Thursday, June 2, 2011

Taxpayers To Lose Only $14 Billion on GM Bailout?

To begin with, that's a lot of money.  And I don't believe that number.  I think before we consider some of my points below, to take that number based on Geithner's calculations and proclamations would be more than just pure faith-based naivete, it would be ignorance.  That number, before looking at my add-ons below, is no doubt a lot higher than $14 billion (unless of course you put faith in Government-reported numbers).

Here's the news LINK  NOT included, I'm sure, in this estimate is the amount of money that was spent to subsidize the financing of autos produced by GM that have flooded the floor of the GM dealer network PLUS the money spent to subsidize the purchase and leasing of these vehicles by the consumer.  As an example, and this is well-known to those who observe the news and the facts, the cost of leasing a GM vehicle has been completely subsidized by the U.S. Government.  This is accomplished by the Government guaranteeing the "residual value" component of all GM auto leases, enabling the finance company, Ally aka GMAC, to create a lease with an unrealistically high residual value - the value at the end of the lease term, which thereby allows the lessor, GMAC, to create a lease with lower monthly payments and a much lower implied interest rate. But then what happens at the end of the lease when the market value of the used car is substantially lower than the residual value guaranteed by the lease?  The Government, aka the Taxpayer, ponies up the difference. We won't know what the final tab is to the Taxpayer on this subsidy clusterfu$k until the leases start expiring, but it will run into the billions.  That's just one example.  There's also the implicit guarantee of workforce entitlement and benefit plans.  Again, billions not included in the $14 billion.  It's insane.

Let me just say though, that while some may look at whatever the real amount of lost taxpayer money is as part of a crucial effort to rebuild America's auto industry, the fact of the matter is that IF the Government withdraws its life-support effort, GM will inevitably fail anyway.  America's labor and production costs - not to mention the fact that the product sucks compared to the competition, especially the better-priced, better-built Korean models - are not even closely in-line with that of the rest of the world.  This is just another one of those situations in which the Government will have wasted billions in resources and actually made things worse.  The proper resolution to this situation would have been to endure the short term agony from having GM and Chrysler die and let private entrepreneurs figure out how to make an automobile product that is both profitable for the shareholders AND doesn't burn up taxpayer wealth.  All we got with the GM/Chrysler bailout is the ephemeral extension of a dead business and the massive transfer of middle class wealth to the workers and upper management of GM and Chrysler.  Once again - just like with Wall Street - the CEO and other senior officers  at GM/Chrysler will make millions which are paid with Taxpayer money and the market will fail anyway.


  1. you forgot that the unions were placated at least for the short term (even though you referenced that in the workforce entitlement section.

    Its indicative of the overall problems when people are promised more than can be delivered and that there is still not the realization that we are competing globally with people who get less pay and less benefits and have a lower standard of living.

  2. Upon a recent visit to St. John, USVI, I can report that this tiny island's police department is loaded to the gills with a couple dozen nice new GMC suv's. I guess they had to do something to unload all these gas guzzlers. Although they spend most of their time just sitting here:

  3. Its fcking sickening. I don't know what else to say at this point other than this country is so corrupt it makes me sick. The theft taking place right before our eyes is unimaginable. I feel like I live in the twilight zone. I sure hope the true price of gold/silver is represented in the market sooner than later cause I see no other place to put my hard earned money. How do you even teach your kids to do the right thing and work hard and have good character when it is quite the opposite that achieves wealth in this country. I was reading about the AIG nonsense yesterday and how Chris Dodd is intertwined and it really amazes me how this guy is not behind bars and he is one of thousands that are supposed to be protecting the people. America wake the fck up! These slim bags are raping you and you don't even care!

  4. Hal, I used "workforce" on purpose and avoided making any editorial comments on "unions" specifically so that I didn't get accused of "union bashing."

