TARP audit claims Obama admin destroyed “tens of thousands” of jobs in dealer closures

posted at 12:15 pm on July 19, 2010 by Ed Morrissey

Last year, while the Obama administration seized two of the nation’s three main domestic auto manufacturers, it also shut down thousands of dealerships across the country, supposedly to stabilize GM and Chrysler.  A new report from Neil Barofsky, the Inspector General of the TARP program, calls into question that decision.  In a sharp rebuke to the White House, Barofsky says that the action needlessly cost tens of thousands of jobs and extended an already-disastrous downturn in employment:

President Obama’s auto task force pressed General Motors and Chrysler to close scores of dealerships without adequately considering the jobs that would be lost or having a firm idea of the cost savings that would be achieved, an audit of the process has concluded.

The report by Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program of the Treasury Department, said both carmakers needed to shut down some underperforming dealerships. But it questioned whether the cuts should have been made so quickly, particularly during a recession. The report, released on Sunday, estimated that tens of thousands of jobs were lost as a result.

“It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our nation’s history was either necessary for the sake of the companies’ economic survival or prudent for the sake of the nation’s economic recovery,” the report said.

Mark Tapscott says that Rep. Darrell Issa (R-CA) and his consistent criticism of the dealer closings has been vindicated:

Issa, who has been a vocal critic of the Obama administration’s handling of the GM and Chrysler government takeovers, said the SIGTARP report should “serve as a wake-up call as to the implications of politically-orchestrated bailouts and how putting decisions about private enterprise in the hands of political appointees and bureaucrats can lead to costly and unintended consequences.”

The California Republican also said the fothcoming report will say “GM did not consistently follow its stated criteria and that there was little or no documentation of the decision-making process to terminate or retain dealerships with similar profiles, or of the appeals process” and that “making termination decisions with little or no transparency and making a review of many of these decisions impossible…”

This doesn’t come as any great shock.  Barack Obama put Steve Rattner in charge of running his auto bailout program, a man who had just as much experience in the auto industry as Obama did: he drove a few cars.  Rattner had to make a quick exit after just a few months when it became known that he was the target of a federal probe into questionable activities regarding the New York pension fund — and his replacement had just as much experience in the auto industry as Rattner did.

What was the main entry on Ron Bloom’s resume?  He was a union negotiator.

Let’s keep this in mind when Democrats insist that government can run industries better than the markets themselves.  Not only did the White House purposely evade bankruptcy laws in cutting sweet deals for unions during the bailout, but they also destroyed jobs in the process out of incompetency.  I’d bet that a number of union members are none too pleased with that outcome, even if the union bosses are.

Update: Congressional candidate Sean Mahoney has been pushing on this topic for a while.


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SIGTARP to go under the bus in 5….4…..3….

cmsinaz on July 19, 2010 at 12:19 PM

Obama: I didn’t order the dealerships closed. That was strictly performed by regulators following laws written by REPUBLICANS. I am now demanding that the Republicans work with us on the cap and trade energy bill to include safeguards from letting this happen ever again.

Skywise on July 19, 2010 at 12:19 PM

Confirmed: Democratic White House not good at the auto business.

Or anything else for that matter.

upinak on July 19, 2010 at 12:19 PM

This doesn’t make a lot of sense. Anyone who wanted to buy a car, did so. So the number of dealers had no effect. If your company sells widgets, why have ten dealers to do it, if there are only three customers wanting to buy one? They will go to the nearest open dealer.

keep the change on July 19, 2010 at 12:20 PM

Democrats don’t care what Union members think, they care what the influence peddlers who run these organizations think

rob verdi on July 19, 2010 at 12:20 PM

The takeover of banks will have the same results, jobs lost! Everything this bho and team does is crater jobs and that seems to be just dandy with them.
L

letget on July 19, 2010 at 12:20 PM

Shortly after that process of shutting down dealerships, there were several articles on the political contributions made by dealership owners. Seems it was bad luck to be a Republican contributor.

iurockhead on July 19, 2010 at 12:21 PM

I’d bet that a number of union members are none too pleased with that outcome, even if the union bosses are.

union members-*crickets chirping*

do you ever hear a peep out of them? seriously, I’d be curious to know…if they are outraged, will the msm relay the message?

cmsinaz on July 19, 2010 at 12:22 PM

Last year, while the Obama administration seized two of the nation’s three main domestic auto manufacturers, it also shut down thousands of dealerships across the country

Mission Accomplished.

two birds, one stone.

ted c on July 19, 2010 at 12:22 PM

So does this mean I won’t be getting a dividend check from GM?

