Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: General Motors

Is the Dingell Dynasty in the House Over?

This article first appeared at The McAlvany Intelligence Advisor on Friday, March 7, 2014:

The encomiums poured in following the announcement by John Dingell (D-Mich.) last week that he wouldn’t be seeking a 30th term in the House. Tweeted Gary Peters (D-Mich.): “Today we honor the service and legacy of Michigan’s greatest Congressman. His accomplishments will never be forgotten.” Such praise would reasonably be expected from a hard-left progressive like Peters who

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Age and Acrimony End Dingell Dynasty in the House

Born in Colorado Springs in 1926, John Dingell (D-Mich.) took over from his father as a Representative from Michigan in 1955 and has never stopped promoting his father’s progressive agenda. On Monday, February 24th, Dingell announced that he would not seek a 30th term partly due to

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Monumental Hubris in Claim of Taxpayer Victory in GM Bailout

 

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, December 11th, 2013:

In Treasury Secretary Jacob Lew’s fawning, obsequious, genuflecting announcement that the president had singlehandedly saved western civilization from a cataclysmic economic disaster, he said that by taking a loss, taxpayers actually scored a victory:

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US Treasury sells the rest of its GM shares at a loss, claims taxpayer victory

Treasury Secretary Jacob Lew announced on Monday afternoon that his department had sold the remaining shares of GM that it acquired following the forced bankruptcy of the auto giant in 2009, and made the $10.5 billion loss sound like it was a victory:

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Former Treasury Secretary Geithner to head up private equity firm Warburg Pincus

Former Treasury Secretary Timothy Geithner announced his plans to join the Wall Street private equity firm Warburg Pincus in March 2014 where he will serve as president and managing director.

Geithner is the proto-typical insider with establishment ties that follow almost exactly

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Detroit: the First Domino to Fall

This article was first published at The McAlvany Intelligence Advisor on Monday, July 22nd, 2013:

 

The city of Detroit is living proof that Herb Stein is right: if something cannot go on forever, it will stop. For Detroit, it stopped last week when

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Cheap Abundant Natural Gas is a Game Changer, Says the IMF

Expressing surprise at the enormous increase in US production of oil and natural gas by unconventional means, Thomas Helbling, a division chief in the IMF’s (International Monetary Fund) Research Department, was forced to admit that it was free enterprise that was responsible for it after all. In his March 2013 article he wrote:

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Presidential Debate Questions from Michelle Malkin

God bless Michelle Malkin. I toyed with a few hard-ball questions for the Presidential Debate in a previous post. The temptation to do the same by Malkin was just too much. I don’t think the media, or Jim Lehrer (the moderator), will be calling either of us very soon.

American writer and blogger Michelle Malkin.

American writer and blogger Michelle Malkin. (Photo credit: Wikipedia)

Here’s Malkin:

We know the liberal media bias drill: Make the Republican candidate look like a scary extremist on social issues and a greedy capitalist pig on economic issues. Avoid the Democratic incumbent’s record of failure. Run out the clock. Thank you and good night.

Malkin wants them to talk about Fast and Furious, in light of Tuesday’s murder of another border patrol agent at the same spot where Brian Terry was shot two years ago. She gets a running start by reviewing the Fast and Furious scandal, and then quotes Homeland Security’s Inspector General which found that “violence has significantly increased against Border Patrol agents. Since 2007, assaults on agents have risen more than 35 percent, including 13 deaths.”

Here are her questions (edited slightly):

Why has the Terry family been forced to file a federal lawsuit to obtain justice?

Why does Attorney General Eric Holder still have a job?

What exactly are you doing (or will you do) to ensure that Border Patrol agents are adequately armed and supported in their mission to defend American sovereignty?

Then Malkin takes on “transparency”:

[Mr. Obama, as President] you famously declared, “A democracy requires accountability, and accountability requires transparency.” Yet, the very first act of your administration was to violate your transparency pledge to allow full, public viewing of all legislation five days before you signed it…

You failed to televise health care negotiations as promised. You cut endless backroom deals protected from public scrutiny. In addition, your administration has routinely evaded disclosure law by meeting with lobbyists off the books at D.C.-area coffee houses and private townhouses, where Secret Service background checks and login routines are abandoned…

How, exactly, can you claim to have run the most transparent administration ever based on your actual record?

Next up: the auto bailout:

[Mr. Obama] your campaign touts the “success” of the government takeover of the auto industry as one of your proudest accomplishments. In 2010, you bragged that “American taxpayers are now positioned to recover more than my administration invested in GM, and that’s a good thing.”

