American Elephants

The Rose-Colored Glasses Are Beginning To Come Off. by The Elephant's Child

There are cracks in the firmament, or perhaps I should say in the rose-colored glasses. The head of the NAACP has said the obvious out loud, that President Obama has not been good for black Americans. Unemployment rates for Black Americans remain way too high, and for black youth they are off the charts.

Chris Crane, president of the National Immigration and Customs Enforcement 118, told the House Judiciary Committee yesterday that President Obama and the Department of Homeland Security care more about “special interests” in the Democratic campaign base than the lives of the Immigration and Customs Enforcement officers. This is the ICE Union boss.

“Death or serious injury to ICE officers and agents appears more acceptable to ICE, DHS, and Administration leadership, than the public complaints that would be lodged by special interest groups representing illegal aliens,” Chris Crane, president of the National Immigration and Customs Enforcement 118, told the House Judiciary Committee this afternoon.

Crane based that statement on the way government policies handcuff the ICE officers charged with enforcing immigration laws, such as the policy that bans using tasers on illegal immigrants even though law enforcement is authorized to use them on U.S. citizens in the course of an arrest.” ICE will not approve this equipment for political reasons,” Crane, a former United States Marine, explained.

Obama ‘s decision to implement the DREAM Act without congressional approval — “deferred action for childhood arrivals” (DACA) — has made it almost impossible to enforce the law. ICE immigration agents have been instructed to accept an illegal alien’s claim as to whether he or she graduated or is attending high school or college or otherwise qualifies for DACA. Immigration agents have heard illegal immigrants coaching about how to lie about their qualification for DACA privileges. ICE union members agreed in 2010 that they have “no confidence in the ability of the people Obama has appointed to run the agency.

Ed Whitacre, former CEO of General Motors appointed by Obama, has a new book out: American Turnaround. Whitacre initially believed that the government wanted to help the company survive and thrive. He found out that was not true. Their goal was not to maximize profits to ensure GM survival, but to keep control of the company as long as possible, to keep its union allies fat and happy and to pleas its green buddies by forcing GM to produce hybrid vehicles that the vast majority of Americans cannot afford, and perhaps never will.

He said the partial  IPO that the bankers allowed went well, but on that day, GM didn’t just get a few additional orders for the $20.1 billion offering, but orders worth $86 billion— enough that GM could have repaid the government the entire $43 billion it owed, but given the taxpayers a nice profit on top of that.

In a recent New York Times op-ed, David Rothkopf said that Obama’s lack of experience , and never having  an executive or leadership role in his career, makes him unsuited for running government effectively. Obama is a lousy manager.

But Mr. Obama and his team would benefit, as they begin the second term, by acknowledging that many of the biggest problems facing the administration flow directly from the man at the top. Mr. Obama is a lousy manager. As chief executive he gets a C — and then only if graded on a curve that takes into account his predecessor’s managerial weaknesses.

Often people with no management experience — academics, writers or politicians who have never run an office with more than a handful of people — are put in charge of giant, complicated government agencies or processes. In part this is because so many people in government mistakenly believe that being able to articulate ideas is the same as being able to put ideas into action.

In the New York Times.  They probably allowed the criticism because Mr. Rothkopf went on about Mr. Obama’s “notable achievements” which I would hardly agree are achievements, but then Mr. Rothkopf is clearly a chartered leftist, the publisher of Foreign Policy magazine. The whole op-ed is fairly amusing, and a window into leftist thinking, such as it is. Lots of sheer nonsense, and a few partly sensible suggestions.

The rose-colored glasses are beginning to come off, a little. Maybe they will even start photographing the president without the ubiquitous halo around his head. Comedian Chris Rock has created some real humor on the right today, by claiming that the president is our Boss, and the Obamas are our Mom and Dad, and we should mind them. Huh.


Taxpayers Will Lose Big on the GM Bailout. by The Elephant's Child

The long sorry saga of the General Motors bailout is coming to an end. General Motors is buying back 200 million shares of its stock from the government, or about 40% of the government’s holdings of GM stock. The remaining 300 million shares will be sold by March 2014.

By selling the stock and putting GM back in business, the federal governments’ “investment” was a great success, was it not?  Not. We were told repeatedly that the GM bailout would not only save jobs, but it might even end up netting the taxpayers a profit.

GM on Wednesday said it will buy back the 200 million share of the government stake for $5.5 billion, or $27.50 a share. Unfortunately the break even point on the government’s total holdings was $53 a share. Now, with $20.9 billion in taxpayer funds left to pay off from the remaining 300 million shares, the break-even point has risen to $69.72 a share.

Back in October, President Obama was bragging about the big comeback of General Motors.