Cindy Munford on July 19, 2010 at 12:22 PM

Ah, but those people that became unemployed due to the closings are now recipients of government cash to keep food on their table. Mission Accomplished.

myrenovations on July 19, 2010 at 12:24 PM

I predict future happiness for politicians if they can concentrate government power by usurping the labors of the people under the false pretense of taking care of them.

WashJeff on July 19, 2010 at 12:24 PM

get your big gubmint auto, big gubmint handout, big gubmint job and join a big gubmint union…..

funny how these chips are falling where they are…..

ted c on July 19, 2010 at 12:25 PM

So does this mean I won’t be getting a dividend check from GM?

Cindy Munford on July 19, 2010 at 12:22 PM

You will be lucky to get your money back in 2011 if you overpay your 2010 taxes.

WashJeff on July 19, 2010 at 12:26 PM

Doh!!!!

Oh and don’t forget that we spent 20k plus on each car in cash for clunkers. Nice work Obama! /sarc

CWforFreedom on July 19, 2010 at 12:26 PM

You will be lucky to get your money back in 2011 if you overpay your 2010 taxes.

WashJeff on July 19, 2010 at 12:26 PM

true dat

cmsinaz on July 19, 2010 at 12:27 PM

Has anyone tried to do an audit of dealers/ownerships shut down as compared to party affiliation from voter registration lists?

coldwarrior on July 19, 2010 at 12:27 PM

So in other words the dealer closures created 17 septillion jobs, according to Sergent Smartass.

rbj on July 19, 2010 at 12:29 PM

Obama’s next speech: “This administration has saved or created or destroyed 3 million jobs….”

tommer74 on July 19, 2010 at 12:32 PM

The gubment created hot career is Repo man!

seven on July 19, 2010 at 12:33 PM

And if I recall correctly, the manufacturers taken over by the gubbymint filed bankruptcy anyway.
It’s like the gubbymint doesn’t know how to do anything practical….

mjk on July 19, 2010 at 12:34 PM

Let’s keep this in mind when Democrats insist that government can run industries better than the markets themselves.

This was an expensive lesson that most of us did not need.

And the ones who need the lesson aren’t listening anyway.

UltimateBob on July 19, 2010 at 12:34 PM

Let me fix that:

Obama’s next speech: “This My administration has saved or created or destroyed 3 million jobs….”

tommer74 on July 19, 2010 at 12:34 PM

Obama administration response: “Unfortunately, these were necessary casulties as our economy transforms into a top-down, green-energy, command economy in which President Obama and successor liberal presidents pick winners and losers.”

BuckeyeSam on July 19, 2010 at 12:35 PM

Municipalities send a big thank you to Obama for putting a big hole in their budgets via reduced property and sales taxes.

WashJeff on July 19, 2010 at 12:35 PM

Wait till they figure out how many banking, energy and healthcare jobs will be lost next.

xler8bmw on July 19, 2010 at 12:36 PM

Obama needs to throw Obama under the bus.

darwin on July 19, 2010 at 12:36 PM

Dealerships are independently owned and operated and have no direct impact on the manufacturers. The closures only served to funnel more consumers into favored dealerships by eliminating their competition.
 
The number of dealerships doesn’t affect the car manufacturers expect that more is better… ease of access, proximity of consumers… having a greater density of dealerships is GOOD, not BAD.

CLaFarge on July 19, 2010 at 12:38 PM

Not only did the White House purposely evade bankruptcy laws in cutting sweet deals for unions during the bailout, but they also destroyed jobs in the process out of incompetency.

Incompetency? Or corruption? At least some of the dealers claimed that closures had more to do with internal corporate connections and politics. The closures inured to the great benefit of those dealerships (many of them chains) remaining. These people knew there was no good business reason to close hundreds of dealerships and destroy tens of thousands of jobs. They used the “crisis” to exploit the government’s power out of greed, and they didn’t give a damn what they destroyed in the process.

novaculus on July 19, 2010 at 12:42 PM

Confirmed: White House not good at the auto anything business.