Yet, your Treasury Department won’t take up GM’s recent offer to repurchase 200 million of the roughly 500 million shares the U.S. holds — because it would incur a $15 billion loss to taxpayers right before the election. GM still owes nearly $30 billion of the $50 billion it received, and its lending arm still owes nearly $15 billion of the more than $17 billion it received. Foreign workers and overseas plants have soaked up billions of American bailout tax dollars. But some 20,000 Delphi non-union workers saw their pensions eroded and health benefits disappear as part of the deal you cut with United Auto Workers.

How are Delphi workers, bondholders, car dealers and taxpayers better off now than they were before the Government Motors bailout given the actual record? If this is your proudest accomplishment, why on earth would reality-based voters want you back in the driver’s seat?

These are great questions. It’s too bad they’ll never be asked in public, especially by Lehrer who owes his career to the establishment mainstream media.

The Chevy Volt: King Obama and King Canute

John Ransom -The Chevy Volt: Another Obama Green Investment Loses a Billion

Today, I’m very pleased to announce that I have a new reason to dislike the Volt.

And it’s probably the best reason of all.

The Chevy Volt costs close to $90,000 to manufacture while it retails for $40,000 according to information gathered by Reuters.

Chevrolet Volts, Washington DC

Chevrolet Volts, Washington DC (Photo credit: mariordo59)

King Canute, as you remember, tried to “rule the waves” by commanding the tides not to come in. Here is Wikipedia on Canute:

Henry of Huntingdon, the 12th-century chronicler, tells how Canute set his throne by the sea shore and commanded the tide to halt and not wet his feet and robes. Yet “continuing to rise as usual [the tide] dashed over his feet and legs without respect to his royal person…”

King Obama has the same obsession: “If we force General Motors – now Government Motors – to build it [the Volt], they will come.”

Well, not so much. First of all, each vehicle costs $89,000 to build, but it sells for about $40,000. That’s bad enough. But it gets worse. When a vehicle is leased, the lease terms have been made so attractive – in order to draw people into leasing one – that it costs the owner just $5,000 over a two year lease! That’s the only way the Volt makes any sales – by essentially giving them away!  Ransom does the math:

10,666 Volts were sold in the first seven months of 2012. At an average loss of $49,000 per vehicle that’s a loss of $522,634,000.

A $523 million dollar loss on a car that won’t sell 20,000 units in 2012?

To put this in perspective, the company has probably shaved at least $4 billion off its market value by squandering money on the Volt. Right now the company is trading at about 8.31 times its earning.

Assuming GM didn’t produce the Volt at all and just held on to the cash savings, the $523 million in cash multiplied by the market value of 8.31 times earnings comes out to $4,343,088,540 in lost value for the shareholders.

Those shareholders are you and me.

It would be cheaper for the company to quietly ask potential Volt buyers if they would take a $40,000 check just to go away.

Of course GM is putting the best lipstick it can find for this pig:

We’re really seeing momentum continuing to build,” Michelle Malcho, a GM spokesman told the press a few weeks back according to the Detroit Free Press. “As people see their neighbors have one and as they start to understand the technology and are able to drive it, they put it into their consideration.”

You bet. That’s why Volts are flying out the door.

GM: Trying to Please Too Many Masters

Michael Barone: GM Goes From Bad to Worse Despite Obama Bailout

Obama talks about the auto bailout frequently, since it’s one of the few things in his record that gets positive responses in the polls. But he’s probably wise to avoid probing questions, since the GM bailout is not at all the success he claims.

The New GM (Government Motors) Proudly Introdu...

The New GM (Government Motors) Proudly Introduces the 2011 Obummer (Photo credit: wstera2)

Aptly (and properly, in my opinion) called Government Motors, the old GM is still on life support, but of a different kind: trying to please too many masters is keeping the company from being as competitive as it might be, and will cost taxpayers—you and me—more and more money to keep it going.

Obama thinks otherwise, and why shouldn’t he? He is enamored with government and thinks everything should be run or controlled by government czars. After all, that’s what collectivists do: they collect!

His recent speech in Colorado illustrates this well:

When the American auto industry was on the brink of collapse, I said, let’s bet on America’s workers. And we got management and workers to come together, making cars better than ever, and now GM is No. 1 again and the American auto industry has come roaring back.

