Biden: "Bin Laden is Dead and GM is alive!" GM alive?

As of this writing and since the beginning of the year, GM has recalled 15.4 million vehicles.  To put it into perspective, that's the equivalent of recalling every single vehicle it sold in the U.S. in the last 5-1/2 years; or, just about as long as Obama has been in office.  I heard this sarcastic comment on television the other day: "Are there any cars left to recall?" 

Throughout the 2012 election cycle, we heard this slogan from Joe Biden while hyping Obama's first term in office: "Bin Laden is dead and GM is Alive!"  Well, that was long before years of hidden, widespread defective production and its related deaths and injuries all came to light.

Today, GM 's bottom line is being heavily impacted by the cost of repairing all these trucks and cars.  Yet to come are the settling of hundreds of potential lawsuits.  But, more importantly, all the recalls are painting GM vehicles as both defective and unsafe.  That kind of bad publicity could very easily hurt sales and, potentially, drive the company towards bankruptcy once again.  To say GM is alive might be quite a stretch.

Maybe Biden's new slogan should be: "Bin Laden is dead and so are some GM owners!" And, well...  While Bin Laden might be dead, his legacy -- Al Qaeda -- continues to grow.

Yes, Joe Biden's uber-intelligence just proves he should (?) be our next President!  Please, Joe, run!  You're every conservative's dream.

References:

U.S. safety watchdog says 303 deaths linked to recalled GM cars: http://www.reuters.com/article/2014/03/14/us-gm-recall-casualties-idUSBREA2D02U20140314

Al Qaeda controls more territory than ever in Middle East: http://www.cnn.com/2014/01/07/opinion/bergen-al-qaeda-terrority-gains/

GM recalls another 2.6 million vehicles, doubles second-quarter charge: https://news.yahoo.com/gm-recalls-another-2-42-million-vehicles-doubles-154144232--sector.html

GM Auto Sales Numbers: http://www.zacks.com/stock/news/119647/Record-2013-Sales-for-GMs-Chevrolet

General Motors In Chains

According to comments made by GM's top execs, the company is more than anxious to sever its ties with the government.  MarketWatch.com reported it this way:

"...GM executives are...saying it [government ownership] hurts the company's reputation and its ability to attract top talent due to pay restrictions..."

Obviously, this is contrary to Obama/Biden's touting the GM bailout as a success. Lets face it, the bailout of $50 billion by the government has literary put the company in chains; keeping it totally beholding to the whims of the Obama Administration.

And, just as it is in sports, pay will be what attracts the kind of talented people that are going to keep GM profitable in the years to come.   The problem with Obama and his people are that they are too union worker focused and, seem to think that it is those workers, and those workers, alone, that are responsible for a company's success.   That's why GM was forced to shed executives and executive pay while being all warm and cozy and protecting union contracts.  Union workers are at the tail end of the creative process and GM can see that process is in jeopardy for as long as the government has its heavy hand in the company's business.   My guess is that, if Obama wasn't involved, GM would never have introduced the money-losing Volt.  The Volt is a typical example of what happens when the profit motive is eliminated by government intervention.

MarketWatch.com Article on the above subject: http://articles.marketwatch.com/2012-09-17/industries/33890428_1_stake-gm-executives-general-motors

Sorry, Barack. Joe. GM Is Not The #1 Auto Company In The World

On the campaign trail, both Obama and Biden continue to perpetuate the lie that GM is the world's largest auto maker.  The clueless Biden even goes so far as to claim that GM is the world's largest company.

Here's the facts.

GM briefly held the top spot over Toyota because Toyota sales were hurt in two ways.  First there was the "acceleration pedal" recall.  This really tarnished Toyota's quality image and, as a result, impacted sales.  Secondly, there was the Tsunami that severely hampered Toyota's manufacturing output.  But, as reported in May, Toyota is now back on top.

Biden and Obama both have to know that GM didn't become #1 because of increased sales.  It's just illogical to think that their sales increased after having dumped Humvee, Saab and Volvo and shutdown Saturn and Pontiac.  But, politically for them, they must think they can keep telling the lie and no one will call them on it, and from the looks of things, no one in the mainstream media has.

