Overregulation Anyone??

This is a picture of a Chevy Camaro. According to the Heritage Foundation, Chevy Camaros from 2013 and 2014 are being recalled for violating Federal Motor Vehicle Safety Standard No. 208—Occupant Crash Protection. The recall affects 18,941 cars.

Gene Blevins/Polaris/Newscom

So what is the problem with the car that constitutes a safety violation? The air bag warning label on the sun visor may peel.

The article reports:

The recall decision was made by the Executive Field Action Decision Committee, following a review by the Field Performance Evaluation Review Committee. So, pursuant to 49 CFR §573.6, the automaker submitted to the National Highway Traffic Safety Administration (NHTSA) its determination of noncompliance for the requirement that the visor label be “permanently affixed.”

GM also issued a stop delivery order to dealers, and instructed them to inspect the label on each sun visor (“using a finger nail, plastic card, or similar” to determine proper adhesion). In the event a label is prone to peel, the entire sun visor must be scrapped and replaced.

There are a few questions here. How is this recall going to impact GM financially? Would you bring you car in to the dealer if your recall notice told you the recall was about a label on the sun visor? Is this another example of the government overstepping its bounds and having a negative impact on the American economy?

We have done a lot in recent years to improve the safety of the American automobile. This is not an example of that.

 

 

 

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The Final Chapter Of The General Motors Bail Out

Yesterday Yahoo News reported that the Treasury Department has announced that all government-held shares of General Motors will be sold by December 31.

The article reports:

…On Thursday, it (Treasury Department) announced it sold 70.2 million shares of General Motors (GM) stock and intends to sell its remaining 31.1 million shares by Dec. 31.

Once the final sale is complete, however, US taxpayers will have lost nearly $10 billion of the $49.5 billion the federal government used to prevent the auto giant from collapsing in 2008, Treasury officials say. The loss offsets a greater calamity that would have occurred – the disappearance of 1 million jobs – if the federal government had not intervened, says Treasury Deputy Assistant Secretary Tim Bowler.

I guess the question I have at the end of this is how did Ford Motor Company continue without the government bailout, and could General Motors have done the same thing? The taxpayers lost nearly $10 billion in this transaction. What would have been the result of simply dividing that amount of money between those Americans who pay taxes? I think in the long run, it would have had a more positive long term effect on the economy.

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We Wouldn’t Have Needed Sequestration If The Government Had Not Done Things Like This

Ed Morrissey at Hot Air posted an article today about government funding of the Fisker Automotive‘s manufacturing of electric cars.

The article reports:

Newly obtained documents show the Obama administration was warned as early as 2010 that electric car maker Fisker Automotive Inc. was not meeting milestones set up for a half-billion dollar government loan, nearly a year before U.S. officials froze the loan after questions were raised about the company’s statements.

An Energy Department official said in a June 2010 email that Fisker’s bid to draw on the federal loan may be jeopardized for failure to meet goals established by the department.

Despite that warning, Fisker continued to receive money until June 2011, when the DOE halted further funding. The agency did so after Fisker presented new information that called into question whether key milestones — including the launch of the company’s signature, $100,000 Karma hybrid — had been achieved, according to a credit report prepared by the Energy Department.

This is a familiar story in the Obama Administration. Solyndra was also going bankrupt as the government was funding the company. In 2009 Vice-President Biden stated that Fisker was planning to buy a shuttered General Motors plant in Delaware to produce hybrid cars. The plant was never opened and no cars were ever produced.

The Wall Street Journal also reported on the Karma, a luxury car produced by Fisker that has a sticker price of over $100,000:

Mr. Simon says his car broke down four times over the span of a few months. Each time, Fisker Automotive Inc. picked it up and sent it by trailer from his home in Omaha, Neb., to a dealer in Minneapolis.

