Update – Obama To Take 72.5 Percent Ownership Of GM

May 30, 2009 by · 2 Comments
Filed under: Economic News, Political News 

As an update to the last blog post about government ownership of GM, President Obama is to take a larger slice of what was once the largest employer in the world (except for the US government) and of course the largest car manufacturer in the world. Up from owning 69% of General Motors, the President will now take a 72.5% ownership of GM.

How did this happen? How can the government take majority control of a major US corporation? More importantly however, is why we are going to let it happen. Any way you want to slice it folks, state ownership of industry is socialism. That’s where we are today in the United States Of America.

GM made some huge concessions to the labor unions in the form of unsustainable wages and unsustainable pensions to retirees, but that is no reason for the government to take it over. Somewhere GM should have told the unions a big flat out no.

It was painfully obvious to some, that with automobile sales down and its labor costs the highest in the industry, it would be impossible to be competitive in the marketplace. When GM’s labor costs were averaging out at some $75 per hour for each laborers hourly wages including taxes and benefits and their rival, Toyota, who was leading the car industry, had those same costs down to $43 per hour it should have been apparent to anyone and everyone in the accounting department that this couldn’t continue unabated forever.

Many people though several months ago, as I did, that GM would fail anyway, before Obama lent them nearly $20 billion. It’s pretty obvious now that the market should have been allowed to take its course and let GM go under last year, because that’s what was going to happen anyway.

Now the government will invest another $40 billion in GM and let it go into bankruptcy while taking a nearly 73% ownership of the company. Let’s see if GM has any better luck being run by Washington puppets and ultimately being controlled by the Messiah in Chief, Barack Obama. Something tells me it won’t last that long.

Welcome to socialism 101.

President Obama To Take 69 Percent Ownership Of GM In Bankruptcy

May 27, 2009 by · 1 Comment
Filed under: Economic News, Political News 

With President Obama’s continued march towards socialism in the United States and continued government intervention in banks and American industry, General Motors looks like it’s going to be the next company to be nationalized by the ever intrusive government. My only question at this point is, what, you didn’t think with all the handouts from Barack Obama, that this wasn’t going to happen?

Whoever thought that a major company such as GM would be facing bankruptcy? In the later part of the 70′s when I was driving classic muscle cars such as the 69 Camaro and the 69 Firebird, GM was the leading car maker in the world and now its stock price is $1.15 when it was over $93 in April of 2000.

The possible bankruptcy now facing GM is being blamed by the media on GM bondholders being unwilling to take a “deal” offer up by the Obama administration giving them approximately 4 cents per dollar they are owed which they soundly rejected. What stories such as this one about the GM bankruptcy fail to mention is that the President is violating bankruptcy law by offering bondholders (read that, “financiers of the company”) such a deal. Granted, everyone loses is a bankruptcy, but there is law that must be followed mandating how a deal of this magnitude is to be handled.

Bondholders are owed $27.2 billion, or 43% of GM’s debt because they financed the company. In other words the money they paid to buy GM bonds allowed the company to run, pensions and salaries to be paid, parts to be purchased and other business activities to be paid for. The Obama administration was then only offering these bondholders a measly 10% of the mostly worthless company stock. Such a deal. The most bizarre thing about the deal being brokered by Obama’s henchmen is that the government may now take as much as 69% ownership in the company when they are only owed 27% of the outstanding debt.

How much worse will it get before Americans start to wake up and figure out what’s going on? Maybe it’s time to buy some gold bullion, bury it in the back yard so the feds can’t find it and stock up the bunker.

Higher CAFE Standards Means Less Taxes For Uncle Sam

May 21, 2009 by · Leave a Comment
Filed under: Economic News 

In yesterday’s post I commented about how President Obama’s new CAFE standards will contribute to the economic crisis, but it gets even worse because it appears on the surface that they will also lower taxes for the consumer due to not needing to buy as much gas. If our gas consumption is cut by 30% because we’re getting better mileage in our cars, that also means the government receives that much less in tax revenue from this source.

Now, if you think for a minute that the powers that be don’t already know this and are going to let you get away with sending less of your hard earned money to Washington, guess again. You can bet they are already working on new schemes to increase the lost tax revenue somehow. The fed thrives on its never ending lust for more money, so they surely won’t pass this apparent oversight by.

Proposed ways that the government may come up with to generate those extra taxes are, tracking the number of miles you drive via GPS and charging based specifically on this factor. Another way to get back the loss is to just raise taxes on a gallon of gas based on some average actual savings implemented by the increased CAFE standards. Of course, with Congress’ infinite wisdom on how to extract an ever increasing amount of money out of our pockets, there are probably several ways they’ve thought of to make up the difference.

Ultimately, Congress will probably look at this as an opportunity to not just replace the lost revenue, they will most likely find a way to increase taxes. They will probably base it on the fact that we’re supposedly saving money on gas, therefore we can afford to pay higher taxes.

However you look at it though, it will cost you more in the future to drive. Increased CAFE standards will add approximately $1,300 to $1,500 to the cost of a new car. There will also be inspection fees associated with the new emissions standards and yes, look for higher taxes at the pump, if not higher gas prices as well in the next several years.

Will the government ever figure out how to take less money from us? That probably won’t happen until they figure out how to spend less money, and that more than likely, will never happen.

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