the policies that caused the crisis in the first place, and he'd make it even worse with plutocratic policies that benefit the rich at the expense of everyone else, particularly the middle class.
That's the choice in this election, and it couldn't be more clear.
Mitt just can't help himself, it seems. He's a dishonest, bullshit-spewing prick.
I get that political rhetoric in the heat of a campaign often bears little relation to the truth, but this is just absurd:
Republican presidential candidate Mitt Romney on Thursday suggested that Barack Obama had been governing as a "president of doubt and deception."
At a campaign event in Saint Louis, the former Massachusetts governor blasted Obama for not understanding the "free enterprise system."
"Sadly, it's become clear that this president simply doesn't understand or appreciate these fundamental truths of our economic system," he insisted. "Our government has a moral commitment to help every American to help himself -- him and herself. And that commitment has been broken."
"I don't believe, by the way, that it was done with evil intent or ill will," he continued. "As your president starting on day one, I will do everything in my power to end these days of drift and disappointment."
Romney noted that something was "fundamentally wrong when there over 23 million Americans who are unemployed, underemployed or have stopped looking for work."
"And yet, the president tells us he's doing a great job," the candidate pointed out. "Forward, he says. Off a cliff."
"I will not be that president of doubt and deception!"
Apparently he thinks he can say anything and get away with it. (It's another of those George Costanza rules: It's not a lie if you believe it.)
So Obama is an enemy of capitalism and the American Way. Why? Because he says so.
We're used to this by now, of course. Republicans have spent much of the last four years breathlessly telling us that Obama is a socialist who wants government to crush the market and control every last inch of our lives.
But where's the evidence -- in this case, the evidence that Obama "doesn't understand or appreciate these fundamental truths" of American capitalism, that somehow Obama doesn't believe in this "moral commitment" to help people succeed in the free market?
If anything, if we look back over his first term, the president has been overly committed to the market at the expense of meaningful regulation and the protection of non-wealthy Americans. Otherwise, his policies have all been about protecting "our economic system" from itself and building it up again: the stimulus package (not large enough but probably as much as he could get given Republican opposition at the time), the auto bailout, the refusal post-TARP to hold Wall Street appropriately responsible for its actions (and crimes), market-oriented, pro-Big Insurance health-care reform based on Romney's own reforms in Massachusetts (not a single-payer system), etc. Where in all that is evidence of anything even remotely resembling opposition to American capitalism?
Has the economy continued to struggle under Obama? But consider how much worse it would have gotten, and would be today, if not for what Obama did to reverse it's downward spiral, the condition he found the economy in when he took office -- all that he did in the face of Republican opposition and obstructionism. Consider what it would be like now if Republicans had gotten their way, if there had been no auto bailout, no stimulus, nothing at all to get the economy moving in the right direction, just more tax cuts for the wealthy, like Romney, and further deregulation of a financial system that almost destroyed itself, globally, precisely because there was not enough regulation.
But that hardly matters to Romney. This is the guy who wanted the auto industry to go bankrupt and who is now taking credit for saving it. He's shameless, and relentless.
Jon Lovitz used to have this great routine on Saturday Night Live in the late 80s in which his character would tell the most outrageous lie and then punctuate the absurd claim with, "yeah, that's the ticket." It was hilarious because we have all come across people who make up shit and seem to think no one will notice. His pathological liar schtick was great.
Why was I reminded of that today? Hmmm. Well, Mitt Romney must be channelling himself some serious Jon Lovitz as he attempts to take credit for the bailout of the auto sector, something he vehemently opposed.
Romney's claim is based on the following statement, which he gave in a recent interview: "I pushed the idea of a managed bankruptcy, and finally when that was done, and help was given, the companies got back on their feet. So, I'll take a lot of credit for the fact that the industry has come back."
The course Romney advocated differed greatly from the one that was ultimately taken. GM and Chrysler went into bankruptcy on the strength of a massive bailout that Romney opposed. Neither Republican President George W. Bush nor Democratic President Obama believed the automakers wound have survived without that backup from taxpayers. Romney opposed taxpayer help.
In the now-famous editorial in The New York Times in 2008, Romney wrote, "If General Motors, Ford and Chrysler get the bailout their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed."
Well, that didn't happen.
I guess if you advise people to jump out of a burning airplane to save themselves, you might want to include the part about the parachutes or your advice would only be half right, with catastrophic results.