The Karma was “so vulnerable to software errors, and the parts used were of such poor quality that eventually I insisted they take the car back and return my purchase price, which they did,” he says. “It’s a real shame, the car itself was beautiful.” …

Troubles with suppliers and regulatory requirements added months to the Karma’s release. Its engineers expressed concerns that the software that ran the Karma’s display screens and phone connections wasn’t ready, people familiar with the situation say. Still, the Karma went out to customers. The company said that its problems were expected of any new model. …

Fisker stopped production of the Karma at a factory in Finland in July 2012 in an attempt to negotiate a cost-saving contract. The following month, Fisker recalled its cars for a second time to fix a cooling system flaw that was linked to battery fires.

It hasn’t built a car since.

American tax dollars at work. I would strongly recommend that after the Obama Administration leaves office none of its members become stockbrokers.

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Does This Make Sense ?

A website called 24/7 Wall St posted an article yesterday stating that hourly workers for General Motors will receive bonuses this year of between $5,500 and $7,000 each.

The article reports:

The payments are based on a formula that gives workers a $1 bonus for every $1 million in North American operating profit at the two companies.

On Wednesday (as reported at rightwinggranny.com) the Detroit News reported:

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

It just seems odd to me that the taxpayers are out $13 billion and the workers are getting bonuses of up to $7,000. Why isn’t some of the bonus money being used to pay back the taxpayers for what they were forced to invest?

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How Much Are The Taxpayers Actually Going To Lose In The General Motors Bailout ?

Today the Detroit News posted a story about the General Motors exit strategy announced today by the Treasure Department.

The article reports:

The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday. GM shares jumped sharply on the news and were up 6.7 percent to $27.10, or $1.59.

The U.S. Treasury — after more than a year of refusing to say when it might start selling its remaining stake in GM — said it will announce a written plan in January to shed its remaining 300 million shares over the next 12 to 15 months — likely in a series of small stock sales.

The Treasury’s move is intended to minimize the impact of the stock sale on the share price.

The article states that there will be serious government losses in the General Motors bailout:

The exit plan may prove to be a boost to GM’s lagging stock price and to some car buyers, who have avoided GM because of the “Government Motors” label.

Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion.

Bailing out General Motors was not a good idea. A controlled bankruptcy would have been a better idea. What the bailout did, other than cost the taxpayers serious money, was to protect the unions and ignore what was good for the company in the long run. Even after the amount of taxpayer money spent and the losses taken, there are no guarantees that General Motors will exist in five years.

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Who Really Profited From The Auto Bailout ?

Breitbart.com posted an article yesterday revealing some interesting statistics about the auto industry bailout. Government Accountability Institute President Peter Schweizer investigated the bailout to see where the money went and how much taxpayers actually lost.

The article reports:

The government’s actions involving Chrysler resulted in a net loss to taxpayers of $2.9 billion, and the government is currently sitting on a $14.5 billion loss for its actions involving General Motors. But Mr. Schweizer says few Americans realize the backroom deals the Administration cut that created a flood of cash for well-connected Obama cronies.

For example, the GM bailout was handled not by automotive experts but by New York investment firm Evercore Partners. The firm is headed by Obama bundler and former Assistant Treasury Secretary Roger Altman and Obama mega fundraiser Ralph Schlosstein. GM paid Evercore $46 million in advising fees and billed the car company another $17.9 million for a “success fee,” despite the fact that Evercore never found GM a purchaser or funder. 

Unfortunately the unions and the political bundlers were the winners in the auto industry bailout. Had the auto industry been required to follow normal bankruptcy procedures as stated in Chapter 11, those involved would have been forced to be accountable for the money they spent. The auto bailout is the poster child for crony capitalism–it is nothing to brag about.

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Searching For The Truth About Delphi

 

The Washington Free Beacon and the Daily Caller have both posted articles about how the bailout of the automobile industry was handled in regard to Delphi, a company which supplies electronics and technology to the auto industry.

The Daily Caller posted an article stating that the decision to end the pensions of the non-union  workers at Delphi was not made independently by the Pension Benefit Guaranty Corporation (PBGC), the federal government agency that handles private-sector pension benefits issues, but that the decision was the result of pressure from the Treasury Department. They have uncovered a chain of e-mails that backs up this conclusion.

