If you heard it once last week, you heard it 100 times. General Motors is alive and Osama bin Laden is dead. That juxtaposition of the federal bailout of the car manufacturer and the killing of the terrorist is supposed to be the argument for President Obama’s re-election. While both are good things, neither tells us much about the administration’s value. It is likely that GM would have survived in one form or another no matter what the president did. Nor, despite the unseemly chest-thumping braggadocio about the bin Laden operation, is it reasonable to assert that it was only possible because Obama was president. Nevertheless, this catch phrase, made popular by Vice President Joe Biden, is an effective campaign slogan. Indeed, the car bailout is thought to be a crucial factor in propping up the president’s poll numbers in key swing states like Ohio and Michigan that may decide the election.
However, for all of the cheering for GM plants done at the Democratic convention, the notion that the company that once dominated the industry has been set back on the path to prosperity by the president may be something of an illusion. Last month, Forbes published a sobering piece on the company’s prospects that should give even the giddiest of Democrats pause. According to Louis Woodhill, the GM revival is all smoke and mirrors:
President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
Woodhill points out that the value of GM stock has crashed since it went public in November 2010. That leaves the federal government, which owns about 26 percent of the company, sitting on what he estimates is a loss of $16.4 billion. He predicts that the president will probably ride the decline of the company’s stock down to zero as its house of cards inevitably collapses.
Just as important, Woodhill asserts that the failure of the company’s cars to make headway against its rivals means that its decline is an inevitable result of failure rather than merely the vagaries of stock speculation. With Chevy’s Malibu failing to stock up against comparable models from Ford (the U.S. company that wasn’t bailed out by Obama), Volkswagen, Honda, Toyota, Nissan and Hyundai, he thinks there’s little reason to believe that anyone will be bragging about GM’s Lazarus act in a year or two. He believes that if Obama is re-elected, it is a certainty that the company will be back begging for help and that the president will be forced to oblige with another bailout.
If he’s right, rather than the bailout being a triumph for his administration, Obama’s bouquet to the United Auto Workers will turn out to be a cautionary tale about the folly of government intervention in the market.
A year from now, Osama bin Laden will still be dead, meaning that Barack Obama can go on bragging about the one bright spot in his career as commander-in-chief until the end of time. But if Woodhill is right, we will look back on the GM bailout as just another failed government boondoggle.
Japan has access to the US Auto market both in terms of sales and manufacturing. nHow much selling and manufacturing is GM able to do in Japan? nIf we had Japan's policies on supporting our own auto industry,GM would be #1 in the US,and therfore,the world.
Or why is Toyota #1 in the world? n nBecause of American trade policy. n nWho approved the deals that allowed Toyota,Honda,Nissan,Subaru etc etc to thrive in the US? at the expense of American high paying jobs. n nMaybe you ought to discuss that? n nBTW,how many Chevys did we sell in Japan in 2012 so far? LOL n n
Though I agree with the article in general, Ford stock has just about broken even over the past year while GM is up about 7%.
Obama and Biden mock Romney as having opposed the rescue of GM, but that’s not quite correct. Romney wanted an orderly bankruptcy and reorganization, done according to established practice. Romney certainly knows a lot more about rescuing failing companies than does Obama – and arguably more than Rattner, Obama’s “car czar”. Such a reorganization could have been accomplished earlier, at lower cost, all while maintaining the legal rights of bond holders and non-union workers. (Unionized workers made out quite well by comparison.)
As to the Bin Laden hit, I think UBL would be delighted with the victories achieved subsequent to his death. Recall that a top priority of his was the toppling of pro-Western regimes and their replacement by Muslims more loyal to Islam. Well, Islamists are now dominant in Tunisia, Libya, and Egypt. Syria’s secular regime (which was never friendly to the West) is on the brink of falling to those aligned with the Muslim Brotherhood. All with the help of the Obama administration which still clings to the idea of the Brotherhood as moderate and “mostly secular”.
Try blaming our government. n nFirst by not allowing GM’s bankruptcy to take its normal course, it saddled the company with higher labor, pension and health care costs. n nThe UAW, with government approval , has been limiting the number of compact cars that GM can import. GM can be competitive with the larger vehicles, but given their cost structure, are not in the ball game with the smaller cars. Allowed to import some of their models, they could compete across the boards. n nBy continuously pushing up CAFÉ requirements, the government is dooming GM by forcing it to manufacture more small money loosing cars and eliminating the larger cars with which it could make a profit.
In my city,there is one gas company,and one electric company,I 've never had a problem with either. Both companies are on the NYSE,and are very profitable,yet their prices are fair. nWe don't need 10 Gas and Electric companies. Two car companies,GM&Ford,would handle America's car needs perfectly.
You forget one crucial point- these are public utilities, subject to regulation. if yo uwant to have a socialist/communist regine where there is one thing of everything , regulated by the government, I know where you can go to live (Think Burma)
The best place for GM stock is at, pennystockvipsite dotcom
The mainstream media was all over the Republicans for supposedly “politicizing” 9/11 during the 2002 and 2004 elections. Now? Not a word about politicizing Bin Laden’s execution during this election. n nWhen is anyone going to call them out on this? n