The investment that’s Left

Last week the president took time off from golf and fundraising to brag about what a great thing he did in bailing out the UAW General Motors:

“Now, I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.”
Barack Obama, Pueblo, Colorado – Thursday Aug 9

“I want to say what we did with the auto industry, we can do it in manufacturing across America.”
Barack Obama, Colorado Springs, Colorado – Thursday Aug 9

That’s what we’re all afraid of.

The president should have waited to comment on the wonderfulness of Government Motors, as these stories from Forbes and Investors Business Daily show:

General Motors Is Headed For Bankruptcy — Again
Obama’s $25 Billion Government Motors Lemon

Any competent CEO/CFO would insist on knowing these facts, certainly he would do so before wishing GM’s fate on every other US manufacturer. I’m sure Mr. Obama did know these things. Think about it. Unlike every other CEO/CFO, he has the CIA, the NSA, the CBO, the GAO, the FBI, Tim Geithner, Harry Reid and John Corzine to help him out with industrial intelligence.

The president failed to mention his accomplishment in trashing the contracts for GM bondholders. Nor did he speak of raping Delphi salaried pensioners. Recognizing those acts as counter to the rule of law would involve ideas, not intentions.

At the moment, the GM bailout is just barely a better investment than A123 and Solyndra, two “green” initiatives the president has funded. He is at least consistent. The president dumped $500 million into A123 for batteries, and $500 million into Solyndra for solar electricity to charge the batteries.

What’s the return on investment from that? A bunch of temporary jobs in China, a taxpayer funded bankruptcy and the Chevy Volt.

Competitors be warned

Government Motors has powerful allies: The White House, FBI, FCC, NLRB, EPA, IRS, etc., etc.

Ford pulls its ad on bailouts

This is what happens when government seizes corporations. If it will decide to give money to a corporation going bankrupt, to negate legal contracts… to suspend the rule of law, then government owns the result. In the case of GM, literally and morally.

Criticism of such a deal is automatically politicized, and while political speech may be protected under the First Amendment; what is that to the Corporatist Axis? The Axis will suppress free speech in order to protect its political agenda reciprocal “investment.”

Ford should keep on, I’ll even buy one I don’t yet need just to get in Corporatism’s face.

Turning America into Detroit

The congresscritters in Atlas Shrugged said things similar in meaning, but not one of them was so dumb as Maxine “Moral Hazard” Waters.

If they [banks] don’t come up with loan modifications and keep people in their homes that they’ve worked so hard for, we’re going to tax them out of business

The ways in which this is stupid are beyond counting, but one has to wonder what is Ms Waters plan if she destroys all the banks. Didn’t we just get done bailing them out?* Are they suddenly too resistant to making more stupid loans not to be forced to fail?

Ms Waters, of course, is the congresscritter who threatened to nationalize the oil companies, “[T]his liberal will be all about socialize [sic]…er, ah … basically, … about the government taking over and running your companies!” One can presume she means the same thing when threatening to tax banks into extinction. The “government taking over your banks and giving them to Fannie Mae.” We know how that’s worked so far.

Even aside from its lack of conciseness, “the government taking over and running your companies,” is not a good euphemism for “socialize.” It is far too straightforward. But Maxine Waters apparently didn’t even get the memo that the proper description of her statist policies is “progressive,” which at least has the virtue of moving the statists away from their appropriation of “liberal.” A word that doesn’t mean what they’ve turned it into.

*Including her husband’s to the tune of $12 million.

Gas prices are too low

General Motors CEO Dan Akerson thinks the federal government should raise gas taxes by as much as $1 per gallon. He thinks this would make customers more receptive to smaller more fuel-efficient vehicles.

According to the Detroit News:

A government-imposed tax hike, Akerson believes, will prompt more people to buy small cars and do more good for the environment than forcing automakers to comply with higher gas-mileage standards.

Translation: “If we’re going to be forced to build cars we can’t sell. Consumers should be forced to buy them.”

GE already accomplished this with CFLs, so why not give it a try?

Anybody else see a problem with Government Motors petitioning the government for a tax hike?

Corporatists to the left of me, whores to the right…

…”Stuck In The Middle With You”
Apologies to Gerry Rafferty and Joe Egan.

There was whining in the letters page of the Lansing State Journal about GM spending millions on Superbowl ads. Oh well, I consider this to be a legitimate business expense. That doesn’t mean I like paying for it, but if they are going to sell cars, they need to advertise. The Superbowl is no worse a place to do that than the State Journal. Probably better.

There has been far less outcry regarding GM’s plans to pay major bonuses. The average UAW worker at GM is going to get around $4,000: Because GM has been “profitable.” I think GM should buy itself back from the US Treasury Department before it pays any bonuses. I’ll bet the bondholders who were told to pound sand in 2009 feel the same way.

And let us not ponder the $4,000 direct subsidy for every Chevy Volt built at a loss.

But if none of those expenditures bother you, try this blast from the past. In 2009, when the Feds took scalping knives to Chrysler and GM bondholders, the “new GM” was quietly allowed to carry forward $45 billion in net operating losses. This regulatory undersight will allow GM to avoid paying up to $16 billion in taxes on their “profits.”

The Obama administration appears ready to disregard years of precedent in bankruptcy and taxation law as it remakes the U.S. auto industry.

The latest example is the General Motors (GMGMQ) bankruptcy, where the intent is to have a newly created GM assume the benefit of tax losses at the old GM.

The problem, says Jeffrey Coyne, senior lecturing fellow at the Duke University School of Law and a management consultant who specializes in reorganizing troubled companies, is that tax losses can be passed on only to companies whose owners controlled at least 50% of the predecessor company. Since the start of 2005, General Motors has reported losses of about $87 billion.