Of course he and his auto czars had to stiff bondholders by skirting, illegally, the usual bankruptcy process, but, hey, this is socialism: we can’t let niceties like contracts and the rule of law get in the way! And if you were a GM dealer who wasn’t connected to the Obama administration, well, sorry about that, you’ll have to go.

And how’s GM doing? Well, profits just dropped 41 percent, and its stock is at $21, down from $40 when it went public following the bailout. Government still owns some 500 million shares, which translates into a loss to taxpayers approaching $25 billion.

And according to Louis Woodhill, an auto analyst at Forbes, GM is likely headed for bankruptcy once again.

Government Motors indeed.

Arithmetic, not Paul Ryan, is Medicare’s True Enemy

Steve Chapman: Ryan and the Real Enemy of Medicare

President Barack Obama’s campaign has a new ad accusing Ryan and Mitt Romney of a scheme “ending Medicare as we know it.” But the real enemy of Medicare “as we know it” is not Ryan. It’s arithmetic.

Paul Ryan Caricature

Paul Ryan Caricature (Photo credit: DonkeyHotey)

This is an interesting point of view. It’s not very sexy and not eye-catching like the Obama story: ending Medicare as we know it. But it’s true: left alone, Medicare will end itself, all by itself.

Says Chapman:

Medicare is the second biggest item in the entire federal budget and one of the fastest growing. Over the past 30 years, its cost has doubled as a share of our gross domestic product, and over the next 30, it’s on track to double again.

At the rate we’re going, Medicare, Medicaid, Social Security and interest payments will consume the entire federal budget by 2025.

That’s called unsustainable.

And Ryan’s approach does two things: it protects those already in the system, and gives those not in the system time to adjust:

His chief reform is to shift from a defined-benefit program, which obligates the government to cover all costs, to a defined-contribution approach, which commits the government to provide a fixed amount of money for each recipient.

Chapman is honest about Ryan:

Not that he has a stellar record in this or other areas of the budget. In the past, he’s been the fiscal equivalent of a chicken hawk: tough until it’s time to put his own survival on the line.

He voted for President George W. Bush’s plan to furnish prescription drug coverage to seniors, adding $8 trillion to the government’s unfunded obligations. He voted to bail out General Motors. He voted for TARP.

He did more than his share to help Bush add $5 trillion to the national debt.

All that aside, I think the real enemy of Medicare is that it violates the Constitution. The fact that it is unsustainable helps point out its fatal flaws. But to me the biggest flaw is getting the government involved where it doesn’t belong. And you can’t fix that through reform.

Uncertainty: Free Market Bugaboo

Imprimis: John Steele Gordon

[During the Great Depression] unemployment, over 25 percent in 1933, was still at 17 percent as late as 1939. Indeed, in 1937, when the economy suddenly turned south again, there was a problem: what to call the new downturn. Most people thought the country was still in a depression, so that word wouldn’t do. But economists, delighted to have a problem that they could actually solve, came up with the word “recession,” and that’s what we have been using ever since.

Great Depression Bread Line

Great Depression Bread Line (Photo credit: martnpro)

The similarity to the “recession” of 1937 to our present circumstances scarcely needs mentioning. Roosevelt’s continued tinkering and illogical (ideological) interfering with the market trying unsuccessfully to correct itself meant that entrepreneurs were frozen into inaction—just like today.

Explains Gordon:

Usually, when there has been a steep decline in economic activity, recovery is equally steep. The valley is V-shaped. That is what happened in 1920, when there had been a severe post-war depression and then a strong recovery.

So why was the recovery so slow in the 1930s? One reason, according to an increasing number of economic historians, is that Franklin Roosevelt had a bad habit of changing his mind. While highly intelligent, he was no student of economics and seldom read books as an adult. So much of his program was, essentially, seat-of-his-pants policy…

But markets, which can function even in disaster with ruthless efficiency, hate uncertainty. When uncertainty regarding the future is high, they tend to tread water. As a result, there was what is known as a “strike of capital.” While corporations often had large cash balances—General Motors made a profit in every year of the Great Depression—and banks had money to lend, there was little investment and few loans made. Both the banks and the corporations were too uncertain about what the government was going to do next.

This surely sounds familiar: a “strike of capital” is what we’re seeing today.

