GM, short for Gubmint Motors, is telling a whopper of a fib in its new advertising campaign. Listen to Ed Whiticare’s Happy Talk and you’ll be informed that through his Masterful leadership GM has become so successful in the last year that it has paid back the government loans in “FULL” with interest five years ahead of schedule.
That would be wonderful news, as a matter of fact it would be the best news I’ve heard out of Detroit in ages, but nothing could be further from the truth. GM has not come roaring back to life after a successful rescue by the brilliant pols in Washington. GM was, and is still a basket case, only now they have a bank account that is chock full of our money.
In fact, GM’s story is just another in a long line of Bailout success stories to go along with Chrysler, AIG, Fannie and Freddie, all of whom received money from the US Taxpayers and will never pay it back. GM didn’t pay back, as much as it gave back a tiny portion of the bailout money it received. I thought paying something back implied that you had earned the money used to pay off your debt.
In GM’s case, they got 60 some billion dollars from US taxpayers and gave 6.7 billion of the money back. GM lost 3.3 billion dollars in the 1st quarter of this year, which means there is no way they “paid back the money.” That’s a Give Back! Not a Pay Back!
More happy talk is on the way with the good news that GM continues to lose market share and is down to 17.6 percent versus a year ago number of 18 percent. That’s just a small loss of market share, no need to worry right? No! Not right! Last year the economy and auto sales were in a free fall. This year we are in a recovery, albeit a tepid one, and GM is still losing market share. How can things get better when revenues and market share continue to fall and profits are something that you can only dream about having someday? Answer: It can’t and it won’t!
Maybe even more Happy Talk can turn things around. GM can disclose, as it did several weeks ago that its pension plan is massively underfunded and short a couple of billion dollars. Well, actually they are short 27 billion dollars, but Like Ed I’m trying to keep the happy talk going. Is there any question about who is going to get stuck with that bill when it comes due? Then there is the Healthcare VEBA. What happens when that goes bust?
GM didn’t go bust last year, but should have and almost certainly will go bust at some point in the near future after proving to be the biggest money pit the US tax payers have ever had the pleasure of funding, no matter what kind of snake oil Ed Whiticare is peddling.
Dave Cribbin, President of Tailwind Capital, is a Liberty Features Syndicated writer.