Yeah, Mitt Romney: "I'll take a lot of credit for the fact that the auto industry has come back. That's the ticket!"
It's a rhetorical question. Of course he fumbled. And what an embarrassing fumble it was:
Standing on the 30-yard line of Detroit's Ford Field, Mitt Romney delivered what was billed as a major economic speech before a crowd of about 1,200 supporters on Friday.
In his crucial home state of Michigan, Romney reiterated his new tax
plan to applause from an audience dwarfed by the scope of the stadium
that seats up to 80,000 spectators.
The Romney campaign promised an economic policy speech on filled with
major new policy initiatives, but as it turned out, the venue may have
been too big for his message. The supporters, sitting in folding
chairs on the field of the indoor football stadium that is home to the
NFL's Detroit Lions, were surrounded by tens of thousands of empty
seats.
"I want to thank the folks at the Ford Field for making this space
available for us," Romney said. "I guess we had a hard time finding a
large enough place to meet and this certainly is."
The speech itself was typical Romney. If you've been paying attention, you've heard it all before. He said that Detroit should be "the motor city of the world," though of course he was against the auto bailout -- which has proven to be a huge success.
Television cameras showed rows of empty chairs as Romney rehashed many
of the policies and quips he'd used in previous speeches, made a few
jokes that appeared to fall flat with the audience and said that his
wife, Ann, drives "a couple of Cadillacs," which will likely give
Democrats more ammunition for their depiction of him as rich and out of
touch.
*****
Most of Romney's speech was focused on rehashing the tax policies he'd
released earlier this week, and repeating attacks he’d made previously
on President Obama. Romney promised to lower taxes and repeal Obama’s
healthcare overhaul, comments he makes during nearly all of his
speeches.
And those in attendance were not terribly impressed, it would seem:
After an audience member asked Romney if he thought he'd have the
best chance to beat Obama, Romney dismissed the other GOP candidates.
"I
not only think I have the best chance, I think I have the only chance —
maybe I'm overstating it a bit," he said, chuckling awkwardly.
"That's
my family leading the applause," he said quickly, although no one was
clapping, then laughed again. No one appeared to laugh with him.
Awk... ward. And this from the Republican frontrunner and likely nominee? Yes. And this is what it's come to: Romney bullshitting, the media calling him on his bullshit, and whatever appeal he has left draining away. It's like no one's even taking him seriously anymore as he runs as far as he can to the right while keeping an eye on the center he must head to should he win the nomination, promoting a far-right agenda on everything from the economy to immigration to same-sex marriage to unions to Iran, but doing so without even a shred of credibility, so obvious does it seem that he'll do and say anything for votes, and blaming Obama for everything under the sun, so much so that it's all become quite ridiculous, his act so laughable, his inability to connect so blatant, his desperation so palpable that the negative media narrative is writing itself, and deepening, every time he opens his mouth or even just appears in public.
Even his key surrogates, the Chris Christies and Ann Coulters of the world, must find it hard to summon any enthusiasm. Imagine how the party faithful will react when he walks out to give his acceptance speech at the convention later this year. They'll back him because he's the Republican and because they hate the president, but will there be any genuine love for Romney himself?
A speech full of the usual banality to some unimpressed supporters in the middle of a mostly empty stadium in a state that he calls his own pretty much says it all.
(Another installment in our "Behind the Ad" series.)
Who: Mitt Romney in an ad called "Growing Up."
Where: Michigan.
What's going on: In the ad, Romney is driving around in a car on a street somewhere in Michigan. He is narrating himself as various scenes are shown depicting the Detroit auto show, workers at a Chrysler plant, and the General Motors tower in downtown Detroit.
Mitt Romney clearly wants to remind Michigan voters that he grew up there and his ad, the first one designed for the state's Feb. 28 primary, is an explicit home-town appeal. He reminisces about his father, a popular former governor and auto executive, name-checks the renowned auto show and uses imagery designed to remind voters of the Motor City's glory days. If that's not enough, he concludes by asserting that the state's fate is "personal" for him.
The ad comes at a delicate time for Romney. While he recovered somewhat by winning Maine's caucuses last weekend, he's still nursing wounds from Rick Santorum's sweep of nominating caucuses in Colorado and Minnesota, and Missouri's non-binding primary. Santorum's momentum has pushed him ahead of Romney in a handful of national polls and in early Michigan surveys. If Romney is to regain momentum before the potentially decisive Super Tuesday primaries on March 6, when 10 states vote, he badly needs to win in Michigan.
