Update - Obama To Take 72.5 Percent Ownership Of GM
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
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.
Obama ASU Speech - Building A Stronger Foundation?
President Barack Obama gave the commencement speech at Arizona State University yesterday and although his remarks were encouraging and pointed ASU graduates away from greed and towards what they can do to make the world, and our country, a better place, a bit of hypocrisy reared its ugly head during the talk. Unfortunately, hypocrisy is what you end up with most of the time when you’re the POTUS and you constantly seek to manipulate instead of lead.
Here are President Obama’s remarks in question:
And as a nation, we’ll need a fundamental change of perspective and attitude. It is clear that we need to build a new foundation - a stronger foundation - for our economy and our prosperity, rethinking how we educate our children, and care for our sick, and treat our environment.
If we need to build a new foundation for our economy as the President states, then why would you start out your tenure as the big chief by spending, lending or committing $12.8 trillion, that we don’t have, to bailout crooks, cheats, and institutions that may possibly collapse or go bankrupt anyway?
As I mentioned in my last post, in addition to the $12.8 trillion the POTUS signed over to crooks and failed business models, he has also proposed the largest budget in history to run the ever expanding government with the largest deficit in history to go along with it.
This isn’t a formula for prosperity and opportunity, it’s a formula for utter economic disaster. Printing money to cover the gargantuan expenditures the President is racking up, is a plan fraught with doom that can’t be undone until collapse ensues.
I just have one question for the President - How does spending that kind of money, that most assuredly can never be paid back, lay a stronger foundation for for our economy and prosperity?
It would be nice to have something other that the usual evading the question type answer given at one of his press conferences.