FIFY

milwife88 on July 19, 2010 at 12:44 PM

So they put people out of work and now use those same people in the argument over the length of unemployment benefits to attack the GOP? I smell a rat.

CWforFreedom on July 19, 2010 at 12:47 PM

obama is yelling at the GOP about jobless benefits, when what we really need is JOBS! And he is not doing a single thing to help that

ConservativePartyNow on July 19, 2010 at 12:47 PM

Those people got screwed.
They lost their franchise rights that they paid fore without compensation and the inventory they had on their lot could no longer be sold as new.

NeoKong on July 19, 2010 at 12:48 PM

And he is not doing a single thing to help that

ConservativePartyNow on July 19, 2010 at 12:47 PM

You mean he is doing the opposite.

CWforFreedom on July 19, 2010 at 12:49 PM

Municipalities send a big thank you to Obama for putting a big hole in their budgets via reduced property and sales taxes.

WashJeff on July 19, 2010 at 12:35 PM

You ain’t kidding. There was once upon a time a HUGE car dealership near me. Now there is just a big empty lot in it’s place. They used to be the number 3 tax payer in that city.

Johnnyreb on July 19, 2010 at 12:51 PM

So…. forcing the closure of thousands of dealerships has COST jobs? Who would have thunk it?

Is that an unintended consequence?

Only in the twisted minds of leftists is it considered “unintended” when jobs are lost because businesses are shut down.

UltimateBob on July 19, 2010 at 12:52 PM

I think if we did deep enough we can fabricate find a memo that closing those dealerships was really George Bush’s idea.

Koa on July 19, 2010 at 12:52 PM

Maybe Obama should try channeling Mussolini since channeling Marx hasn’t worked out for him.

darwin on July 19, 2010 at 12:52 PM

Obambi’s concern was for the unions only. The number of dealerships had exactly ZERO to do with the manufacturers profitability.

The dealerships were business people = BAD
The manufacturer is union = GOOD

Thousands of jobs lost, thousands of communities screwed so this narcisistic blowhard could advance his own socialist agenda.

It’s not written or reported anywhere but it’s obvious the plan was for the government to take them over, protect the union and simply revamp the distribution system using company/government stores for the sales function.

Tim Zank on July 19, 2010 at 12:54 PM

Now who are the foot rustlers and tonsil grabbers?

Is there such a thing as government/political malpractice? If not, maybe we should invent it.

When the government knows, or should have known, its actions will cause unnecessary or irreparable harm, it is guilty of malpractice.

Legislators and Executive branch individuals found complicit with the above shall be enjoined from practicing legislative or public management duties. Forever.

BobMbx on July 19, 2010 at 12:55 PM

They whited out “car dealerships” and substituted “oil rigs following regulations” and hit reprint over the past few months, apparently.

Good Lt on July 19, 2010 at 12:55 PM

Consider the number of associated jobs with any retail business. It isn’t that simple to merely close down a dealership – that decision would be the owners’. How many sales people, parts people, mechanics, untold businesses that service the dealership? Anybody with a business background would know the answers. How do you expect a mob of corrupt lawyers to run this country? A nation of fools on a sinking ship.

LarryG on July 19, 2010 at 12:58 PM

“Success!”

Bishop on July 19, 2010 at 12:59 PM

I think if we did deep enough we can fabricate find a memo that closing those dealerships was really George Bush’s idea.

Koa on July 19, 2010 at 12:52 PM

If you go to Minnesota im sure you could find it in someone’s car trunk.

heshtesh on July 19, 2010 at 1:01 PM

The car companies were going to go bankrupt one way or the other. The important point is, taking over the carmakers before they filed for bankruptcy put the govt in the position to control the process. They could protect the unions and stick it to the bond and shareholders.

rlyle on July 19, 2010 at 1:04 PM

Has anyone tried to do an audit of dealers/ownerships shut down as compared to party affiliation from voter registration lists?

coldwarrior on July 19, 2010 at 12:27 PM

Coldwarrior,

http://hotair.com/archives/2009/05/26/hmmm-chrysler-dealers-shut-down-in-obama-bankruptcy-are-mostly-republican/

Good to see you. Hope you are well.

