In this, the third Age of Bailout, the Troubled Asset Relief Program (TARP)’s $50 billion General Motors (GM) bailout (upped from $20 billion by President Barack Obama) is yet another unmitigated disaster.
But a few of the many failures:
- GM had to file for bankruptcy anyway.
- President Obama originally claimed we’d make money on our $50 billion. Seven months later, the Administration admitted we’d lose more than $16 billion – and dishonestly claimed the loss they had said would be a profit was “less than the(y) originally expected.”
- GM last year claimed in a television ad campaign to have “repaid (their) government loan in full, with interest, five years ahead of the original schedule.” Which was another total lie. They had in fact paid back only a tiny fraction thereof – and had done so so with other government TARP money.
- So fraudulent was GM’s media-buy proclamation that there has been a Federal Trade Commission (FTC) complaint filed against them.
- As of November 16, 2010 – more than half a year after the “paid in full with interest” ad – GM had only paid back $361 million.
- With the exception of the 2011 Mercedes-Benz S-Class, the 2011 Smart For Two and the 2011 Nissan Titan, the cars on the list are all American-made. Worse than that, they all come from two manufacturers: General Motors and Chrysler. Ford managed to avoid the list completely…. (GM) offerings from Chevrolet and Cadillac crowded the picture…
- GM has some work to do before it can regain a good reputation fleet-wide. Four GM-made vehicles-the Cadillac Escalade, Chevy Tahoe Hybrid, Chevrolet Colorado, and Chevrolet Aveo/Aveo 5-are ranked as among the worst on the market today. All but the Tahoe Hybrid qualified for the Worst Cars list last year as well.
- Probably also due at least in part to these distractions, GM has had to recall their cars – again, and again, and again, and again, and again, and again, and again, and again, and….
As horrendous as all of this is, it can at least perhaps be written-off as the utterly predictable, yet unintentional, ruinous outcome of government involvement in the private sector.
Not so this:
- President Obama and GM eviscerated bankruptcy law – throwing secured bond holders over the side to the benefit and illegal betterment of his union allies.
To quote Jaws – this was no boating accident.
This was President Obama willfully breaking the law – to advantage the unions who every election so thoroughly help him and his fellow Democrats.
Specifically the United Auto Workers (UAW).
Between 2000 and 2008, the UAW gave $23,675,562 to the Democrat Party and its candidates.
(During that same eight years, the UAW gave a whopping $193,540 to Republicans.)
In 2008 alone, the UAW gave $4,161,567 to the Democrat Party – including Obama.
Think they’re owed? Obama apparently does.
And another payoff opportunity has arrived. For it’s labor contract renewal time for GM and the UAW.
We have here the ridiculously pro-Obama union on one side of the negotiation table – and Obama on the other.
I wonder how these talks will end up.
The UAW will undoubtedly get an absurdly good deal. Not just because of their uber-favorable partner, but because of the artificially good situation in which GM currently – but temporarily – finds itself.
GM’s present profitability is a harmonic convergence of events that has very little to do with any possibility of their long-term success – for which the prospects actually look pretty grim.
Obama wiped out entirely GM’s debts. He has issued them a multi-year tax waiver – they do not for years owe the Internal Revenue Service (IRS) a dime.
GM, meanwhile, is fire-selling billions of dollars worth of assets – further artificially bolstering their bottom line.
And Japan’s tragic earthquake-tsunami combination devastation dramatically damaged Toyota, which had until then held the global automotive top spot. GM didn’t ascend – Toyota collapsed.
So GM is currently enjoying synthetic profits – they most likely would not last even if they weren’t building expensive, unprofitable cars that no one wants.
All of which will not at all stop the UAW from pointing to these profits as grounds for demanding even more out of GM.
And they’ll get it. Because Obama owes them. And desperately needs them again for 2012.
And, of course, the UAW will get this absurdly good deal in large part at our expense – as We the People still own 33% of GM.
And even if We the People manage to extricate ourselves from this TARP-inflicted morass, it still leaves GM (again) hamstrung by a terrible UAW deal.
But that’s ok, because it helped President Obama and his fellow Democrats in their reelection efforts.
And that’s really what the terrible GM bailout was all about.