GM could be heading for bankruptcy again
President Obama loves to tout the General Motors bailout as the signature “achievement” of his presidency, even though current taxpayer losses on the deal are estimated at over $25 billion. The exact degree to which the rest of us got soaked so Obama could give GM to his union allies changes constantly as the value of the stock held by We the People fluctuates. You don’t remember being asked if you would like to become a GM stockholder and willingly accept massive losses to protect highly compensated union jobs, do you? Well, that’s the great thing about command economics. It relieves the ruling class of the tedious chores private-sector entrepreneurs face when attracting voluntary investment.
Not only does Obama portray the GM bailout as a great success, he has actually said, in public, that he wants a lot more “successes” just like it. “I said I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he told an audience in Colorado last week. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.”
(Emphasis mine.) That really should have been accompanied by some ominous thunderclaps, or perhaps the “Friday the 13th” musical cue that plays when Jason Voorhees is stalking a victim. Even if you can swallow the idea that the GM bailout was a “success,” there is literally not enough money in the world for a $25 billion bailout of every industry. The point of the 2012 presidential campaign is getting delusional liberals to understand that our beyond-bankrupt government doesn’t have enough money to take over any more industries, and had no business taking over industries to begin with.
Unfortunately for Obama, it’s increasingly difficult to pretend the GM bailout was a “success” for anyone but the United Auto Workers. Earlier this week, Investors Business Daily described the loss taxpayers took for President Obama’s inaugural adventure in crony socialism as “staggering,” a judgment not improved by the recall of 38,000 Chevy Impalas, which are widely used as police cars. In fact, the only reason GM can post decent sales figures is that government agencies buy a lot of fleet vehicles from them. Taxpayers were compelled to rescue the company from bankruptcy, then they were compelled to buy its products, and Obama tells them it’s all a smashing “success” that should be duplicated throughout the private sector. Taken literally, as the President prefers his words not to be taken, this would mean the end of the private sector.
A normal bankruptcy procedure would have spared the taxpayers from this raid on the public treasury, and as IBD notes, it didn’t even “save” jobs in the long run. Bankruptcy would not have erased GM facilities, or Detroit. It would have allowed GM to correct the ridiculously expensive labor contracts that caused it to go belly-up in the first place. Instead, we got large-scale closures of small businesses selling GM cars – a process the TARP Inspector General officially condemned as politicized, with some dealerships “retained because they were recently appointed, were key wholesale parts dealers, or were minority- or woman-owned dealerships.”
And let’s not get started on the ill-fated, heavily subsidized Chevy Volt, which is basically Solyndra on wheels.
Now Forbes tells us GM is probably heading for bankruptcy again. Its stock price would have to more than double, to $53.00 per share, for taxpayers to recover their “investment.” Instead, stock values have declined by 39 percent in absolute terms, and 49 percent relative to the Dow average, since GM went public in 2010. Louis Woodhill of Forbes thinks political considerations would prompt Obama to “ride the stock down to zero” instead of cashing out at a massive loss to the public.
GM’s market share is also falling, as competitors beat its pants off in key vehicle classes. Disappointing new models will likely yield excess inventory that must be sold off at a loss in years to come. GM CEO Dan Akerson, who has mused on the record that it would be awfully nice if Obama made gas more expensive with higher taxes so GM’s electric cars would sell better, is “rearranging the deck chairs on the Titanic” in Woodhill’s view, while more innovative and knowledgeable managers at competing companies run rings around him.
Not only does the government lack the money to nationalize all industries, as in Obama’s fever dreams, but it doesn’t have the resources to bail GM out again. There’s no money for more Solyndras, either. The absurd fiction of command economics, government-created jobs, and ideologically-driven “investment” must be put to rest, along with Barack Obama’s career, if the American economy is to have a prayer of recovery.