NaCly dog on July 19, 2010 at 1:10 PM

I’d bet that a number of union members are none too pleased with that outcome, even if the union bosses are.

And you would be wrong. Obama is fervently bashing the GOP for not wanting to provide unemployment benefits to those union brothers who lost their jobs…because of Obama.

It’s that second part that never gets discussed. Until now.

BobMbx on July 19, 2010 at 1:11 PM

Barack Obama put Steve Rattner in charge of running his auto bailout program, a man who had just as much experience in the auto industry as Obama did: he has been driven drove in a few cars.

FIFY

dmh0667 on July 19, 2010 at 1:16 PM

You gotta wonder what Obama got for those appointments. Surely he didn’t give them away for free.

TexasDan on July 19, 2010 at 1:17 PM

This doesn’t make a lot of sense. Anyone who wanted to buy a car, did so. So the number of dealers had no effect. If your company sells widgets, why have ten dealers to do it, if there are only three customers wanting to buy one? They will go to the nearest open dealer.

keep the change on July 19, 2010 at 12:20 PM

Let’s see. In a recession is it better to have 10 dealerships operating and keeping all their employees working while making some profit, or breaking even.

Or is it better to have 5 selected dealerships left operating with their employees making the same wages as before, but the increased sales for each dealership resulting in the owners making increased profits. That, of course, happening while the other 5 dealers are out-of-business, potentially bankrupted, and their previous employees in the ranks of the unemployed.

I guess one’s view, as a dealership, might depend upon whose ox is getting gored; yours or theirs.

Yoop on July 19, 2010 at 1:19 PM

You gotta wonder what Obama got for those appointments. Surely he didn’t give them away for free.

TexasDan on July 19, 2010 at 1:17 PM

He doesn’t need or want anything but their votes. Money to him is no problem since he has all he needs from taxes and the printing presses. Votes he needs to remain in power and the Dems are very good at buying votes.

docdave on July 19, 2010 at 1:25 PM

Workers at dealships are unlikely to be members of the Auto Workers.

burt on July 19, 2010 at 1:26 PM

One addendum to this story, all the related parties, the Unied Auto Workers, National Association of Auto Manufacturers,Chrysler , Ford & GM ‘s mgt. etc. all supported Obama in ’08.

The National Association of Auto Dealers on the other hand however, specifically endorsed McCain. Good thing our Prez hasn’t been shown to be thin-skinned, or you just might suspect….nah, couldn’t be right.

Right?

Archimedes on July 19, 2010 at 1:26 PM

If only these union members would stand up, and say…….NO MORE! We wont’ support a union hell bent on destroying the rest of the country, and our fellow citizens.

capejasmine on July 19, 2010 at 1:27 PM

Congrats also goes out to . . . PAUL RYAN!

Notorious GOP on July 19, 2010 at 1:31 PM

There is clearly racism at work here– because he is black, he gets a free pass.

If anybody this incompetent were white, they’d paint his face, give him a big red nose and trot him out to entertain the crowd between the Japanese jugglers and the bicycle-riding bears.

MaiDee on July 19, 2010 at 1:53 PM

I wish there was an independent source for unemployment figures – one that accounted for everyone without a job. I’d like to see the figures adjusted to the same standards used in the depression. I bet they’re closer than one might expect.

WashingtonsWake on July 19, 2010 at 1:54 PM

I think if we did deep enough we can fabricate find a memo that closing those dealerships was really George Bush’s idea.

Koa on July 19, 2010 at 12:52 PM

I’ll get right on it.

Love,
Dan

Laura in Maryland on July 19, 2010 at 2:23 PM

Neil Barofsky is obviously confused, disoriented, unable to answer questions, I suspect he’ll be getting the hook pretty soon.

Walpin will soon have company.

ButterflyDragon on July 19, 2010 at 2:24 PM

blockquote>President Obama’s auto task force pressed General Motors and Chrysler to close scores of dealerships without adequately considering the jobs that would be lost or having a firm idea of the cost savings that would be achieved, an audit of the process has concluded.

The report by Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program of the Treasury Department, said both carmakers needed to shut down some underperforming dealerships. But it questioned whether the cuts should have been made so quickly, particularly during a recession. The report, released on Sunday, estimated that tens of thousands of jobs were lost as a result.