    Spefically, the union grip on our system and Obama's sympathies toward unions is a BIG BIG problem. There will be more "Wisconsins" coming soon. The unions became a problem because the citizens "enabled" them. We really only have ourselves to blame. The human condition is such that humans in general can't handle democracy. Too much freedom and responsibilty

  5. Isn't this crazy, right now I can't post comments on my own blog under my name, but I can post them under "anonymous" without moderation...LOL

  6. Union grip?...sure but come on that's not the sole reason for this shit hole we're in...the unions were appeased and given the rope to hang themselves by the guys on many of these fucking billionaires would have been able to lay off their crappy deals without the pension bagholders playing depository? it reminds of the time they let the ual pensioners in on the LBO...gee thanks guys....these dividend recaps paying out $10 for a $1 investment via debt offerings...who ponied up?(pensions) who took the spoils?)pe firms)..when I see a guy like pete peterson leading the anti debt campaign I want to puke...on him ...all these guys promoted debt leverage in the they want deleverage..why?to get back in on cheap.......
    things are so convoluted you could not get a straight answer from a yard stick today...we need a do over...but the pain should start at the top down...hopefully through a devaluation to squeeze the funny money out of the system...either way....I think this guy is right

    The King (Economy) is Dead, Long Live the New King

  7. Agree on all counts (Dave)

  8. I am confused; who is who?

    the above post on how sickening the corruption is in front of our faces is a great point. Drives me nuts every day.

    I am in IL and have acquaintences who taught--some took the job in the 70's because you got a draft deferment. Some took it because you got the summer off. Many just liked the idea of a short work week. All took the job knowing compensation and benefits were low.

    All up till now in IL got spiked salaries at age 55 and early retirement. Now they are pissed that the pension fund has not been funded for years (we see Geithner using that tactic now-hoe's that gonna work out?).

    Where were these geniuses-the ones who taught our underperforming children-when the funding was, err "lite" due to insufficient funds? Probably out on picket lines because they cared so much about the kids.

    Illinois is bankrunpt and will run out of pension funds soon-just not enough income in Illinois to tax and even if they did, our genius Gov would give it away in incentives for companies to stay in IL with the higher tax structure, Nutso, crazy.

    So when the pension plans run out of money in 4-6 years and stiffs ALL the public employees at ages where they cannot reenter the workforce, I will dream of flipping them the bird since I too will be screwed by what the idiotic educators did.

    There is no such thing as a free lunch and the teachers union proved it.

    Dave; if people want to accuse me of bashing, bring it on--the fault does lie there for many reasons, along with school boards which caved every year.

    I would blame the legislators in Illinois but they are too busy trying to fix the deficit-oops, not--they just went on summer recess-a real sense of urgency with the state broke.

    We all know where this is going to end. Plenty of blame to share.

  9. $14B for GM. $5.8B/month for foodstamps.
    May as well spend it like a rock-star while they still can.

  10. @Dave; if people want to accuse me of bashing, bring it on--the fault does lie there for many reasons, along with school boards which caved every year.

    well-how do you pay someone something if you go over budget? borrow...who approves the borrowing?

    to blame teachers is ludicrous...are there abuses?...absolutely...but look at the top down...start with the school board, the county salaries/benefits, etc....they are using the teachers numbers to save the upper levels...sort of like wall street did with the economy...haircut everyone!

    Silver’s Drop is JP Morgan Trying to Protect Their Ass

    With continued volatility in both the gold and silver markets, today King World News interviewed John Embry, Chief Investment Strategist at the now $9 billion strong Sprott Asset Management. When asked about the current state of affairs Embry had this to say, “My honest opinion is that we have gone so far down the road that there is only two outcomes now. You can continue QE to infinity as Jim Sinclair says, and that will lead to some form of hyperinflation or you can sort of go cold turkey and that will lead to a depression that will make the ’30’s look like a picnic. When you think about it, that is an awful set of choices.”

  11. Bravo Anonymous. Agree on all counts! (Dave)

  12. We need a majority of the people to take on this mindset...anyone that is cognizant of the situation has to do more to re awaken the walking dead counteract the crap they put out there in the media!