References:

Toyota back, passes GM as world's largest automaker: http://content.usatoday.com/communities/driveon/post/2012/05/toyota-retakes-worlds-largest-automaker-status-from-gm/1#.UDZl6qNT8uc

Because of Politics, Chevy Loses On Every Volt It Sells

Before the General Motors (GM) bailout, it was estimated that the company was losing $1800 on every car it sold.  Well, it seems old habits are hard to break.  Now, it appears that GM is losing thousands on every Chevy Volt it sells.

Back in November 2010, Obama's Car-Czar, Steven Rattner, wrote this in his book titled Overhaul:

"At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included).” 

With that in mind, it was a little surprising that the initial Volt MSRP was set at $41,000.  Normally, a car that costs $40,000 would have a price tag set at the mid-to-high $40's.   Even more surprising was the fact that GM, several months later, lowered the price below the psychologically-impacting $40,000 level. 

While the dealers are able to make a profit on each Volt they sell,  GM, itself, is selling it at about a $4,000 loss.  That's just not a good business decision. Instead, it's a political decision. This is what happens when a liberal politician, like Obama, gets his hands on private enterprise.  And, I don't care if the enterprise is Solyndra or health care system.

Reference:

Report: Each Volt Costs $40,000 To Build: http://gm-volt.com/2010/11/26/report-each-volt-costs-40000-to-build/

GM Confirms, Yes, We're Losing Money on Every Volt We Build: http://www.greencarreports.com/news/1052107_gm-confirms-yes-were-losing-money-on-every-volt-we-build

GM Still Has One Big Financial Problem

Based on the current stock price, anyone could buy GM for a mere $31 billion and change.  However, if you did buy the company, you would also take on $109 billion in "current" pension liabilities.  That's a burden that is 350% greater than the market value of the company. 

In June, GM announced that it was going to try and reduce those liabilities by $26 billion by offering 42,000 non-union employees a chance to opt out of their pensions by accepting a one-time, lump-sum payout at age 65.  The payout, itself, would be equal to whatever the annual pension would have been  over 12 years; starting at age 65.  Now, the cash for this is basically taxpayer money; part of the $33 billion that was left over from the $50 billion that the government gave GM to remain solvent.

But, even with this lump-sum program, GM is still left with $83 billion in liabilities; of which, $71 billion are theoretically non-negotiable union pensions.  That $83 billion is still 260% greater than the company's value, and, because union pension programs remained intact following last year's 4-year labor contract agreement, those pension liabilities will only continue to grow. 

Now, even if GM could fund the pension liabilities with every dollar it made in profits, it would still mean that it would take a decade or more to cover that liability in total; and, of course, realistically, that just won't happen.  Its pension liabilities could be a ticking time bomb that could sink the company once again.

The problem here was the way GM was bailed out.  Obama sided with labor, and all the labor commitments and contracts were left unchanged.  That would not have happened if they went through a normal bankruptcy process.  As a result, you have a company that, in the short term, looks to be successful,  but, in the long term, may be a disaster waiting to happen.  This is a major reason why GM's stock price is so low; below $20/share.  And, the taxpayers?   They're really screwed because its looking like it will never get back to the $53/share that is needed for us to breakeven on Obama's bailout of the company.  Basically, GM is another Obama Solyndra.   This time, a bankruptcy in slow motion.

Did Government Buying Boost GM's Sales To Make Obama Look Good?

Last quarter, General Motors (GM) sales were reported being up by a whopping 16%; making Obama's "masterminding" of the GM bailout look like a miraculous turnaround for a company that had almost gone belly up.  And, of course, Obama has taken every opportunity to promote GM's success story as his own; while on the campaign trail. In fact, last week's three-day bus tour through Michigan, Ohio, and Pennsylvania was dedicated to doing just that.

But, if you drill down into that 16% increase in sales, you would find that the federal government's fleet purchases of GM autos actually rose by an extraordinary 79% in June; just days before the second quarter sales numbers would be tallied.  How convenient that was for his bus tour and for this supposedly "most transparent" president in the history of the United States!

Fleet Sales data source: http://nlpc.org/stories/2012/07/05/gm%E2%80%99s-government-sales-and-truck-inventory-rise

Bus tour story: http://www.detroitnews.com/article/20120705/AUTO01/207050337/1121/auto01/Obama-bus-tour-to-tout-car-sales

The Hypocrisy of Obama's Latest Attack On Romney and Bain Capitol

As of today,  Barack Obama's reelection campaign released this new ad attacking Mitt Romney's stewardship of Bain Capital:



But what this ad and the idiots that appear in it don't seem to understand is that Bain Capital was involved in the business of fixing broken companies.  Companies that were broken because they had too many people and/or too many unprofitable or marginally profitable products and services.  Those companies were broken long before Bain got involved. So, if those people lost their jobs it was because the original management of the company that hired them was at fault due to bad management.