Give me a break, if the auto companies had been forced into a normal and bankruptcy process under their old leadership, neither GM or Chrysler would have survived. Bondholders had zero intention of letting either company emerge from the process without a massive asset sale. If you look at the history of the auto industry, this reality becomes more than clear. And no respected auto analyst seriously questioned that either GM or Chyrsler would have survived without government aid.

It’s pointless to criticize the depth of the restructuring at either company (it’s not fair, Saturn and Hummer were forced to close by Obama!) In fact, most Republicans at the time criticized the bailout as a complete waste of money- GM’s balance sheet was such a disaster and its culture so inefficient and bloated that it was hard to imagine the company ever turning a corner. Those were valid criticisms at the time, but it’s the height of hypocrisy now to call into question the depth of the cutbacks. It was better to cut too far- and let GM grow back if necessary- than cut to little and see the company ultimately fail.

As for impact of Obama’s action, the survival of GM was absolutely crucial to keeping the US auto industry around. At the time of the bailout, Ford executives supported government aid for its competitor, GM. Without GM alive, most US auto suppliers would have been forced to close, leaving Ford without components needed to keep production ongoing. And you’re looking at over 100,000 jobs across the Midwest- both within GM and Chyrsler- and hundreds of auto parts suppliers and other companies that depend upon the US automotive industry. A slow and normal bankruptcy driven dissolution of the automakers would have marked the end of America’s relevancy as a manufacturer.

GM is slated to go public in 2010 or 2011, at which point the government will lose its controlling stake. And in any case, GM executives have repeatedly stated that the government is no longer driving any key decisions within the company. It’s true that generally speaking, the government should stay out of business. But in the extraordinary economic situation of the time, it was not only necessary but imperatives to the country’s manufacturing base. And despite widespread claims that the bailout wouldn’t save GM, it’s been a resounding success that has saved a staggering number of jobs.

bayam on July 19, 2010 at 2:37 PM

Consider the number of associated jobs with any retail business. It isn’t that simple to merely close down a dealership – that decision would be the owners’. How many sales people, parts people, mechanics, untold businesses that service the dealership?

If you go back and read reports from respected, independent analysts, if no bailout had occurred, between 1 and 2 Million jobs would have been lost. Anyone who opposed the bailout back then is being hypocritical to criticize the government forcing the auto companies to drastically cut back. The numbers behind GM were ominous, and it wasn’t clear that GM would ultimately turn into a profitable company.

bayam on July 19, 2010 at 2:46 PM

Obama’s administration has destroyed millions of GOP donor jobs (auto, gulf coast, national security contractors, builders, DOJ) and saved or created millions of Dem jobs (government, union, USDA).

faraway on July 19, 2010 at 2:46 PM

That’s “Destroyed or Eliminated”.
Gotta keep up with the White House propagandists, ala “Created or Saved”.

OxyCon on July 19, 2010 at 2:46 PM

Sorry to destroy the left’s narrative, but a GM bankruptcy would have no impact on dealerships, since GM would survive anyway, and the dealerships are owned by third parties (mostly GOP donors).

faraway on July 19, 2010 at 2:48 PM

While I have no love for the Obama admin, I think that the auto bailout will be considered one of its successes. That such a qualified and limited success is one of their banner achievement is pretty telling!

The industry never recovered from its poor designs, over-production, high labor costs and other problems that have been around since the 1970s.

While Rattner was very heavy-handed and doubtless made mistakes, much of what they accomplished was actually pretty good: eliminating the crushing debt, scaling back the out-of-date brands, scaling back production to actual end demand, eliminating some of the stooopid labor rules, etc. The real question is whether they will slip back into their bad habits once the crisis has passed. I remember that Chrysler had a hot little run after their first bailout, only to be back at the trough in 2008.

It is hard to know how this would have played out in bankruptcy. I agree, however, that a forced liquidation at the bottom of the market would have been the worst of all outcomes. And it is hard to unite a group of fractious lenders in a complex negotiation.

At least the auto-bailout was not a new entitlement with a perpetually-growing price tag – it was a one time shot like TARP. The limited amount of money that the govt will lose is a drop in the ocean vs a $14T economy and the number of manufacturing jobs saved.

