Truth in Advertising? Not With GM

On a day when the news features an unrepentant FCC chairman declaring, in essence, that the internet will be turned into a "public utility" and subject to future regulation much as telephones and power systems have been, and when Drudge features a report of five students sent home for wearing American flag-intensive apparel on Cinco de Mayo, there's already a lot of red flags waving in the face of your typical Constitution-loving patriot.

But I choose instead to discuss truth in advertising, as in, the lack of truth in advertising from spots being aired by Government Motors and the AARP, which I think now stands for the American Association to Re-elect Progressives, for it certainly has little to do with its traditional senior citizen membership.

Let's tackle the GM ad spots. Ed Whitacre, chairman of Government Motors and a shill for the Regime, as Rush says, announced proudly (in radio and TV spots, as well as a Wall Street Journal article headlined, "The GM Bailout: Paid Back in Full") that GM has paid off its $6.7 billion in loans from the taxpayers years ahead of schedule.

Well, hot damn, you may say! It's the "Soggy Bottom Boys!" Well, not so fast. There's more to this story, and I have it thanks to columnist Shikha Dalmia writing at Forbes.com.

The GM Bailout, let's remember, included the direct loan of $6.7 billion. It also included $42.8 billion as an equity purchase (stock) of the company by the U.S. government (60.8 percent!) and the Canadian government (11.7 percent!). Together the two governments control 72.5 percent of GM, which is why it is truly Government(s) Motors.

So the Bailout isn't paid back in full. It's not even close.

But the story gets worse. GM has yet to turn a profit under its new management, which is no big surprise. Since when has the U.S. government run anything efficiently? So where did the money come from?

From an escrow account of $13.4 billion of "working capital" that came from the federal bailout!

Now the question is why did this take place at this time. The Forbes article has the answer, which once would've been shocking but it's par-for-the-course in our Obama Nation:

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new -- and bigge r-- DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!

Sadly, it gets worse still. By incurring more debt, GM will be farther away from the day that it turns a profit and, according to the government's plan, it will not sell its equity (stock) in GM until it is profitable and becomes a publicly traded company again.

As Dalmia puts it:

Mr. Whitacre's bailout payback ploy is a desperate attempt to win back the car-buying public deeply disgusted by the spectacle of GM rattling its tin-cup before Uncle Sam. But the fact of the matter is that the company is still deep in the hole. It might claw its way back – or it might not. But surely it's premature for its media boosters to pop open the champagne bottle without getting their story straight?

When I think of GM I think of the lemon I bought for my son to drive, a 2005 Impala that must be "burped" regularly every couple of months in order not to serially overheat. The first GM product I've owned since a wonderful 1957 Chevy that I never should have sold. Now that was a car!

I also think of my poor mother-in-law who invested heavily in GM stock a few months before the government took it over. She used the time honored "buy low, hold and sell it high" rationale to justify her action. The stock is worth less than she paid for it, substantially less. (Yes, she had professional investment advice; those boys were caught flat-footed, just as we all were.)

I think of all the dealers who lost their GM and Chrysler affiliations across the country, of the lost jobs as weird decisions were made as to who won and who lost in the dealership shuffle.

Then I multiply all this sorrow and suffering by many thousands or millions, and it makes me sad.

Then when I hear Ed Whitacre crowing about GM's accomplishments and asking for us to trust the company again, I want to vomit. This is not America. It is not freedom.

Resolved: if and when conservative-minded, freedom loving people control Congress, they should require the administration to divest itself of 100 percent of its interest in Government Motors and any other private business. Businesses should succeed or fail on their own merits. The taxpayers should not be the lenders -- or owners -- of last resort.

Confessions of a Knee-capped Car Dealer

Had a bit of car trouble during the past week with a GM product. In this case the cure was worse than the disease, as the dealer service was something less than satisfactory.

It got to the point where I had to talk to management.

This post is not about the car trouble. With any luck, that issue will be resolved some time today.

It's about what one of the top managers told me about the dealership.

"They plan to shut us down," he said. Until a few days before there had been a sign indicating that the dealership had survived the federal triage imposed from above.

"We aren't ready to announce it publicly," he explained. "Frankly, we don't exactly know how we're going to handle it. There are jobs on the line."

He spoke at some length of the illogic of some of the closures across the country, specifically how so many dealers who are getting the axe are registered Republicans. "These are not business decisions," he said. "It's political."

How can dealers operate within a company that is controlled by Washington politicians and the labor unions, he wondered?

I mentioned to him that my latest purchase was a Toyota, not a GM or Chrysler product. "Can't say that I blame you," he said. "GM still has good cars, but I have a feeling it's not going to stay that way. I have a hard time justifying their future plans for our business. Especially now."