    Taking Away the Punchbowl

    As long as the Federal checks keep being issued and everyone gets their 17 "low-cost" meds paid by Medicare, the National Defense State gets unlimited billions to spy on the citizenry and indeed, the entire world, gasoline at $1,000 a gallon flows freely in Afghanistan and other distant corners of the Empire, and Wall Street writes itself billions in bonuses, then nobody cares about the deficit.

    The only way anyone will feel the deficit is if their share of the Federal swag is trimmed to pay the interest on the ballooning debt. But the Federal Reserve has a solution to that eventuality: keep interest rates (and thus yields on new Federal debt) super-low.

    In effect, the income which should flow to savers and owners of surplus capital in an economy that isn't centrally managed (a.k.a. the People's Republic of America, complete with A Natural Security Apparatus, unaccountable Central Bank, kangaroo-court judicial system (just look at ForeclosureGate) and phony elections where the choice is always between hand-picked stooges of the Ruling Elite) is diverted to Wall Street and the "too big to fail" banks.

    But alleviation of immediate suffering is only the excuse offered for runaway Federal deficit spending; the real reason why Federal spending has leaped from $2.7 trillion in 2008 to $3.8 trillion in 2011 is to prop up the Status Quo profiteering of cartel-crony capitalism and its partner, the Savior State.

  13. Oh the teachers!...the bad teachers!....the whole god damn country wears panties!..because if it's the teachers wedged between your ass and not this...then that's what you're wearing!


    Friday, June 3, 2011

    The Buzz..."The Subpoena"

    More talk and more action which is inaction. The story of wrongdoing lays dormant for months at a time and then some little "subpoena" pops up and headlines are again made. These headlines, like all the others, will fade away, lost in the forever chronicles of cyberspace. Digital entries on some far away hard drive that future generations may accidentally come across while Googleyahooing "what caused the demise of America and the Republic for which it stood".

    We have all heard the "testimony" given by Blankfein and his merry band of banksters under oath in Congress. Perjury and BS-itry at its best by a group of elites whose self criminalized wealth lets them believe that they are above all. If they could lie and evade questions in Congress then why would anyone believe that they will abide by "the subpoena". What will they produce and what power exists to insure that the subpoena produces all the documents relevant to the investigation?

  14. Get rid of the fed and who is going to bailout the banksters?....NO ONE!

    The academics are only worrying about how they will replace their parasitic incomes...think about that...fraudspan was a business failure yet he ran the most powerful central bank...all these guys never risked a dime of their own money anywhere yet they make all the important decisions...this is way or another...its just taking more time than any sane person would have imagined!

    Pushing for a return to the gold standard

    The ultimate goal is to return the nation to the gold standard, in which every dollar would be backed by a fixed amount of the precious metal. Economists of all stripes say the plan would be ruinous, but that view is of scant concern to Pitts.

    "Quite frankly, I think that economists from universities are thinking within the confines of their own little world," Pitts said. "They don't deal with the real issues."

    Proponents of the laws believe that returning America to the gold standard would force the government to live within its means, curtailing runaway spending and inflation.

    Lately, the idea has been gaining currency — and not just among the Tea Party activists who have been pushing the gold standard as part of wider efforts to rein in federal power.

    Most of the action is at the state level, but the gold-standard rush has extended to Washington. Rep. Ron Paul (R-Texas), a presidential candidate in 2008 and possibly 2012, and a longtime proponent of abolishing the Federal Reserve, has proposed exempting gold from the federal tax on capital gains, which would make it easier to use as a currency.

    The proposals by Pitts and others can't change the U.S. monetary system, which is the jurisdiction of the federal government. The state laws are intended instead to create an infrastructure to allow gold and silver to be used as an alternative currency — a setup that would come in handy in the event of economic catastrophe that leaves the dollar without value.,0,7289166.story