Though, I guess, the height of hypocrisy comes from Obama, himself, on this one.  The fact is that what Bain Capital did is no different than what the President's people had to do with the "broken" General Motors.  Like Bain Capitol,  Obama took a controlling interest in General Motors by infusing $56 billion in cash.  But, unlike Bain's takeover of companies, Obama used taxpayer money -- not private capital -- to fund the takeover. Then, to make the company profitable again, people had to lose their jobs and some benefits.  The Saturn and Pontiac Divisions were shuttered and employees were just let go.  Losers like Saab, Opel, Vauxhall, and Humvee were sold off with their worker's ultimate fate in question. Hundreds of dealerships were shut down; and, as a result, lots of people lost their jobs.  Former suppliers to Pontiac and Saturn lost contracts and, in the process, some either laid people off or, perhaps, went out of business all together. 

I'm sure that if Romney wants to stoop to Obama's level, he could just as easily run a similar ad with former, disgruntled, General Motors workers or Dealers.

Update: Even Obama's former Car Czar who orchestrated the GM Bailout calls this Obama attack ad "unfair".  (Click here to see video from Morning Joe program).

Chevy Volt's Not So Electrifying Sales

Once again Chevy Volt's sales are disappointing.   Two months ago, there was a lot of left-wing joy in that fact that the Chevy Volt broke the 2,000 mark by setting a sales record of 2,289 cars.   Many in the industry saw this as a new trend that would help General Motors "exceed" its claim that they would sell between 15,000 and 20,000 Volts this year; with sales easily surpassing the high end of that range.  Sadly, sales slipped again last month and the Volt only managed to sell 1.654 vehicles.   What really hurt the Volt was the fact that the competing Toyota Prius Plug-In did so well; beating the Volt sales by 192 cars.

The problem with the Volt and other electric cars is the fact that the electric vehicle (EV) market is a niche market with only a small, limited amount of buyers.  For this reason, more models from more manufacturers only mean that this limited number of buyers will be spreading their buying over an increasing amount choices; and each model's sales will suffer in the process. Being the most expensive of all the electrics, this further limits the Volt's market to an even more limited, wealthier class of buyers.   As a result, the Volt's sales will be further marginalized.  Right now the buyers of EV's are finding the Prius the better buy with a known history of Hybrid/battery technology.  The average price of a Prius EV is only $26,000 as compared to the Chevy alternative at $40,000.   And, whether you buy a Volt or a Prius Plug-In, you still get the same $7500 tax rebate.  For all the above reasons, I think the Volt was a mistake and is ultimately doomed to die; and, not necessarily a slow death.

Biden: Bin Laden Is Dead, GM Is Alive

Ahead of the one-year anniversary of the Bin Laden raid, Vice President Joe Biden proudly declared: "Bin Laden is dead, GM is alive."

Now, I'll buy Obama/Biden taking credit for the Bin Laden killing.  But, as far as GM being alive, the qualifier should be "just barely".   While the company looks profitable on paper, let's not forget that this profitability came at a very high cost to the taxpayer's with a $56 billion bailout.  At the same time, prior stockholders and creditors were literally thrown under the bus with Obama handing ownership over to the unions and the U.S. Treasury. And, with the stock price floundering, it looks like it will be a very long time before the taxpayer will get any of its money back.

However, lurking just below the surface, GM has a major problem that could, again, put that company into serious financial trouble. That problem is underfunded pension funds.  As of the end of last year, it was estimated that GM's pension funds were short $31 billion dollars; growing from a $22 billion deficit at the end of 2010.  That was a net deficit increase of $9 billion in just one year and far greater than the $7.6 billion in GM's profits for that same year.  What's more disturbing is the fact that, based on stock price, the total value of the company barely exceeds its pension deficit at the end of 2011.