But the part about the ad that really stinks is the strong suggestion that President Obama is somehow to blame for Detroit's woes.
Again, The Washington Post:
He also implies that Obama's policies played a role in the auto industry's collapse, which is not the case. After noting the industry's decline in one breath, Romney then says Obama "did all these things that liberals have wanted to do for years." Regardless of the merits of Obama's policies, they didn't bring about Detroit's ills. The auto industry in general, and Chrysler and General Motors in particular, were collapsing before Obama took office in 2009. The decision to continue the bailout of GM and Chrysler, which Romney doesn't mention, was one of Obama's first major decisions in office. Romney publicly opposed the bailouts and reaffirmed his stance this week in an opinion piece published in The Detroit News.
I don't know if I should give the ad grudging respect for creating a grossly false impression without actually lying or if I should be disgusted by yet another example of bullshit coming out of Romney's mouth to support his run for the GOP nomination.
Well, actually, I do do know. This is pathetic.
Hard to believe that anyone could actually lower the level of political discourse coming from the right, but Mitt Romney has.
Mitt Romney was wrong about the bailout of the auto industry -- he was against it, and therefore in favor of the industry collapsing, and it's been a rousing success -- and yet continues to be riding the wave of his own failure.
In an op-ed in yesterday's Detroit Newt, Romney argues that the bailout was a bad idea, notes reluctantly that there has been some "indisputable good news" (i.e., GM and Chrysler still in business -- he doesn't mention all the jobs that would have been lost, all the lives ruined, all the families destroyed), and then shifts course and blames President Obama for mismanaging the bailout, apparently because criticizing the bailout itself is now ridiculous.
And for what specifically does he blame Obama. Well, it should come as no surprise that Romney plays the ever-popular-in-GOP-circles union-bashing card and blames him for not "standing up to union bosses," specifically Democratic and pro-Obama union bosses. And also for giving "American taxpayers," through the Treasury Department, a share of GM:
This was crony capitalism on a grand scale. The president tells us that
without his intervention things in Detroit would be worse. I believe
that without his intervention things there would be better.
Instead of a bailout, Romney preferred "managed bankruptcy." In other words -- surprise, surprise -- he wanted the banks to win, not the union -- not, that is, the workers.
By the spring of 2009, instead of the free market doing what it does
best, we got a major taste of crony capitalism, Obama-style.
Thus,
the outcome of the managed bankruptcy proceedings was dictated by the
terms of the bailout. Chrysler's "secured creditors," who in the normal
course of affairs should have been first in line for compensation, were
given short shrift, while at the same time, the UAWs'
union-boss-controlled trust fund received a 55 percent stake in the
firm.
Confused? (Sure, it's complicated.) I'll let emptywheel's Marcy Wheeler explain:
He's complaining, of course, that VEBA (the trust fund run by
professionals that allowed the auto companies to spin off contractual
obligations – retiree healthcare – to the unions) got a stake in Chrysler
while Chrysler's secured creditors took a haircut.
So, in part, he's basically complaining that the bailout preserved
the healthcare a bunch of 55+ year old blue collar workers were
promised. He’s pissed they got to keep their healthcare.
He's also complaining that banks took a haircut, as would happen in any managed bankruptcy.
But it's more than that. He's complaining that a bunch of banks that
themselves had been bailed out had to take a haircut. He's complaining,
for example, that JP Morgan Chase, Chrysler’s largest creditor at the
time and the recipient, itself, of $68.6B in bailout loans, had to take a haircut on $2B in loans to Chrysler.
When Romney says he wants the free market to do what it does best, he must be referring to the sort of vulture capitalism over which he presided at Bain Capital, the sort of capitalism that rewards banks and investment firms will billions upon billions in profit with no regard for the human toll of their actions.
In the editorial, Romney, whose former company profited
from a government bailout, called on the government to sell its shares
in GM and return the profits to taxpayers. In other words, Romney is
fine with destroying the company when it isn’t succeeding, but then
wants to seize its profits if it turns around.
Meanwhile, he continues to ignore the success of the rescue plan he criticizes. Chrysler posted its first profit more than a decade in last year and expects those profits to continue growing in 2012. It has added 9,400 jobs
since its rescue and plans to add 1,600 more at a plant in Illinois
this year, and the success of Chrysler and General Motors has helped
American automakers control more than half of the industry's market share.