Is General Motors Now China Motors? [VIDEO]

In less than 24 hours, Vince Wade’s YouTube video of General Motor’s CEO Dan Akerson’s speech touting the car company’s increasing investment in China has gone viral, with nearly 500,000 views. Noting that GM—derisively called Government Motors by some–received nearly $50 billion of bailout funds in 2009, Wade asked: “Did we bail out General Motors to have it become China Motors?” According to Akerson, GM now:

  • Makes almost 70 percent of its vehicles outside the US
  • Has more than 2,700 dealerships in China
  • Operates 11 assembly plants in China
  • Has 11 joint ventures in China with two Chinese government-controlled companies
  • Regards these joint ventures “as 11 keys to success.”

Akerson added:

Our commitment to working in China, with China, for China, remains strong and focused on the future. We’re now building out the advanced technology center which will bring our research and development that is centered largely in the United States…we’re going to diversify that more into China because we think this market is so critically important to the success of our company… [China] is the crown jewel in the GM universe.

As evidence that GM is willing to do business with the Chinese government as long as it’s profitable, Wade notes the largely unknown purchase of GM’s Saginaw Steering Gear facility, now known as Nexteer, for half a billion dollars in 2010, giving the Chinese government ownership of

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Hostess to Unions: No More Sugar for You

Hostess Twinkies. Yellow snack cake with cream...

When Hostess Brands, maker of Wonder Bread, Twinkies, and Ding Dongs, declared bankruptcy on January 12, it said it can’t make interest payments on its $860 million of outstanding debt and make payments into its unions’ pension plans as well. So it stopped making the pension plan contributions.

Ripplewood Holdings, the private equity firm that holds controlling interest in Hostess, said it won’t invest any more money into the company unless the unions renegotiate the pension plan obligations. Hostess’ president, Gregory Rayburn, said that the company “is not competitive, primarily due to legacy pension and medical benefit obligations and restrictive work rules,” and so he’s demanding that the unions reduce the company’s obligations, currently at more than $100 million a year, to just $25 million. The unions aren’t budging, and the case is going to court on Tuesday, April 17, where the matter will be settled. There is a possibility for a settlement, but if the court supports the company, the unions have promised to go on strike. That, according to Rayburn, will force Hostess to liquidate and go out of business.

That will also end the unions’ claims and leave the members out of work.

The last time Hostess declared bankruptcy in 2004, it took nearly five years to settle, and the union finally acquiesced, taking some equity in the company in exchange for pension liabilities. This time the unions appear to be ready to accept the worst. One Hostess worker said,

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U.S. Manufacturing Is Making Headway

Shipping containers at Port Newark-Elizabeth M...

The numbers posted at Investors Business Daily over the weekend by John Merline were impressive: U.S. manufacturing profits last year exceeded $600 billion, almost tripling since the bottom of the recession, while jobs in manufacturing have increased by 400,000 in the past two years. Unemployment in manufacturing has been below the national average for eight straight months, and the industry itself has been growing at three times the rate of the overall economy.

More jobs. Higher profits. Lower unemployment. Faster growth. All good. Economist Mark Perry is on board with the new robust sector: “By all relevant measures of economic performance…American manufacturing remains the shining star of the U.S. economy.” And this is taking place right under the noses of politicians who are decrying the perceived woes in manufacturing, such as Rick Santorum, who said:

We went from about 21% of jobs in this country when I was a kid being in manufacturing down to 9%. We lost those jobs overseas. We need to bring them back.

He may be right about the numbers but wrong about being worried about them. Manufacturing lost 7 million jobs since its peak in 1979 but the productivity of the workers remaining has improved enormously. According to Joshua Feinman, chief global economist at DB Advisors, “Productivity has grown much faster in manufacturing than in the economy as a whole.” In fact, despite the loss of jobs manufacturing output has tripled in this country since 1980 and the United States remains the largest

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Family Research Council: Individual Mandate Unconstitutional, Thus Whole Law

English: cartoon version of an ambulance

On Monday the Family Research Council (FRC) filed a “friend of the court” (amicus curiae) brief with the Supreme Court that makes its case that if the mandate forcing citizens to purchase health insurance or pay a penalty is ruled unconstitutional, then the entire 2,700-page Patient Protection and Affordable Health Care law should be thrown out as well.

The brief, co-authored by two attorneys, Ken Klukowski and Nelson Lund, called the hotly contested mandate the “linchpin” for the entire law and if it fails, the whole massive superstructure fails with it. Klukowski stated:

After almost two years of impassioned debate, Obamacare will finally have its day before the Supreme Court. The “individual mandate” in Obamacare that requires all Americans to have health insurance is unconstitutional. And for the reasons we explain in this brief, 135 years of Supreme Court precedent show that this is one of those rare instances where striking down the individual-mandate provision requires the Court to strike down this entire 2,700-page law.