“You can’t form new GM, which has never transacted business before, and sell the assets (of existing GM) and then sell the net tax benefit to the new company,” Coyne says. “And as far as I can tell, the NOL is not a saleable asset.” An NOL, or net operating loss, can be used as a tax loss carry forward, an accounting technique that allows it to be applied to future profits to reduce tax liability…

The rules are different in the GM and Chrysler bankruptcies because the government is the major financier and a major shareholder…

Coyne said… ‘The law is the law unless the government is a creditor.’

Indeed. In 2009 the United States Government bought more than 50% of GM. Then the United States Government exempted itself from its own rules so as to hand even more money to GM the UAW.

We bailed them out. We paid for their Superbowl commercials. We’re subsidizing the cars they build. And now we’re paying bonuses to the UAW.

Can anybody tell me how bonuses paid to any GM employee are morally different from the bonuses paid to AIG employees that caused so much angst? Well, let me suggest a couple of distinctions:

1- The AIG employees involved had nothing to do with the mistakes AIG made. They did not work in the division that brought AIG to its knees.

In GM’s case, the UAW – ably assisted by GM management – was directly responsible for GM’s demise.

2- Like the UAW bonus recipients, the AIG employees had contracts specifically including bonuses paid for performance. Those AIG employees achieved their goals – before AIG was bailed out. AIG’s bailout would have been much more expensive except for their success.

OTOH, UAW members were handed ownership of General Motors despite the fact they had performed at least as badly as had GM management for decades.

Taxation in spite of representation

FERC YOU!
From the Wall Street Journal (requires registration):
The Midwest Wind Surtax

You’d think poor Michigan has enough economic troubles without the Federal Energy Regulatory Commission placing a $300 million to $500 million annual surtax on the state’s electric utility bills. But on December 16 FERC Chairman Jon Wellinghoff announced new rules that would essentially socialize the cost of transmission lines across 13 states in the Midwest…

Let’s be very clear on what’s happening here: Mr. Wellinghoff and FERC are trying to establish by regulatory fiat a national energy policy that Congress has refused to endorse. Last summer Congress rejected the Obama Administration’s renewable energy standard law because it would have inflated power costs. So the fiefdom at FERC is unilaterally moving ahead to require that industries and homeowners pay a surtax on their utility bills for a nonexistent renewable energy policy. This is similar to the EPA’s initiatives to regulate carbon even after Congress rejected cap and trade.

Because Iowa and the Dakotas want to build windmills, you (and taxpayers in Illinois, Indiana, Minnesota and Wisconsin) are going to pay to build new power lines to distribute the intermittent windmill electricity. This should become known as the “Dumb Grid.”

Without billions of dollars in new power line infrastructure, the windmills are uneconomic. However, like the health care individual mandate, I’m sure we will hear a defense of this based on the Commerce Clause: Michiganders must pay for windmill transmission lines they neither need nor want, because not to do so is a restraint of interstate commerce.

Imminently-former-Governor Granholm’s desire to manufacture windmills now moves from merely stupid to surreal. You are subsidizing the manufacture of windmills so they may be sold to people who have just arranged to tax you in order to enable distribution of electricity from the windmills. That electricity will charge the batteries Ms Granholm has also subsidized, in cars the Feds have forced you to pay for, built by a company whose union you were made to bail-out. All with no law being passed.

FERC may, justifiably, have assumed Michigan would be happy to cough up half a billion annually to subsidize other States’ crackpot energy schemes. “Green” – the hue of Frankenstein’s monster – “jobs.”

Fred Upton, call your office. And don’t return to this state unless you spike this taxation by the unelected of people they do not represent.

The country is in the very best of hands

First, the corruption:


Then the incompetence:
The Fed Has a $110 Billion Problem with New Benjamins

A significant production problem with new high-tech $100 bills has caused government printers to shut down production of the new notes and to quarantine more than one billion of the bills in huge vaults in Fort Worth, Texas

The good news is that that $100 billion is fiat currency in any case. The biggest cost of producing it was labor, and that stimulated the economy in the same way broken windows do.

And hey, it looks like EU script. Maybe we can recycle it to bail out Ireland.

General Government Motors

It would be very nice to believe that General Motors’ recent IPO represented the successful culmination of a multi-billion dollar bailout, especially since that bailout was combined with the General Government’s flaunting of the rule of contract law.

The rescue of the UAW was morally hazardous, ethically reprehensible and accomplished on the backs of taxpayers – the majority of whom objected to the transaction. It would be nice to believe jobs were saved and taxpayers profited. It would be the very minimum definition of nice, and it would still be BS.

The Cadillac of Bad Ideas

Did the Auto Bailout Really Save One Million Jobs?

It would even be nice if General Government Motors applied a lesson already learned:  Buy what you want or need instead of compromising. Makes great sense

But the General Government has insulated General Motors from that lesson. You are meant to buy a Chevy Volt.  Not some car you actually want.

We’re well shut of Lee Bollinger

Not that that has materially improved the intellectual diversity of the University of Michigan.  Still, Bollinger’s recent plea to bail out print media, at least, won’t be associated with UofM.

Via PajamasMedia and Frank J. Tipler: Columbia U.’s Bollinger Oblivious on MSM Bailout 

His argument is so obviously false that he himself, in his own article, cannot avoid providing the facts needed to refute it. For example, Bollinger writes:

There are examples of other institutions in the U.S. where state support does not translate into official control. The most compelling are our public universities

RTWT

Apparently, Bollinger has no clue why Hillsdale College does not accept any money from the Feds. 

Bailing out any media is a violation of the First Amendment.