Unless GM can get some concessions on existing pension liabilities, that company will be right back facing bankruptcy in as little as two years.  That's because the pension fund payouts are rising much faster than GM's profits and its contributions to pension funding.   This pension problem is one of the reasons that GM's stock price is floundering.   A problem that will only get worse with time.

GM Trips OverThe Chevy Volt's Cord

On Friday, General Motors (GM) announced that it was suspending production of the Chevy Volt for 5 weeks in order for demand to catch up with production. At the same time, more than 1300 workers will collect a big chunk of taxpayer money in the form of unemployment insurance. All this just two days after President Obama touted the Volt and said he would buy one after he leaves office in "five years".

I really don't think 5 weeks will do the the trick. That's because Volt production had to be ramped to sell an estimated 60,000 cars in 2012. Last month, they only sold about 1,000. If that trend continues, that means sales are off by 80% from projection. By my calculations, they really need to shut down production for 40 weeks for demand to catch up with production. It is time that GM pulls the plug on this lemon and not just trip over the cord. Each of these lemons are costing the taxpayer $25,000 to build (Analyst: 'This might be the most government-supported car since the Trabant'). Once, again, Obama has Solyndrazized the American taxpayer with another silly green project.

The Shock And Blah Of The Chevy Volt

I think General Motors (GM) can be very thankful that the Chevy Volt was such such a flop in the marketplace. After all, having to recall an entire run of a particular line of vehicles could have been quite expensive. But, thanks to the intelligence of the American consumer, a little less than 8,000 of these firetraps have been sold to date -- well short of the 10,000 vehicles that GM had predicted they would sell by this point in time.

Then there was the news that GM may move its production of the Volt to China. If there ever was an admission by a company that it was losing money on making a product, this is it. I don't know if anyone remembers but, GM originally announced that the price of the Volt would be around $47,000. But, after Obama took over the company, the Volt hit the showrooms with a much lower price tag of $41,000; making me think that the real cost to produce this car is somewhat higher than the selling price. You think, maybe, that Obama's Car Czar had something to do with the lousy pricing? It's obvious that GM is losing money on these eco-nut vehicles. Enough of a loss, that it makes sense to replicate the current Volt production facilities in China; train new workers; and, then, ship the vehicles back to the U.S for distribution to the dealers. Of course, China's biggest cost saver is the fact that they don't have a United Auto Workers union.

This is just another example of Obama trying to force feed America with "green" technology. Like Solyndra, the Volt is a loser. And, like Solyndra, the American taxpayer is on the hook for keeping this pig alive with a $7,000 tax rebate for anyone buying one. A tax break that only benefits the wealthy who can afford to buy a $41,000 glorified golf cart. Now, it looks like those tax breaks will, at sometime, subsidize jobs in China. Thank you, Mr. Obama!

The Chevy Volt: A Rolling Crematorium?

Running nearly the entire length of the "hump" between the driver and passenger seats and, then, forming a "T" that runs along the back seat of the Chevy Volt is an extremely large and toxic lithium ion battery. It's the very same battery type that is used to power your laptops or cell phones.

The problem with lithium ion batteries is that under certain "stress" conditions, like extreme overcharging, they have a tendency to catch fire. Just five days ago, on a regional flight in Australia, an Apple iPhone burst into flames. A couple of days later, in Brazil, another iPhone caught fire. The fact is that the lithium battery has a history of either burning people's skin from the high heat that's generated or just plain catching fire.

Now, we have the Electric Vehicles being powered by lithium batteries thousands of times larger than any you would find in a cell phone or laptop. To my knowledge there have already been 3 fires associated with the Volt. The first occurred back in April of this year when a Connecticut couple lost their entire garage to what is suspected to be a Volt fire. Then, just a few weeks ago, a Volt that was undergoing a crash test had its battery burst into flames. Finally, another set of batteries, used in another crash test, caught fire after having been removed from the car.

After the first crash test fire, General Motors (GM) announced that they would provide rental cars to anyone concerned about their Volts until such time as they were able to assure the safety of these cars. Then, following the next fire, GM announced that it was willing to buy back any Volts from owners fearful of the hazard. That, to me, was a clear admission that GM has a serious problem. With that, sales of the Volt are starting to falter as the buying public smells a rat.