The Daily Caller reports:

The email chain was titled “Delphi Hourly Plan.” Delphi’s unionized hourly retirees originally saw their pension plans terminated together with the nonunion Delphi salaried retirees’ plans in a process that commenced on July 31, 2009.

Later, in September 2009, the union retirees’ plans were topped up while nonunion retirees’ plans remained terminated.

 These emails contradict July 2012 congressional testimony Feldman (Treasury official Matt Feldman) gave during an investigation by the subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs.

The treatment of Delphi employees is becoming a campaign issue in Ohio, where many of its employees were located. Paul Ryan met with nine Delphi retirees who lost their pensions, while their union coworkers pensions were untouched.

The Washington Free Beacon explains some of the details of the bailout:

Delphi was an important element of the auto-bailout. The company, one of GM’s largest parts suppliers, had been in bankruptcy since 2005 and Treasury officials recognized that it would need to be lifted from bankruptcy along with GM.

To cut costs, the Pension Benefit Guaranty Corporation (PBGC), an independent federal insurer of retirement systems, terminated the nonunion plan while GM volunteered $1 billion to top-off pensions belonging to the United Autoworkers union.

The administration has contended that GM was acting on a 1999 agreement with the union to close any pension gap that emerged if Delphi declared bankruptcy.

That agreement, however, was liquidated when GM itself entered bankruptcy and emerged as a new company, according to bankruptcy expert Todd Zywicki.

General Motors’ decision to guarantee the obligations of a separate company—Delphi—was completely unjustified under established principles of bankruptcy law, and it increased the cost of the taxpayer bailout of the automotive industry by more than $1 billion with no reciprocal benefit to General Motors,” he told Congress in July.

The auto industry bailout is an example of the government interfering with the laws of bankruptcy and acting in total disregard to the law. It’s time to bring people into Washington who respect the laws of this country.

 

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When Fact Checkers Don’t Fact Check

Red State posted an article today on some of the ‘fact checking’ done on the speeches at the Republican Convention. I will post some of the details, but the bottom line is simple–Don’t believe anything you hear until you have a chance to look into the facts for yourself.

The article at Red State cites a few examples:

Democrats are energetically attempting to create the perception that Republicans — specifically, Paul Ryan — are running around Tampa making stuff up about Barack Obama (as if that’s necessary). And when I say Democrats, as regrettably cliché as it may sound, I also mean the mainstream media.

The following assertions, for instance, are true:

  • Obama did cut over $700 billion from Medicare to fund Obamacare.
  • The stimulus was a case of political patronage, corporate welfare and cronyism.
  • The Janesville, General Motors plant was closed down under Obama (though Ryan made a more nuanced assertion that we’ll cover below)
  • Obama did blow off the bipartisan debt commission.
  • Obama’s waivers do allow for the relaxing of work requirements in welfare reform.

Unfortunately, if you read the fact checkers, you wouldn’t know that those things are true. It is really sad that in a republic where the citizens are asked to vote for their leaders, the press cannot be trusted to provide the information the voters need.

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About That Successful Bailout Of General Motors

President Barack Obama, with Assembly Manager ...

President Barack Obama, with Assembly Manager Teri Quigley, drives a new Chevy Volt, during his tour of the General Motors Auto Plant in Hamtramck, Mich., July 30, 2010. (Official White House Photo by Pete Souza) (Photo credit: Wikipedia)

One of the accomplishments that President Obama is citing on his ‘stump speech’ is his bailout of General Motors. So far the taxpayer has lost about $25 billion on the bailout. I have posted a number of articles about the lack of sales of the Chevy Volt during the past year (you can use the search engine at the top of this site if you want to read them). The bottom line is that even with the government paying customers to buy the car, the car is not selling. There have also been a number of fires in the Chevy Volt after minor accidents.

