It’s been nearly a year since the Obama administration took the reins of General Motors, and if today’s headlines are any indication, things aren’t looking good for the troubled Detroit auto maker. First off, GM just isn’t making money. It posted a $4.3 billion loss for the second half 2009 – far from profitability, far from a government-led turnaround. The company claims it has a chance of “achieving profitability” in 2010, but keep in mind that GM is $50 billion in the hole to the American taxpayers, who paid for …
The taxpayer-funded auto bailout was largely the result of a number of poor decisions made by General Motors and Chrysler. Along with the excessively high labor and legacy costs, Detroit’s dependence on big, non-fuel-efficient vehicles was its own doing and at one time, was a very profitable strategy. Detroit struggled to make competitive fuel-efficient vehicles that rivaled its Japanese counterparts. The government stepped in and took a controlling stake in General Motors and, more recently, attempted to provide more regulatory stability by mandating stricter fuel efficiency standards. The Environmental Protection …
So President Obama wants to slap a tax on banks, but should you really care? Absolutely. Those taxes are going to wind up costing YOU money, whether you’re a customer, a bank employee or an investor, according to the non-partisan Congressional Budget Office (CBO). As ABC News reports, the CBO wrote a letter yesterday to Sen. Chuck Grassley (R-IA) in which it highlighted that the American people will bear the true brunt of the President’s proposal. From the CBO’s letter: [T]he ultimate cost of a tax or fee is not …
In his State of the Union Address, President Barack Obama proposed “a modest fee” on banks that “would pay back the taxpayers who rescued them in their time of need.” In truth, his bank tax would hit financial institutions who have paid back their bailout funds, with interest, while those who haven’t—Fannie Mae, Freddie Mac, General Motors and Chrysler—would get off scot-free. As Politico reports, Sean Ryan at Wisco Research firm says Obama’s tax would have other effects, too. From Politico: “[Ryan] predicts the banks will simply pass on the …
Toyota’s bad press has been for its sticky pedal incident certainly isn’t surprising, but is all the negative attention warranted? When asked about the Toyota recalls, Transportation Secretary Ray LaHood responded by saying, “My advice to anyone who owns one of these vehicles is stop driving it, and take it to the Toyota dealership because they believe they have the fix for it” and that “we’re not finished with Toyota.” Hood later toned down his remarks but immediately after his “stop driving” comment, Toyota’s stocks plummeted. Even after recovering some, …
If President Barack Obama’s New Year’s resolution was for the federal government to stop taking majority ownership in private corporations, he’s off to a bad start (or he decided to get one more in before 2010). Yesterday, the government indicated it will provide $3.8 billion in additional aid to GMAC and increase its stake in the company from 35% to a whopping 56%. As The Washington Post reports, the federal government now has ownership stakes in GMAC, Fannie Mae, Freddie Mac, General Motors, and American International Group – and holds …
When the government bailed out General Motors and Chrysler, part of the necessary, painful road to recovery was to cut unnecessary dealerships. Before the cuts GM and Chrysler had over 9,000 independent dealerships in the United States. To save costs, GM and Chrysler cut 1,300 and 800 dealerships, respectively – still leaving them with many more dealerships than the likes of Toyota which only has 1,240. Both closed dealerships and some lawmakers have complained that the decision to close certain dealerships was politically motivated. But the reality is the choices …
There’s new evidence that General Motors and Chrysler, both owned partly by taxpayers, are still facing interference in the way they are run. The latest example comes not from the Obama Administration, but from Congress. At issue are the closures of over 2,000 dealerships announced by the two firms last summer. Despite much grumbling, the decisions appeared to be a non-political one, potentially saving as much as $2.5 billion annually according to the Washington Post. But politics did come in, in the form of congressional pressure to keep the dealerships …
Not very often is losing $1.2 billion good news but that’s the way General Motors is spinning its third quarter earnings report. GM claims its finances are stable enough to begin repaying the $6.7 billion in government loans as soon as December and could be paid off ahead of schedule, potentially by June of 2010. But that’s a small share of what the government (aka the taxpayer) invested in GM. Americans unwillingly invested over $80 billion in auto industry, allowing the government to take a 61 percent stake and a 10 …
What goes up must fall just as hard. Case in point: cash for clunkers: The dramatic decline in sales reported Thursday by the Big Three automakers suggested the extent to which the stimulus act has propped up the economy. The government’s wildly popular “Cash for Clunkers” program drove consumer spending to its highest level in eight years in August. But after it ended, so did the growth in auto sales. General Motors’ sales plunged 36 percent in September compared with August. Ford plummeted 37 percent. Chrysler dove 33 percent. Cash …