I don't know about you but, I, for one, would not want to sit in a car that had even the remotest possibility of being a mobile crematorium. I'm not sure that the world is quite ready for the electric car revolution. Thanks to the Obama Administration and the leverage they exerted with the bailout, GM was pushed into a rush delivery of the first electric car. Fortunately, only about 8,000 of these might be sold this year. But, if they are a real fire risk, even one Volt on the road is one Volt too many. I really think the future of the electric car has been put into question just because Obama wanted to please his eco-left, climate change, activist voting base by rushing an unproven electric car to market.

The U.S. Treasury Is Killing GM's Stock Price

General Motors (GM) has had 5 profitable quarters and the company looks to be stable. Unfortunately, for the taxpayers, that profitability came at a cost of nearly 50 billion dollars in infused bailout monies that were ultimately converted into GM stock. Now, the American taxpayers own one-third of that company's total shares of common stock; causing many to refer to GM as "Government Motors."

But, in order for the taxpayers to recoup its "investment" in GM, the stock price has to soar to nearly $134 per share (Click here to See the Wall Street Journal Story: U.S. Must Sell GM Shares at $133.78 to Break Even). Since coming public at around $30 a share, General Motor's stock price has done nothing but fall. This week saw an all-time low of $21.18; with the final closing price for the week at $22.87. Obviously, this is one pig that not even lipstick can help.

With the most recent profits being almost double that of the previous year, you would think that GM stock would have gone higher; but, it fell instead. You see, the investment community knows that, at some point in time, the U.S. Treasury is going to have to sell that one-third interest and, when they do, they will flood the stock market with huge sell orders against GM stock; dramatically driving the share price down. So, in an odd way, it's the bailout money and the Treasury Department's ownership of stock that are actually killing GM's stock price and preventing the U.S. taxpayer from recouping its cost to bailout the company.

Obviously, this is just another example of why governments should stay out of the business of trying to fix something that is broken. Think of it as a takeoff on the old saying of the "blind leading the blind." Except, in this case, it was the "broken leading the broken." Clearly, General Motors should have gone through a normal, non-governmental aided bankruptcy. Instead Obama got involved. Never once do the academic technocrats of a bureaucracy ever understand the long-term implications of their actions because they just don't have any real-world experience. All they ever have is untested, academic theory. The Obama Administration -- mostly populated with academics -- clearly didn't see this not-so-little complication coming when they decided to bailout GM in a government-assisted bankruptcy; an effort that was solely and ideologically intended to benefit and protect Obama's election and reelection benefactors, the United Auto Workers (UAW) labor union. As a result, you and I, the taxpayers, are going to eventually take the pipe on what Obama seems to think was such a great success.

There Are Bailouts And, Then, There Are Bailouts

When it came to the bailout of AIG and the banks, Obama and his socialist pay Czar thought it was appropriate to cap executive pay at $500,000.

However, just this week, the bailed out CEO of General Motors (aka Government Motors) managed to get a $9 million executive pay compensation package including a $1.7 million per year salary (Click to See Full Story: GM CEO Whitacre receives $9M pay package).

On top of that, Fritz Henderson, the former and run-out of town CEO of GM (Click to See Full Story: General Motors CEO Fritz Henderson resigns (unexpectedly)), will be back to help the current CEO, Ed Whitacre, understand the business because Whitacre has absolutely no background in the auto industry. He came from AT&T and the telecom industry. But, even so, it is only appropriate that Whitacre gets his $9 mil and $1.7 per year salary package while he is in training under Fritz's guidance.

Just so you know, Fritz is only a "temp" working 20 hours a week. For that charity work in training Whitacre, he will be paid sparingly at $59,000 a month; or, approximately $710,000 a year. There is no word as to whether or not Fritz will get paid overtime if Whitacre needs a little more OJT (On-the-job-training) than expected; above his 20 hours a week allotted time. There is also no word as to whether or not Fritz will be included in the next unemployment or jobs report as an active part of the full-time workforce helping to keep Obama's unemployment numbers lower than reality. By rights, he should be included in the underemployment (U6) report along with the rest of this nation's temporary help and people not working in their chosen profession.

I guess not all bailed out companies are the same; at least in the eyes of pro-labor Obama. It's only important to hand out big salaries when that company has been set up as a Union-owned corporation by him and his labor-favoring cronies. Like General Motors, for example.

We wouldn't want General Motors to fail because they couldn't attract good high-price executive talent, now, would we? And, screw all those non-unionized, public-owned companies like the banks and AIG! Right?