If sales return to 14-15M units a year, perhaps some of these dealerships can be reopened. It is doubtless true that the lack of union representation at car dealerships was a factor in Rattner’s relatively cavalier attitude toward closings.

Bush and Paulsen – to their credit – were the architects of TARP, the most effective disaster-prevention tool from the 2008 meltdown. However, recall that Bush actually gave these auto idiots and unsecured, no-strings loan, against the advice of Senator Corker and others as he didn’t want to preside over the collapse of the industry. At least Rattner demanded some real quid pro quo for the gubmint money.

It is funny, though, that Rattner was both was corrupt and had no auto experience. I guess these guys really don’t know anyone in the private sector other than the big bank CEOs and some feckless “green energy” types.

On the other hand, the stimulus, healthcare and fin-reg are unmitigated, indefensible disasters.

There is plenty of incompetence and poorly-conceived policies coming out of this crowd.

johnboy on July 19, 2010 at 3:05 PM

Obama’s team made sure debt payments went preferentially to his contributors and closings went preferentially to his opponents.

Lucy, ‘splain to me why this is not criminal?

Merovign on July 19, 2010 at 3:25 PM

If you think it was “incompetence” to somehow destroy the livelihood of thousands of non-union GOP donors, you will probably be surprised at the other jobs that are being destroyed by Obama.

faraway on July 19, 2010 at 3:28 PM

The US government owns 60% of GM.
The Canadian government owns another 10%.
For GM to EVER pay off the taxpayers, it will need to raise more than $54 BILLION dollars in a stock offering. But it would need $76 BILLION in market capitalization to run profitably.

The largest market cap GM ever had was $52 billion.

So GM will continue to be a lying, useless, waste of money — forever. The best thing we can do is put it out of its misery as fast as possible.

Don’t buy GM. Make it very clear that Americans will not buy from “government motors” — not now, not ever.

SunSword on July 19, 2010 at 3:44 PM

it’s been a resounding success that has saved a staggering number of jobs.

bayam on July 19, 2010 at 2:37 PM

Stagger us with the number.

BobMbx on July 19, 2010 at 4:00 PM

sorry – i have no sympathy for Dealers. They’ve been egregious in their manipulation of government (mainly State legislatures) to chase away competition and resist consolidation. They deserve this.

rock the casbah on July 19, 2010 at 4:11 PM

In the end analysis of all this, years from now, it will come out that the decision to close all those dealerships was made by a small group of people who did not realize at the time that those dealerships were independently owned.

A group was assembled to develop a plan on what to do with GM and Chrysler, none of those people worked in the auto industry previously. They were looking at the problem completely from the outside and they saw a problem common to most retailers with thousands of stores and shrinking sales.

Close under-performing stores is a common action. That action was decided upon and announced before those making the decision knew that dealerships were the auto-makers’ customers, not their employees. They assumed initially that shutting down a third of their “stores” would save significant labor and facility costs without hurting the unionized factory workers.

Later, they found out that these savings wouldn’t materialize because they didn’t actually own or pay for the dealerships. . . the dealers paid them. They couldn’t change the decision to close because it would make them and the administration look stupider.

So they got out the donor records and started closing anyway.

Jason Coleman on July 19, 2010 at 5:05 PM

This doesn’t make a lot of sense. Anyone who wanted to buy a car, did so. So the number of dealers had no effect. If your company sells widgets, why have ten dealers to do it, if there are only three customers wanting to buy one? They will go to the nearest open dealer.

keep the change on July 19, 2010 at 12:20 PM

Has no effect on what? The number of unemployed? The quality of the dealers that survive? The value offered to customers in a damned tight economy?

The only party not affected by the arbitrary and politically motivated theft of valuable dealerships is the guy who stole the manufacturers.

In fact, he seems pretty well insulated from all of the pain he’s caused.

applebutter on July 19, 2010 at 6:36 PM

sorry – i have no sympathy for Dealers. They’ve been egregious in their manipulation of government (mainly State legislatures) to chase away competition and resist consolidation. They deserve this.

rock the casbah on July 19, 2010 at 4:11 PM

Sounds almost heroic when you put it like that.