Yesterday USA Today reported that General Motors is shutting down its Chevy Volt assembly line for a month and retooling it to produce Chevy Impalas.

The article reports:

“We are not idling the plant due to poor Volt sales. We’re gearing up for production of the new Impala,” Chevy spokesman David Darovitz said in an email.

Maybe I just don’t understand business, but it seems to me that if a car is selling well, you don’t suspend production of that car for a month.

 

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Why The Government Shouldn’t Meddle In Business

President Obama is citing his bailout of the auto industry as one of his accomplishments. I wonder if he has seen the numbers.

The Detroit News posted a story today that a report by the Treasury Department has estimated that the government will lose more than $25 billion on the $85 billion auto bailout. That is almost a third of the cost of the bailout!

The article states:

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.

This is how much it cost the taxpayers to avoid General Motors’ going through a structured bankruptcy. The government bailout violated the basic bankruptcy laws. The bailout was nothing more than the taxpayers giving the company to the unions. This sort of activity needs to be avoided in the future!

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Those Pesky E-Mails

Investors.com posted an article today about the latest scandal in the Obama Administration. You may not see this in the major media–they are too busy trying to distract the public with shiny objects–but it is an indication of how things work in the Obama Administration.

The article deals with GM’s Delphi auto parts unit and how its non-union employees were dealt with during the GM bailout.

The article reports:

The news site The Daily Caller has obtained internal government emails that show the U.S. Treasury Department, led by Timothy Geithner, pushed in 2009 to end the pensions of 20,000 non-union employees of GM’s Delphi auto parts unit as part of the auto bailout.

What’s truly outrageous is that, while those workers were cheated of their full pensions, union employees of the same Delphi company got their pensions paid.

This financially ruinous favoritism of union workers over nonunion workers is blatantly unfair, illegal and a violation of Constitutional guarantees of equal treatment under the law. And the reason is political.

This is one of many examples where government agencies were used for political purposes (paying back union supporters or wealthy donors) in the Obama Administration.

The Pension Benefit Guaranty Corporation (PBGC) is responsible for overseeing private pensions. This organization is an independent, quasi-governmental insurer of private pension plans. Under law, that organization would have had the authority to determine how the pensions were handled.

The article further reports:

The email trail shows clearly that in April 2009 the Treasury Department held meetings on GM and Delphi, including “pension issues.” However, the PBGC was, in the words of one official, “disinvited.”

This was well before the decision, made in July, to stiff nonunion workers on their pensions. It suggests that the White House and Treasury were calling the shots — not the compromised, and politically bullied, PBGC.

This violates PBGC’s independence under the law as the sole agency that can terminate a private pension — not Treasury. Worse, the PBGC, based on the emails, seems to have thought it needed to clear whatever it did with the White House and Treasury. It didn’t.

There is also the question of whether or not several White House officials may have lied under oath when questioned about the decision on the pensions.

The Obama Administration has taken political cronyism to a new level. It is time to vote them out of office.

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Fudging The Numbers

Yesterday the Daily Caller posted an article listing some of the facts in the bailout of General Motors that seem to have been overlooked in the President’s claim to have saved the company.

The article reports:

Car dealerships’ lots are filling up with unsold trucks and SUVs because GM built more vehicles than it can sell in order to inflate sales claims and artificially boost its profits, The Daily Caller has learned.

The Detroit automotive giant records sales for vehicles in dealers’ inventories before car buyers make their purchases, said Mark Modica, a National Legal and Policy Center associate fellow.

Obviously the fake sales numbers will be revealed at some point in the future when the cars are still sitting on the dealers’ lots. The truth will conveniently not be revealed until after the November election.

The article further reports:

Third quarter results won’t be made public until after the November election, allowing Obama to tout the company’s short-term success while masking troubles that are not yet apparent to voters.

Here we have another reason voters need to pay attention.

The article concludes:

“The question is if [GM] is viable enough to ever repay taxpayers,” Dalmia said. “It’s pretty clear that taxpayers aren’t ever going to be repaid.”