"All anyone had to do was let GM go through a normal bankruptcy," he added. "We would have emerged stronger and competitive. This was the absolute worst thing that anyone could have planned. I despise this president and his socialist policies. He's destroying the free enterprise system."

My son, a senior in high school, stood beside me as the man talked. It made an impression on him. "Usually you just think this happens to people in other places," he said. "They (the government) are messing with people's lives right here in our home town!"

He's right. Even with all my challenges with their service department, I can't help but feel pretty sad for this guy and all the people who work at a dealership that may or may not survive. If it does it will have to market another company's cars. I hope that, for the little guys, their jobs can be saved.

This was all so unnecessary.

Getting Politics Out of Car Making

Monday's Wall Street Journal carried a report on how GM (Government Motors) "ignored politics" to select the plant where it will build its new compact car.

Try not to act surprised when you learn that the top criteria it used in its choice were "carbon footprint" and "community impact."

When it was deciding where to build its new compact car, General Motors Corp. made a point of saying it would push politics aside and use strictly commercial criteria.

So Tennessee's three top officials were astonished last month, in a meeting with GM, when they were told the first two criteria were "community impact" and "carbon footprint" -- or how the choice would affect unemployment rates and carbon-dioxide emissions.

"Those didn't strike us as business criteria at all," said Tennessee Sen. Lamar Alexander, who was joined in the meeting by fellow Republican Sen. Bob Corker and the state's Democratic governor, Phil Bredesen. Those factors, Mr. Alexander said, "seemed odd for a company struggling to get back on its feet."

On June 26, after a monthlong competition, GM tapped an existing factory in Orion, Mich., pushing aside competing plants in Spring Hill, Tenn., and Janesville, Wis.

[SNIP]

GM declined to disclose the factors it weighed in picking Orion, but said the process was free of political meddling. "It's in the best interest of all involved to not discuss the selection criteria for the small-car plant," said GM spokeswoman Sherrie Childers Arb. "All three plants have individual merits, but when all told, the Orion plant scenario provided the best business case."

And what would be that best business case? The fact that the UAW, which forced GM to scrap plans to import Chinese-built compact cars, lobbied for the Orion plant? (And since the UAW is part owner now, its voice is bigger than ever).

Or was it over $1 billion in government incentives?

Michigan won the bidding by offering $779 million in business tax credits over the next 20 years, along with $130 million in federal funds for worker training. Local officials threw in additional $102 million in incentives.

If you divide 1,400 into $1,011,000,000, Michigan will spend $722,142.86 per job "saved or created."

That's how this government-operated thingee works.

The Congressional Meddling With GM Begins

That didn't take long.

In a letter to GM chief executive Fritz Henderson, Rep. John D. Dingell (D-Mich.) criticized a proposal to shutter the Willow Run Transmission Plant in Ypsilanti Township, Mich. "As you well know, this plant was once known as the 'Arsenal of Democracy' for having built the famous B-24 bomber that helped the U.S. and its allies win the Second World War," Dingell wrote. "Its closure would have a catastrophic effect on the community in which it is located."

I'm actually sympathetic to Dingell's point of view, and maybe part of the place ought to be converted into a museum housing an actual B-24 bomber.

But the catastrophe goes a bit beyond this one plant.

It brings up an interesting situation. If Dingell saves the plant, it will show just how susceptible the new GM is to political interference.

Soon to be Hummer of China

Sold. To China.

Really.

GUANGZHOU, China — General Motors has reached a preliminary agreement for the sale of its Hummer brand of large sport utility vehicles and pickup trucks to a machinery company in western China with ambitions to become a car maker, a person familiar with the Chinese government approval process said Tuesday.

Since most large businesses in China are owned in whole or in part by government agents, doesn't it stand to reason that one of the more emblematic American military vehicles will now be in the service of a foreign government that considers us a potential adversary.

And who is in charge of GM right now?

That's right. President Obama and his hand-picked brain trust of Soggy Bottom Boys from Yale.

Be afraid. Be very afraid.

When it Comes to GM, Believe What They Do, Not What They Say

"The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions," said the President of the United States. "When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision."

Do you believe these words?

If you do, you are a fool. The government is already dictating which plants are closing, which product lines are being discontinued, and what types of new cars will be built in the future. These are, after all, fundamental corporate decisions of an automaker, right?

How do I know this? I listened to what the president said.

"The original restructuring plans submitted by GM and Chrysler earlier this year did not call for the sweeping changes these companies needed to survive -- and I couldn't in good conscience proceed on that basis. So we gave them a chance to develop a stronger plan that would put them on a path toward long-term viability. ..."

