Osama Dead!!! GM...alive?

I find it laughable that the Obama campaign continues to use the slogan “Osama is dead and GM is alive” as a reason to reelect President Obama. Granted, the President did order the operation (even though, its been revealed that the order gave the President plausible deniability if the operation had gone wrong), but he certainly did not accomplish this on his own. There were many patriotic Americans who contributed to the fatal capture of the world’s most wanted man. People like Donald Rumsfeld, George Tenet, Robert Gates, the brave soldiers in Seal Team Six, nameless CIA operatives, FBI agents, foreign intelligence, and of course George W. Bush who implemented many of the policies by which intelligence was gathered on Osama bin Laden (policies that then candidate Obama campaigned against in 2008).

Furthermore, while GM may in fact still be alive…many believe that another bankruptcy may be just around the corner for the auto company. Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $22.39/share today and is listed as a bearish stock on the Wall Street Journal‘s Market Watch (not good). This has left the government holding $11 billion worth of stock, and sitting on an unrealized loss of around $15 billion. The government’s GM stock is worth about 33% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost around 45% of their value relative to the Dow. All this while analysts are saying that GM’s fall lineup falls well short of their competition as Nissan, Honda and VW continue to out innovate the one time auto giant. In the 1960s, GM averaged a 48.3% share of the U.S. car and truck market. For the first 7 months of 2012, their market share was 18.0%, down from 20.0% for the same period in 2011. With a loss of market share comes a loss of relative cost-competitiveness. There is only so much market share that GM can lose before it would no longer have the resources to attempt to recover. I’m not saying that GM is dead…and I’m certainly not hoping that GM is dead. I’m just saying that, at best, GM is on life support.

Don’t you find it odd that the slogan doesn’t say “…GM and CHRYSLER are alive” as they shamelessly pat themselves on the back? If memory serves me correctly, Chrysler was also included in the “miraculous auto bailout that save the American auto industry from complete disaster” (to quote the Obama team). They probably leave Chrysler out because Chrysler is now owned by the Italian car company, Fiat…and the once great American car company founded by Walt Chrysler, in 1925, exists in name only. I suppose they gloss over that fact seeing as how they continue to try and paint Mitt Romney as the one who sends jobs over seas. Even though, billions of dollars connected to Obama’s stimulus plan went to overseas companies.

Finally, I will close with this point… I am not a fan of the auto bailouts, let me make that crystal clear. I believe that the auto companies should have gone through structured bankruptcies just like every other business must go through when the market dictates. I do not believe in “too big to fail”. I believe in the free market and I believe in all companies suffering market discipline…otherwise, the market becomes corrupt. The funny thing is that GM and Chrysler both went through bankruptcy…the auto bailouts only succeeded in delaying the inevitable, wasting more than 20 billion dollars in the process, and giving government and unions way too much control over a private company. Another fun fact is that Barrack Obama is taking credit for something that he didn’t do. The auto bailouts stem from the TARP Act signed by George W. Bush in October of 2008...a full month before Obama was even elected president. I vehemently disagreed with President Bush’s decision to support the TARP Act. I felt it gave government way too much power and was far too broad in its language. That being said, the fact remains that TARP and by extension the auto bailouts should be credited (if one felt credit was due for such a terrible policy) to George Bush and not Barrack Obama. President Obama seems to love shifting blame and credit for just about everything to George Bush…however, somehow the blame for the auto bailouts is not one of them.