…first they came for…

applebutter on July 19, 2010 at 6:53 PM

he US government owns 60% of GM.
The Canadian government owns another 10%.
For GM to EVER pay off the taxpayers, it will need to raise more than $54 BILLION dollars in a stock offering. But it would need $76 BILLION in market capitalization to run profitably.

The largest market cap GM ever had was $52 billion.

So GM will continue to be a lying, useless, waste of money — forever. The best thing we can do is put it out of its misery as fast as possible.

Don’t buy GM. Make it very clear that Americans will not buy from “government motors” — not now, not ever.

SunSword on July 19, 2010 at 3:44 PM

Hey – that is interesting; however, you have to look at “Enterprise Value” (debt + market cap – cash), not just market cap when you look at the new GM. The old GM had billions of debt that the feds cancelled. The proforma market cap valuation will absorb the debt value into equity.

An easy example: I own a house worth 200,000 with a $120,000 mortgage and therefore $80,000 in equity value. The feds come in and cancel my debt because I am an SEIU member. Later my house sells for 180,000. The equity value (i.e., market cap) is now $180,000 even though the total value has fallen by 10%.

johnboy on July 19, 2010 at 7:21 PM

Stagger us with the number

See above.

If you go back and read reports from respected, independent analysts, if no bailout had occurred, between 1 and 2 Million jobs would have been lost. Anyone who opposed the bailout back then is being hypocritical to criticize the government forcing the auto companies to drastically cut back. The numbers behind GM were ominous, and it wasn’t clear that GM would ultimately turn into a profitable company.

So GM will continue to be a lying, useless, waste of money — forever. The best thing we can do is put it out of its misery as fast as possible.

Clearly you have no idea how to read an income statement or balance sheet. The new GM is a very impressive company on almost every front, including its financials.

Obambi’s concern was for the unions only.

Why do jobs have to get politicized? It doesn’t matter if it’s a union job or non-union job. All jobs are worth saving, esp. to families that depend on their jobs to stay afloat. It’s also pointless to pretend that non-union auto jobs at Toyota are comparable to jobs at American companies like GM and Ford. Toyota manufactures cars in many countries including Vietnam. That fact doesn’t make Vietnam significant in the global auto market.

bayam on July 19, 2010 at 7:35 PM

Close under-performing stores is a common action. That action was decided upon and announced before those making the decision knew that dealerships were the auto-makers’ customers, not their employees.

Not only that, they weren’t shut down based on performance. There was some suspicion that Republican-owned dealerships were shut down in favor of Democrat-owned ones, but IMO the evidence on that is inconclusive. But some of those shut down were the highest performing in their area.

YehuditTX on July 19, 2010 at 8:35 PM

Clearly you have no idea how to read an income statement or balance sheet. The new GM is a very impressive company on almost every front, including its financials.

Does that mean it will pay back the TARP money to us taxpayers? Since we are all forced shareholders now.

Why do jobs have to get politicized? It doesn’t matter if it’s a union job or non-union job.

To Obama it matters, because he countermanded established bankruptcy law to give preference to UAW over the primary debt holders, government worker pension funds.

All jobs are worth saving, esp. to families that depend on their jobs to stay afloat.

If the UAW isn’t competing on the open market for jobs, but is a protected pet of the Obama admin, everyone loses. UAW held GM hostage to its demands for wages and perks way higher than normal for the industry, and sucks value out of the economy that could go to expand business elsewhere, so other workers (including auto workers) lose their jobs.

It’s also pointless to pretend that non-union auto jobs at Toyota are comparable to jobs at American companies like GM and Ford. Toyota manufactures cars in many countries including Vietnam. That fact doesn’t make Vietnam significant in the global auto market.

Have no idea what you are trying to say here.

YehuditTX on July 19, 2010 at 8:52 PM

Enemy of the State.

wepeople on July 19, 2010 at 8:59 PM

Ok to close GM and Chrysler dealerships. I don’t know any of my friends (nor myself included) who want to buy from either Government Motors anyway…

Dandapani on July 19, 2010 at 9:11 PM

All jobs are worth saving

bayam on July 19, 2010 at 7:35 PM

Clearly you have never taken a business or economics class, or you wouldn’t say such stupid things.

fossten on July 20, 2010 at 9:17 AM