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

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...

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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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GM’s IPO: Where’s the Weevil in the Hardtack?

Logo of General Motors Corporation. Source: 20...

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Steven Rattner, former counselor to Treasury Secretary Timothy Geithner, celebrated in Huffington Post, “In the end, it was a blow out!” With the old General Motors successfully selling shares in its new General Motors at $33 per share, taxpayers will allegedly be getting back part of the $50 billion in bailout money used to rescue the company 17 months ago.

As Rattner exulted:

The mother of all initial public offerings—that of the refreshed, revitalized and revamped General Motors—went off better than almost anyone expected….

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Chevy Volt Misses the Mark

Chevrolet Volt plug-in

Image by Argonne National Laboratory via Flickr

Now that the Chevy Volt, General Motors’ electric car, is about to arrive in selected dealers’ showrooms around the country, it has been getting a lot of press. Some are puff pieces, one of which appeared in USA Today, while others are much more critical.

According to James Healey of USA Today, the Volt “represents a staggering amount of engineering…which combines an electric motor…and a small gasoline engine to create a drive train that uses no gasoline for 25 to 50 miles, [and] then sips it.”

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GM Caught in a Lie, Still Owes U.S. Billions

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

Image by wstera2 via Flickr

Daniel Akerson, the new CEO of General Motors, said last week that the rate of payback of U.S. government bailout monies “will be determined by GM’s performance over the next several years. It would be ‘unrealistic’ to pay the government back all at once.”

He added, “We want the government out. Period. We don’t want to be known as Government Motors…It’s a goal of this company to return that (federal money). [However] I don’t think that’s going to be [done] in one fell swoop. I think that’s unrealistic.”

This was a much different message from that delivered by his predecessor, GM CEO Ed Whitacre, back in March when he announced in a series of TV ads:

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Conjuring Magic To Cover States’ Debts

SACRAMENTO, CA - JULY 21:   A sign stands in f...

Image by Getty Images via @daylife

The first warning about the possible bankruptcy of the town of Vallejo, California, was reported by the Associated Press on February 28, 2008, when Councilwoman Stephanie Gomes said, “Our financial situation is getting worse every single day. No city or private person wants to declare bankruptcy, but if you’re facing insolvency, you have no choice but to seek protection.”

Marci Fritz, vice president of the California Foundation for Fiscal Responsibility, blamed the action on promises made earlier by the council to the city’s employees concerning salaries and retirement benefits that the city no longer can afford. According to Fritz, these were promises made during economically flush times, and were due to the city council’s unrealistic expectations that those times would continue indefinitely.

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Can ObamaCare Be Repealed, Nullified?

Repeal ObamaCare

Image by NObamaNoMas via Flickr

U.S. Representative Michele Bachmann (R-Minn.), who has earned a “Freedom Index” rating of 90 percent in the current Congress to date, has introduced a bill in the House to repeal ObamaCare. In her press release, Bachmann reminded her constituents that “the government already owns or controls about one-third of U.S. economic activity through the takeover of General Motors, the bankruptcy reorganizations of Chrysler, the partial ownership of two of the country’s largest banks in Bank of America and Citigroup, and the seizure of mortgage giants Fannie Mae and Freddie Mac as well as AIG. Taken all together, [with ObamaCare] we’re looking at half of the American economy in the grip of the federal government.” Bachmann said that it “will do nothing to spur economic growth … [but] will serve only as an obstacle to actual recovery and smother the spirit of innovation and freedoms that made this country great.”

Her bill is simplicity itself:

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Citigroup Bailout Retrospective

Citigroup

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In the announcement that the U.S.Treasury was likely to make a profit selling its stock in Citigroup, much was made about the great returns that sale would generate, and very little was said about how it all happened in the first place.

The potential profit was estimated to be about $7.5 billion assuming that the price of Citigroup’s stock stays at its current level through the end of the year. The article joyfully announced that “it’s a 14 percent rate of return on the $165 billion invested in the biggest banks. Hundreds of smaller banks also received [TARP] money and have been paying the government a steady stream of dividends and interest.” Banking analyst Bert Ely said, “Overall, TARP may cost taxpayers money. But the banking part of it is going to be a moneymaker.”

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Toyota—The Jihad Continues

Current (2008) logo for the United States Nati...

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Now that the Department of Transportation is opening a formal investigation into the 2009-2010 Toyota Corolla over possible steering problems while the government is continuing with hearings by the U.S. House Oversight and Government Reform Committee on February 24th, the House Energy and Commerce Committee on February 25th, and by the Senate Commerce, Science and Transportation Committee on March 2nd about Toyota’s “timely” response to braking and accelerator complaints, some are beginning to question “Why?”

More than that, the questions are “Why just Toyota?” and “Why now?”  Some are asking “Is there something else going on here?”

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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.