Rep. Kelly, the Pennsylvania car dealer, predicted an economic resurgence that would impact the auto sector if Mitt Romney becomes president.

“If Governor Romney is elected,” he said, “you’ll see reinvestment, you’ll see people come back to this economy.”

Please follow the link above to read the entire article. The comments are also very interesting. One commenter reminds us that in the process of taking over General Motors the government took away 20,000 pensions from non-union Delphi workers. One of the basic aspects of the General Motors and Chrysler arrangements worked out by the government was the transfer of large amounts of money to the unions. That needs to be mentioned when the President claims he saved the auto industry (which he will) during any debate that takes place.

 

 

Why The Internet Media Is Important

On Tuesday, Newsbusters posted a story about the mainstream media‘s recent praise for the successful government bailout of General Motors.

The article cited some of the facts given in the mainstream reports and the things that were not mentioned:

 Not mentioned was the auto bailout will lose us about $30 billion

General Motors (NYSE:GM) Cheers to Reports US Sales Surges 16%

General Motors (NYSE:GM) Beats Analysts Sales Forecasts

GM Sees Highest Sales Since September

Almost all of this $30 billion Taxpayer loss was in fact a gi-normous payoff of the Obama-Democrat stalwart United Autoworkers Union.

GM Races Higher on Sales Report

GM Sales Rise 16%

GM June US Sales Rose 16%

The Blaze is reporting today:

As it turns out, there’s a big reason GM experienced an increase in sales last month: “government purchases of GM vehicles rose a whopping 79% in June,” according to the National Legal and Policy Center’s Mark Modica.

The article at Newsbusters made a wonderful comparison:

That’s like you setting up a lemonade stand for your kids.  You buy them the lemons, sugar, cups and pitchers – and then buy most of the lemonade yourself.

Except you are President Obama.  Your kids are the United Autoworkers Union.  And the lemonade cost $50 billion.

At least you get to tax your neighbors for the $50 billion.

When you hear President Obama listing the saving of General Motors as one of his accomplishments, understand that you are still paying for that accomplishment, that senior citizens and others who held preferred stock in the company got the shaft, and that it really was not so much of an accomplishment.

Another reason I proudly drive my Ford Mustang!

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Would You Let These People Manage Your 401K ?

 

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

Logo of General Motors Corporation. Source: 2007_business_choice_bro_en.pdf (on GM website). (Photo credit: Wikipedia)

John Lott posted an article at National Review today about what has happened to the money used to bail out General Motors.

The article reports:

Three years ago his administration invested more than $100 billion in taxpayer money to bail out General Motors. On Tuesday, the entire company, not just what the government owns, was worth less than $34 billion. By anyone’s definition, that investment is a glaring failure. Yet over the last few days the Obama campaign, in a $25 million marketing blitz, has flooded the airwaves with ads in battleground states, claiming the bailout should be counted a rousing success.

The contrast between the facts and the campaign ads is amazing.

Another thing conveniently not mentioned in the campaign ad is the number of automobile dealerships that were put out of business in the General Motors and Chrysler bailouts.

The article reminds us:

The only real winners from the GM bailout were unions, which were protected from pay cuts, from losing their right to overtime pay after less than 40 hours a week, and from cuts to their extremely generous benefits. They faced only minor tweaks in their inefficient union work rules.

As for “hundreds of thousands of new workers,” the truth is closer to a tenth of that.

Having just $34 billion to show after a $100 billion-plus investment would get a chief executive of any private company fired. Unfortunately, Obama does not seem to understand how this money has been wasted.

Would you let these people administer your 401K account?

 

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This Slogan Only Works If You Ignore The Facts

The Washington Free Beacon posted an article today reminding us of some inconvenient truths about the government bailout of the automobile industry. Since one of the campaign slogans of President Obama’s campaign this year will be, “Osama Bin Laden is dead, and General Motors is alive,” it might be wise to take a look at some of the facts surrounding the auto bailout.