So Mr. Obama fired the head of GM and inserted a "nice guy" who so far has done everything he's been told to do by the president's hand-picked "task force."

GM's management team -- including its new CEO, Fritz Henderson, its interim chairman, Kent Kresa, and all of their colleagues -- have worked -- has worked tirelessly to produce a plan that meets the strict standards I laid out at the beginning: to streamline GM's brands, clean up GM's balance sheet, and make it possible for GM to compete and succeed.

The "strict standards I laid out" included streamlining GM's brands, selling off some of its assets, and ...

As this plan takes effect, GM will start building a larger share of its cars here at home, including fuel-efficient cars.

Forget the fact that selling off the Hummer, which was done today, gets rid of one of the few profitable divisions of GM. Forget, too, that eliminating the Pontiac auto lines gets rid of cars that made up for 23% of GM's annual sales. Forget, three, that GM already makes some fine cars that get great fuel economy, just not enough to please the Left. Let's get busy making those fuel-efficient crap-boxes on wheels!

Obama touched on the need for more taxpayer dollars to GM to save the jobs of roughly 60,000 workers. That's about $500,000 per job, and that doesn't include the previous $20 billion already "loaned" to GM that became the pry-bar to Obama's unprecedented takeover.

I recognize that this may give some Americans pause.

Pause? That's what Aunt Mildred gets when her preacher starts talking about tithing. The Americans I've been talking to are way beyond "pause." We want to hit "rewind" on this presidency. Hell, John McCain couldn't have been this bad! No one even dares think about "fast forward."

We inherited a financial crisis unlike any that we've seen in our time.

Yep. He's blaming George W. Bush again. Not that he doesn't deserve some blame, but when is Obama going to take some responsibility for the worsening economic conditions?

This crisis crippled private capital markets and forced us to take steps in our financial system -- and with our auto companies -- that we would not have otherwise even considered. These steps have put our government in the unwelcome position of owning large stakes in private companies for the simple and compelling reason that their survival and the success of our overall economy depend on it.

I'm sorry. Could any sane person believe he's serious about this? Look at the people Obama has brought into his government. Socialists, progressives ... real "hands on" people. They've been chomping at the bit for years to implement new economic experiments in America. As for the success of our overall economy, it is now highly doubtful that it will survive.

In 1971 President Richard Nixon presided over the creation of Amtrak, as the federal government purchased passenger rail service from private companies that no longer wanted to be in the business. It was a temporary move, Mr. Tricky Dick said, for the public good. Two billion dollars per year in subsidies later and Amtrak is still no closer to being profitable, or private, than it was at that moment.

The federal government has no credibility when it comes to its promises of relinquishing control.

If you know your recent history, then the next paragraph should tell you everything you need to know about Mr. Obama's real intentions:

Understand we're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them. Instead of taking so much stock in GM, we could have simply offered the company more loans. But for years, GM has been buried under an unsustainable mountain of debt. And piling an irresponsibly large debt on top of the new GM would mean simply repeating the mistakes of the past. So we are acting as reluctant shareholders -- because that is the only way to help GM succeed.

Only way? There were a multitude of possibilities, yet he claims it was the "only way"?

How can Mr. Obama claim that he wants to see the federal government get out of GM when he claims that giving them loans would have added to "an unsustainable debt"?

The truth is as simple and as it shocking: he has no intention of Uncle Sam ever getting out of the car business. If $20 billion was unsustainable, then $50 billion is irrecoverable. GM will never achieve the kind of success necessary to attract private capital to "buy out" the federal government, and unless there is a wholesale change in Congress and in the White House, it will never countenance selling GM.

Do not forget that the EPA is dictating the future of all American cars and trucks by jacking up mileage requirements. This is going to make future models unaffordable for many Americans.

Also, do not forget that Cap and Tax -- the anti-Global Warming carbon emissions regulations that the left is so intent on pushing -- will hit Americans in the pocketbook and make everything more expensive, even to the point of driving many industries -- and jobs -- out of the country to countries that are still sane enough not to play this suicidal game.

Finally, if all this were not enough, the federal borrowing under Mr. Obama -- already more in five months than in the past 30 years -- will probably groin-kick our dollar to the point where we will see hyper-inflation that will preclude the possibility of any recovery at GM (or any other firm).

I know it's gloomy, but it's a hell of a lot more realistic than the horse shit being peddled by our president, who despite his condemnations of previous administrations is dragging us into economic disaster at breakneck speed.

Michael Moore -- Reliably, Certifiably Wrong. Always.

So here we are at the deathbed of General Motors. The company's body not yet cold, and I find myself filled with -- dare I say it -- joy.