We have high hopes that the Supreme Court will recognize that the individual mandate is unconstitutional, and will act to safeguard the freedoms of all Americans by holding the individual mandate “nonseverable,” and strike down every part of Obamacare.

There is no “severability” clause in ObamaCare—it was deliberately left out during negotiations between the House and the Senate—which means that if part of the law is deemed unconstitutional,

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Ethanol Subsidies Disappear, Mandates Remain

English: A combine harvesting corn. Deutsch: J...

The Washington Post’s editorial celebrating the ending of ethanol subsidies iterated the same free-market positions taken by Rep. Ron Paul (R-Texas) and other Austrian school economists about those subsidies. Calling the 45-cent-per-gallon tax credit supporting U.S. corn-based ethanol production and the 54-cent-per-gallon tariff on imported ethanol “two of the most wasteful subsidies ever to clutter the Internal Revenue Code,” the Post estimated that ending those subsidies will save the U.S. taxpayer approximately $6 billion this year.

In a remarkable admission of undeniable truth, the Post added: “Taxpayers will no longer have [to] shell out roughly $6 billion per year for a program that badly distorted the global grain market, artificially raised the cost of agricultural land and did almost nothing to curb greenhouse gas emissions.”

Further, the Post rejoiced over the expiration of another “lesser known but equally dubious energy tax break…the credit that gave electric car owners up to $1,000 to defray the costs of installing a 220-volt charging device in their homes,” and said

As a means of reducing carbon emissions, electric cars and plug-in hybrid electrics are no more cost-effective than ethanol. What’s more, only upper-income consumers can afford to buy an electric vehicle (EV); so the charger subsidy is a giveaway to the well-to-do.

More surprising was the Post’s disappointment that the credit for

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Each Chevy Volt Costs Taxpayers $250,000

English: 2011 Chevrolet Volt exhibited at the ...

The Mackinac Center for Public Policy just released a study showing that by the time all federal and state loans, grants, subsidies, and tax credits are figured in, each Chevy Volt costs taxpayers upwards of $250,000.

James Hohman, the center’s assistant director of fiscal policy, counted a total of 18 government “deals” but didn’t include the fact that one-quarter of Volt’s manufacturer, General Motors, is owned by the federal government.

He counted not only incentives offered directly to GM or to the ultimate buyer, but also those offered to suppliers of parts and technology for the Volt. The Department of Energy, for example, awarded a $106 million grant to GM’s Brownstone plant that assembles the Volt’s batteries. The State of Michigan awarded $106 million to GM to retain jobs in its Hamtramck assembly plant. And Compact Power, the company that makes the Volt’s batteries, received $100 million in “refundable battery credits.”

Some of the subsidies and credits are extended over varying periods of time and some are dependent upon certain production “milestones” being achieved. He counted them all along with subsidies to companies vying to provide batteries for the Volt such as the support provided to A123 Systems. A123 lost the battery contract to Compact Power, but Hohman included their subsidies in his study as well.

The total of all subsidies, grants and credits is $3 billion: $2.3 billion in federal money and $700 million in Michigan’s money. That’s enough to purchase

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Government to Sell GM Stock Before It Declines Further

2011 Chevrolet Volt exhibited at the 2010 Wash...

Image via Wikipedia

When the federal government took over General Motors in July of 2009, it was “the only way to avoid an economic calamity,” according to President Obama.

Stuffed full of $50 billion of taxpayers’ money, GM began to revive, a little. It had lost an amazing $103 billion over the previous five years, partly by acceding to union demands for generous compensation packages (including payments to workers even when the plants where they worked weren’t even running!), and partly by

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Donald Trump the Populist and Pragmatist

Donald Trump & Melania enter the Oscar De LA R...

Image via Wikipedia

The February 22nd Newsweek poll followed by the Wall Street Journal/NBC poll showing billionaire Donald Trump eclipsing his nearest Republican rivals and even challenging incumbent President Obama has caused some commentators to look past his rhetoric to see where “The Donald” really stands on major issues. Jonathan Hoenig, writing for SmartMoney.com, says that “Trump’s primary appeal is undoubtedly his business experience.

Given the nation’s festering inflation, exploding deficit and still moribund economy, there’s obvious interest in leaders who promote fiscal conservatism, capitalism and growth. The problem is: Donald Trump isn’t one of them.”

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.

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