The industry has hired enough workers to make up for all those laid off
during the recession, and American and foreign automakers plan to add 167,000 jobs at American plants this year.
Now, the demerits (and privileged rich douchebaggery) of his argument aside, what of the politics of his positioning? Surely this will kill him in Michigan, where he's currently trailing Rick Santorum, no? Er, no. As David Dayen notes at Firedoglake, "This isn't quite as suicidal as it looks. Romney needs to win Michigan, and Michigan Republicans actually don't support the auto rescue,
in true what's-the-matter-with-Kansas fashion. So though this looks
like the opposite of pandering, that's what it is, playing to the
conservative lizard brain conception of greedy unions." Mistermix makes the same point at Balloon Juice:
We all know that Santorum is toxic as a national candidate, but the
problem for Romney is the only way to beat Santorum is to adopt the same
anti-gay, anti-woman and anti-progress positions in the primaries and
bet that he can somehow reverse course this Fall. The longer the
contest draws out, the more Romney has to pander, and the more he turns
himself into the Goldwater-like candidate that the Republican
establishment is desperate to avoid. There are two more debates before Super Tuesday and Mitt's going to have to be pretty fucking severe if he hopes to keep up with the new front-runner.
But of course it is suicidal in the long run, assuming he wins the nomination and finds himself up against Obama for real. Dayen again:
For the state as a whole, however, it's a really dumb double-down,
especially when it can be so easily characterized as Romney favoring
banks over people's health care. Not to mention the fact that
Michigan's unemployment rate has fallen precipitously, led by
manufacturing. Romney's lament about managed bankruptcies and union
trust funds sounds like a fan whose football team has won 35 games in a
row complaining about the new trim on the uniforms.
Well, it sounds much worse than that. It sounds like a privileged rich douchebag with a plutocratic sense of entitlement (as I've been writing for some time now) who got it terribly wrong but who is lashing out at Obama, advocating for the interests of the super-rich at the expense of everyone else (and at the expense of the economy, which he needs to be in bad shape to have any hope of winning in November), steadfastly refusing to acknowledge his own errors, and shamelessly pandering to the extremist base of his party.
Basically, what else is new?
The problem, for him, is that in doing and saying whatever it takes to win the Republican nomination, now more of a challenge with Santorum posing such a serious threat, he's effectively destroying whatever hope he has of winning in November. And the longer this remains a tight race, the longer Santorum keeps up the fight, the worse it will be for him.
Survival now, suicide later. Or, rather, survival through suicide. Isn't it ironic?
**********
For more on all Romney's attack on the auto bailout, see Steve Benen at his new home at The Maddow Blog, where he posts this clip from last summer -- Romney being so very, very wrong, and certainly not someone who should be trusted with the presidency:
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 ...
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.
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.
In a bombshell announcement this morning, President Obama, following up on his successful Nuclear Security Summit, said that an agreement was reached last evening with the other participating 47 countries, and a new "Clunkers for Nukes" program will be launched.
"Legitimate governments, rogue players, terrorists, they're all eligible to turn in their nuclear weapons, or materials, and have their choice of a pre-owned automobile," stated White House spokesman Robert Gibbs, at an unscheduled briefing this morning.
"We have an overstock situation," said Transportation Secretary Ray LaHood.
"We're swimming in used cars ... We lost count, we have so many."
Gibbs further explained, that the "Clunkers for Nukes" program will be scaled, in favor of the client.
"We're offering one car, for every ten-pounds of nuclear material, be it simple, unaltered plutonium, or enhanced, weapons-grade plutonium. It's projected, some potential clients could walk away with three, four, possibly even, five cars with their trade-in."
Gibbs would neither confirm, or deny, that President Obama, in a Rose Garden ceremony, would, symbolically trade in an two old American nuclear warheads, for cars that would be saved for his daughters, when they reach the appropriate age.
News of the "Clunkers for Nukes" program reached the Middle East, as Al Jeezera is reporting that Osama bin Laden is planning on releasing a new audio tape, indicating he is looking for a 1965 Cadillac, and may reach out to U.S. officials.
I hate to say it, but at this point it probably would have made more sense to bail out the auto-workers directly and let the auto companies fail. Taking a 70% share of GM is too much in light of their dysfunction. Maybe GM and Chrysler will come out stronger, but history is not on their side.