-- Moore's blog post today, Monday, June 1, 2009

It is not the joy of revenge against a corporation that ruined my hometown and brought misery, divorce, alcoholism, homelessness, physical and mental debilitation, and drug addiction to the people I grew up with. Nor do I, obviously, claim any joy in knowing that 21,000 more GM workers will be told that they, too, are without a job. But you and I and the rest of America now own a car company! I know, I know -- who on earth wants to run a car company? Who among us wants $50 billion of our tax dollars thrown down the rat hole of still trying to save GM? Let's be clear about this: The only way to save GM is to kill GM.

Michael missed his calling.

He could've fought in Vietnam where villages were burned to save them.

Moore's got a few more off-the-reservation suggestions to make to President Obama, et al.

But there's only so much insanity a guy can take on a Monday.

GM & Citigroup: The Fox is in the Henhouse

“You never want to have the government involved in your business. They’re not businessmen; they’re bureaucrats. They don’t understand capitalism, they don’t understand the profit motive and they don’t understand the financial industry.”

This published on the very day that the President of Government Motors - the Omnipotent Barack Obama - is announcing the "final" details of GM's "bankruptcy."

The author of these words of warning is one Philip Orlando, a guy who manages over $410 billion worth of investments on Wall Street. He's actually talking about the impending demise of Citigroup as a private entity as it appears the federal government will do for it what it is now doing for GM.

The rest of America's financial giants are running away from government control as if it were the fiery coals of hell. Citigroup, a once mighty financial powerhouse crippled by bad investment and lending decisions, and thanks to its acceptance of government "help" now a stock pariah, is stuck to the TARP "tar baby."

Alas, poor Citigroup, we knew ye well.

But back to Government Motors. The situation is so bad that even Ralph Nader can't stomach it:

Today's bankruptcy declaration in federal court by General Motors is an avoidable, crude weapon of mass devastation for workers, dealers, auto suppliers, small businesses and their depleted communities. For GM's voiceless owners -- the common shareholders -- it is a wipeout.

The proximate cause of the bankruptcy was supposed to be the inability of GM and the government's auto task force to reach an accommodation with GM's bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy?

The bankruptcy and the GM restructuring plan are the product of a secretive, unaccountable, Wall Street-minded government task force that assumed power because of a Congressional abdication of historic magnitude. By all rights, the restructuring plan should have been submitted to Congress for deliberative review and decision.

What Ralph misses is that this Congress is nothing more than a rubber stamp for President Obama's socialist sledgehammer. Nothing would change, except the opportunity for Congress to grandstand and tell the American people how much they love the One and how great this new plan is.

But Nader's conclusions are sound. Hundreds of thousands of jobs will be lost, if not more. Union workers will not be in the driver's seat of this new company, but they will be the muscle the government-picked "team" will use to enforce its cock-eyed ideas.

It is too late for the proper resolution to GM's problems: a real bankruptcy, not this government-imposed sham that destroys a once proud company. A real bankruptcy where a judge would have acted to protect the interests of the bondholders, the stockholders and the workers would have let GM start anew without its new federal overseers. This government not only does not understand capitalism, it can't abide it. It wants to redirect "profits" without understanding that they have to be reinvested or a business fails. And all they need to know about financing is that you and I will quietly pay our taxes so that they can keep on truckin'.

As goes GM, so goes America?

Pray that it is not so.

A Government Motors Reorganization Update

Details are "leaking" on the proposed reorganization that is turning General Motors into Government Motors.

Here's a quick snap-shot.

Bondholders are owed $27 billion in secured debt. This is supposed to be ironclad stuff, and it would be in any other sensible universe. However ...

... Big Brother (the U.S.) has loaned GM $15.54 billion. This tail will wag the dog.

The Obama Auto Task Force proposes that the U.S. government wind up with a 50 percent stake in the company.

The United Auto Workers will be awarded 39 percent of the company as a reward for making concessions this past week on wages and benefits. Add it up: 50 plus 39 equals 89 percent.

For their $27 billion, the bondholders get a 10 percent stake in the company, and the bonds are being converted to common stock. At least they have something, you say? Consider this:

Debra June, a substitute teacher from Florida, reports today’s Wall Street Journal — will see her $70,000 in GM bonds swapped for GM stock worth about $280.

Or consider Dennis Buchholz:

... a 67-year-old retired tool-and-dye supervisor from Warren, Mich., has $98,000 in GM bonds. Mr. Buchholtz, who gets no pension, uses interest from the bonds that amount to about $600 a month to supplement his social security payments. About 10% of Mr. Buchholtz’s life savings is invested into GM bonds.