The article reports:

The administration has already written off $7 billion in taxpayer losses in the American takeover of Chrysler and General Motors; those losses are expected to climb as high as $23 billion—27 percent of the $85 billion spent on the bailout.

While the bailout is widely credited with saving the two companies, increasing taxpayer losses have made it nearly as unpopular in 2012 as it was when Obama was elected. More than half of Americans still disapprove of the auto bailout compared with 61 percent in 2008.

Aside from the taxpayer losses involved, there is the violation of bankruptcy laws. We have laws for a reason–if they are wrong they need to be changed (these particular laws are not wrong), but until they are changed, they have to be followed.

As was pointed out at rightwinggranny in June of 2009, in bailing out Chryster, laws were broken:

The issue here is the secured debt.  The government is trying to pressure those who hold secured bonds to accept less than the value of the bonds so that other creditors can be paid.  We need to remember that one of the basic principles of bankruptcy law is that secured creditors (who loaned money only on the contractual promise that if the debt was unpaid they’d get specific property back)  get paid off in full before unsecured creditors get anything.  To do anything else is a violation of the US Constitution and its rules on private property rights.

Laws were broken in the auto bailouts in order to hand the companies over to the unions. Some Americans remember that. General Motors is alive, but aside from the taxpayer losses, the government and the unions have much more power in running the company than is appropriate.

The article at the Free Beacon further reports:

“They came in and forced these companies into pre-packaged bankruptcy where unions were made whole and creditors were squeezed out,” the expert said. “In normal bankruptcy they don’t rearrange stakeholders rights willy-nilly…there’s no way those union contracts would have been untouched.”

Labor is not the only constituency to which Obama has tried to appeal by championing the bailout.  “After three decades of inaction, we’re gradually putting in place the toughest fuel economy standards in history for our cars and pickups,” Obama said in the same February speech. “That means the cars you build will average nearly 55 miles per gallon by the middle of the next decade—almost double what they get today.”

Obama tied the bailouts to strict environmental standards that have led to increasingly efficient cars, an achievement he has used to woo green advocates. The move has affected more than just the environment, establishing “dangerous” legal precedents, according to some legal experts.

General Motors may be alive, but it is a whole lot less free than it was before President Obama said, “I’m from the government, and I’m here to help you.”

 

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An Interesting Perspective On The Auto Companies Bailout

Today’s Wall Street Journal posted an article on the auto bailout and the cost to American taxpayers. The article mentioned the fact that in order to get taxpayers’ money back, shares of General Motors will need to rise to $53 from their current $26 to recoup the Bush-Obama investment. But that’s not the real cost of the bailout.

The article reminds us:

However things shake out, it will be only a fraction of the true costs in precedent and politicized investment. The bailouts signaled that major companies with union labor are too politically big to fail and undermined confidence in the rule of law. More troubling, the conversion of Detroit from an indirect to transparent Washington client continues to distort the auto market.

Last November, Mr. Obama’s enviroteers tightened fuel economy regulations again, jacking them up to 54.5 miles per gallon by 2025—well beyond the standards Congress set in 2007. The auto makers agreed despite their misgivings because as wards of the state they had no political choice. So Chrysler, GM and Ford will still be forced to make cars that dealers struggle to sell profitably, only many more of them.

The rule of law was not followed in the bailouts, and that will create problems for the companies in the future.

The article concludes:

The point is that the auto bailout isn’t an example of enlightened government revitalizing an industry after a market failure. It is a bailout in the wake of failed government policies and bad management that may keep going and going as Washington does whatever it takes to make sure Detroit keeps doing its political bidding.

Government meddling in the private sector is never a good idea.

 

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If Investors Ran Their Portfolios Like The Government Runs Theirs…

Today’s Detroit News reported today that the government has revised the estimated losses from the auto bailout up $170 million.

The article reports:

In the government’s latest report to Congress this month, the Treasury upped its estimate to $23.77 billion, up from $23.6 billion.