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.
In December I argued--maybe not on the blog, but definitely with my office-mate--that the auto industry must not fail while George Bush was still in power. Whether they were viable or not, at least let's get them through Bush's reign and into Obama's. I think this is a good example of why:
DETROIT — Labor unions usually dread bankruptcy, and for good reason. Their pay, benefits and pensions typically suffer significant cuts, as airline and steel workers can attest.
But for the United Automobile Workers union, Chrysler’s Chapter 11 case, which began in New York on Friday, could turn out to be — if the company survives and thrives — the Cadillac of bankruptcies.
The U.A.W., for example, has received upfront protection from the Treasury Department for its pension plan and the fund that will take over responsibility for retiree medical benefits.
Moreover, that fund, called the voluntary employee beneficiary association, or VEBA, will control 55 percent of the equity in the new Chrysler once it emerges from bankruptcy, and hold a seat on the Chrysler board.
Under George Bush the American worker would have been at the back of the line getting mugged by the banks all the while, at least under Obama they were at the front and protected.
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.
UPDATE: Obama's remarks from today on the auto industry are here.
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By now, an awful lot of pundits and opinionistas have weighed in on this story:
WASHINGTON -- President Barack Obama is sending a blunt message to Detroit automakers: To survive _ and win more government help _ they must remake themselves top to bottom. Driving home the point, the White House ousted the General Motors chairman as it rejected GM and Chrysler's restructuring plans.
Obama is set to elaborate on that message Monday when he announces what his White House told reporters over the weekend: Neither GM nor Chrysler submitted acceptable plans to receive additional federal bailout money.
GM chairman Rick Wagoner became the most conspicuous casualty of that decision, forced out Sunday as the White House indicated Detroit must make management and other changes if it hopes to survive -- and that the Obama administration will have a hands-on role in those changes.
Wow. The US government forcing a big company to change it's strategic planning, to the point of forcing the resignation of the COB? Whoda thunk?
GM has been conspicuous in its singular inability to change with the times. Not that any of the major three car companies has exactly been models of being ahead on the curve, for that matter. Car manufacturing requires enormous investments of time, money, energy and industrialization and to be flexible is nearly impossible for firms based on the old "time and motion" studies that created the Henry Ford assembly line in the first place.
The US auto industry IS a model of repetitive stress disorder, however. What the US auto industry needed to be was out front of demand, when in fact, it has always tried to browbeat people with their offerings.
Think about it: ahead of last year's major oil crunch, when oil was only just starting its five-year long upward climb (plenty of time to retool, mind you), what commercials did you see?
Did you see Chrysler/Dodge push compact cars, reminding people that oil prices are hopping and that global warming is coming? Did you see GM push their economy lines? Ford sell us hybrids?
Toyota did. Honda did. Hyundai did. Even Volkswagen did.
To make this mistake once in a lifetime is one thing, but it's not like Detroit hasn't had plenty of warning that oil prices were about to start an inexorable climb to the sky. Indeed, despite the terrible economic collapse, OPEC looks to be aiming for a $50 a barrell price in 2009. That would put us at about 2005 levels, and maybe have gasoline at $2.50 a gallon, maybe $3, by the summer.
In fact, more than thirty years ago, Detroit had the warning that oil was not going to remain the implacably cheap resource it always had been and for people who live and breathe on supply and demand, they somehow missed the fact that India and China would be driving more and using more oil, guaranteeing a permanent rise in prices.
Too, Obama's team probably senses that the American people, while still largely supportive of his attempts to revitalize the economy, are getting tired of "no-strings attached" reclamation projects. I can't blame Obama much for these. They really started with the Fed's bailouts last year under Bush, which sort of forced Obama to throw good money after bad this year, an allusion he made last Thursday.
So he's fired a warning shot after carefully choosing his target. He could have picked the Chrysler chairman and thrown the merger talks with Fiat out of whack. He could have chosen any banker in the mix, but that might have created massive turmoil in the credit and stock markets, and he really had no leverage at this point in that indstry anyway.
So he took the biggest, juiciest and easiest target: an incompetent boob running an incompetent company incompetently.
A blog on politics, philosophy, science, sports, and the arts -- featuring news, commentary, and analysis by Michael J.W. Stickings and the Reaction team.