His new stock will be worth $392.

These are the people who are being demonized by the Obamatrons.

Who are the real demons here?

The Ax Begins to Fall on GM's Dealers

While GM is too big to fail, not so much for many of its dealers.

Between 400 and 500 of the dealers notified Friday sold an average of only 35 vehicles a year, or about three a month.

The rest of the dealers on the list also had very low average sales by industry standards - only about five or six vehicles a week. In total the 1,100 dealers sold about 7% of GM's sales volumes last year.

"These are dealerships that were hurting, in danger of going out of business anyway," said LaNeve. "It [the letter] shouldn't be a surprise to them."

I know many small dealerships that do a brisk "pre-owned" business that could thrive selling only a handful of new cars each month. But I guess that kind of thinking is just too small for the federally-motivated great minds of the new Government Motors.

You can smell the government-sponsored elitism in an earlier paragraph of the CNN story:

The company's expectation is that the surviving dealerships will become larger and more profitable as a result of the thinning out, which in turn will allow them to spend more on advertising and facilities. But GM also acknowledges that its long-term decline in U.S. market share will continue as a result of the smaller network of dealers.

Long-term decline in market share. Do any of these geniuses understand that true sales diversity means that you take the large and the small customers alike?

What a disaster that is coming.

My prediction: these companies will continue to fail, and Washington will eventually issue an edict attempting to force Americans to buy.

The 'Experts' Cut the Chrysler Ad Campaign in Half

I think it was Will Rogers who said that a cynic "knows the price of everything and the value of nothing."

If true, then the people on Obama's Auto Crisis Team at Chrysler must be pretty cynical.

DETROIT (AdAge.com) -- Chrysler wanted to spend $134 million in advertising over the nine weeks it's expected to be in bankruptcy -- the U.S. Treasury's auto-industry task force gave it half that.

So if GM, which is wrestling with the possibility of a Chapter 11 filing itself, is wondering how much influence the task force will have over marketing, the answer is: plenty.

A good ad campaign could help turn around an exceedingly nasty situation for Chrysler. Think back, if you are old enough, to Lee Iacocca's personal ads during Chrysler's first economic crisis. They helped the automaker weather the storm and pay back the federal loans.

Companies use advertising because it works, not because they are trying to keep other people in business. They are trying to keep themselves in business.

The folks at Government Motors (GM) should be worried. The new bosses are going to be interested in every little detail, and most likely pushing for "Fairness" and "Efficiency" in the public interest, which means the profit motive means nothing.

INSTANT CHRYSLER UPDATE -- In another amazing "WTF" move, sources are reporting to the AP that 800 of the company's 3,200 dealers -- 25 percent -- will be terminated on Thursday.

There are some dealerships I know that represent both Chrysler and GM. I'll bet they are wondering whether they are going to lose both.

Some trimming I could see, but 25 percent? Think of the lost jobs, the lost opportunities, and the loss of common sense.

Sheesh!

One Great Car for One Great Country!

EPA administrator Lisa Jackson had a chat with National Public Radio's Michelle Norris about the future of Government Motors (GM). Jackson's comment leaves little to the imagination:

“The President has said, and I couldn’t agree more, that what this country needs is a one single national road map that tells automakers who are trying to become solvent again what kind of car it is they need to be designing and building for the American people.”

NPR's Norris then asked the EPA chief: “Is that the role of Government though? That doesn’t sound like free enterprise.”

Jackson responded: “Well it is free enterprise in a way.”

In what way?

I suppose when all the automakers eventually succumb to The One's incredible charm, they will no longer be enslaved to that maddening competition that has catered to that dangerous freedom of choice Americans have struggled with. With a single national road map outlining one type of car that we need, we will no longer be forced to shop around for the best buy for the best product, since all products will, by definition, be the best.

No need to waste money on advertising when you sell the same vehicle. In fact, the car companies can combine under the umbrella of Government Motors, thus eliminating lots of paperwork, management jobs, and excessive bonuses. With the EPA designing the car of the future, there is no need for a design team, engineers and marketing experts. With the Dept. of Labor on site there will no longer be a need for efficiency experts, quality control, or even time clocks!

With the bully pulpit of the presidency at GM's disposal and the Bureau of Commerce standing by, there will be no real need for dealerships for Americans can buy their new vehicles directly from the manufacturer -- the government -- thus eliminating the greedy middle men, those obnoxious and poorly dressed car salesmen and their mysterious "managers" who have to "approve" the deal. Everyone will be getting a deal!

In fact, I have it on good authority that once The One has achieved the Auto Singularity he envisions, each and every American family will be getting their very own Drive Shaft.