Last fall, the government dramatically boosted its forecast of losses on the rescues of General Motors Co., Chrysler Group LLC and their finance units from $14 billion to $23.6 billion.

Much of the increase in losses is due to the sharp decline of GM’s stock price over the last six months.

Three solar companies the government invested in went bankrupt or laid off workers last week. The losses in the bailout of the auto companies were considerably more than what was initially projected. Have we learned yet that the government should not be investing taxpayer money in private businesses? Government interference in the free market has done nothing but take large amounts of money out of taxpapayers’ pockets and increase the national debt. Someone is needed in Washington who can put a stop to the overspending and misuse of taxpayers’ money.

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Why We Shouldn’t Let The Government Invest Our Money

1964 Oldsmobile Starfire

Image via Wikipedia

On November 14, the Detroit News reported that American taxpayers will lose $23.6 billion, up from its previous estimate of $14.33 billion, on the bailout of General Motors.

The article reports:

The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.

The article goes on the chronicle the losses in the government bailout programs in various sectors of the economy.

The article reports:

The new estimate also hikes the overall cost of the $700 billion Troubled Asset Relief Program costs to taxpayers. TARP is the emergency program approved by Congress in late 2008 at the height of the financial crisis.

In total, the government used $425 billion to bailout banks, insurance companies and automakers, and provided $45 billion in housing program assistance.

The government now expects to lose $57.33 billion, including the full cost of the housing program, up from $36.7 billion. The new estimate means the government doesn’t believe it will make an overall profit on its bailouts.

Again, the problem is that we are spending too much, not that we are taxed too little.

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Even The United Auto Workers Union Is Struggling !

Red Volkswagen Bug

Image via Wikipedia

A website called thetruthaboutcars.com posted a story on Thursday about the financial situation of the United Auto Workers Union (UAW).

The article points out:

In many ways, the UAW resembles the companies it opposed for so long. The UAW is America’s richest union. One of its biggest assets is its strike fund, which stood at $763 million at the end of 2010. If push comes to shove, a union is as strong as its strike fund. The trouble is: The UAW spends more than it takes in. Increasingly, the union has to dip into the strike fund, the Reuters report says. According to government filings, the UAW liquidated $222 million of investments from 2007 to 2009 to cover the shortfall between expenses and revenue.

The article has charts that illustrate the financial problems of the UAW in recent years. One thing mentioned in the article is the fact that the UAW membership fees have dropped to $30 a month. At the same time, the union is having to spend a great deal of money on organizing as some car manufacturers are no longer in Detroit and are no longer unionized.

A Reuters new story reports:

“Volkswagen AG is paying newly hired workers at its Chattanooga, Tennessee plant $14.50 per hour. That is almost exactly what a second-tier UAW worker would make in Detroit. In a sign of demand for jobs at that pay level, the Chattanooga plant had 85,000 applications for more than 2,000 jobs. VW workers have been promised $19.50 after three years on the job. That is just above the $19.28 per hour maximum that entry-level workers at GM would make over the term of the four-year contract now before workers for ratification.”

That is not good news for the future of the UAW.

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Why I Will Never Buy A Car Made By Government Motors (GM)

Decorated car.jpg

Aside from the fact that I love my Ford mustang convertible, here is one more reason I will never buy a car made by General Motors–the company has broken faith with the American consumer. On Friday, Reuters reported that General Motors has refused to honor the warranty on its 2007 and 2008 Chevrolet Impalas. More than 400,000 of these cars have a suspension problem which causes excessive tire wear. An Impala owner has sued the company to get her car repaired.

The article reports:

The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles. [ID:nN1E7650CT]

Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or “Old GM,” before its 2009 bankruptcy and federal bailout.

The current company, called “New GM,” said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs “subject to conditions and limitations” in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.

Meanwhile, in March of 2009, Autoweek posted an article quoting President Obama:

“Let me say this as plainly as I can. If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always,” Obama said in a speech. “Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty.”

Maybe he should have checked with General Motors before he made that statement.

 

 

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