When the American auto industry was on the brink of collapse, I said, let’s bet on America’s workers. And we got management and workers to come together, making cars better than ever, and now GM is No.1. again and the American auto industry has come roaring back.

That’s a valiant attempt to make a silk purse out of a sow’s ears, but it is a poke of exaggerations, half-truths and deceptions — yet it helped to secure Obama’s re-election.

In the 1950s GM owned roughly half of the market. By 2006, just before the financial crisis, its market share had fallen to about 24%. In March of this year, according to Ward’s Auto Reports, it hit an all-time low of 16.5 %. Not roaring back, and not exactly No. 1. The nonunion transplants like Hyundai and VW are growing much faster.

As for Obama’s bailout of American workers, it was a taxpayer giveaway to the United Auto Worker’s Union that allied with sloppy management bears the blame for the ills of the auto industry. The $80 billion auto bailout gave the UAW nearly $27 billion because GM could not shed its overly expensive labor contracts, something it could have done in a normal, legal bankruptcy. Obama bailed out the unions, not the auto industry

The UAW and its affiliates give tens of millions of dollars each election cycle, almost entirely to Democrats. Which explains why Obama’s auto czars arranged a government “bankruptcy” for GM flew in the face of hundreds of years of bankruptcy law and violated investor rights. Bondholders took huge losses, while unions got a big chunk of ownership in GM stock to which they had no legal right.

UAW workers at GM kept their pensions as well, but nonunion workers at GM spin-off Delphi lost theirs. This is a Chicago style bailout in which corporate cronies of the Obama White House pocket taxpayer “subsidies” and “green investments”, give executives a raise, and then go belly up. That’s what happens when the spenders think of revenue as “government money” which they are free to distribute in any way that gathers in future votes.

Excuse Me, But The Auto Bailout Was a Failure. by The Elephant's Child

Vice President Joe Biden’s favorite line on the campaign trail is:”Osama bin Laden is dead and General Motors is alive.” Good soundbite, bad analysis. Bin Laden is dead, but al Qaeda is alive, active, and recruiting. Some economists have warned that GM may soon be facing bankruptcy again.

Economist Dan Mitchell emphasizes that “any company can be kept afloat indefinitely with taxpayer subsidies.” GM is spending scads of money on the Chevy Volt because of pressure from Washington, not because of consumer demand. And the CEO is advocating higher gas taxes in order to make the poor unwanted Volt more attractive to consumers.

Obama seems to believe that bankruptcy is a bad thing. But our bankruptcy courts and bankruptcy laws are designed to save companies by helping them to reorganize. One of the biggest reasons for GM’s failure in the first place was the burden of their overgenerous union contracts and overgenerous pensions.

The video doesn’t really get into the costs to bondholders who legally are supposed to have first call on company funds in a bankruptcy. Nor does it deal with the auto dealers — private businesses whose only connection to GM is that they buy their stock of cars from GM, who were just shut down by the government, and who each had up to 100 employees. Talk about a heavy boot descending on a business. Boom, you’re out of business, your businesses are worthless, your people are unemployed. Welcome to Obamaworld, where everything is always politics.

ADDENDUM: The auto bailout may have been a failure in the eyes of taxpayers. For Obama, it was a big win. Time for gangster government to call in the markers. The United Auto Workers donated $1 million  to President Obama’s super PAC and another million to super PACs that support Congressional Democrats in September, with totals for October yet to be announced. Whatever union members happen to think, that’s where their dues are going.

The Sad Tale of Obama and General Motors by The Elephant's Child

Vice President Joe Biden famously claimed for Obama that “Osama is dead and GM is alive,” to wild cheers of enthusiasm.  Well, of course, bin Laden is dead because of a very dangerous raid by a brave SEAL team. In the “you built that” category, I give the SEAL team the credit rather than to the president who only had to say “yes” or “no,” and in spite of the media uniformly calling it “a gutsy call,” dithered for nearly a year because he couldn’t make up his mind or convince Valerie Jarrett, without whose approval he doesn’t do anything. So yes he is dead, but — you didn’t build that, Mr. President.

Barack Obama has consistently claimed that the recession was all Bush’s fault, but he doesn’t hesitate to take credit for Bush accomplishments. TARP, the Troubled Asset Relief Program, was enacted by Congress on October 3, 2008. President Bush cut a check for $17.4 billion on December 12, 2008. Mr. Bush put money into GM and Chrysler to keep them afloat for Mr. Obama’s benefit, since Mr. Obama would have to clean up the mess if they had to be liquidated.

Normal bankruptcy proceedings would have reined in Union wages and Union pensions, which were a major reason why the companies were failing. Our bankruptcy laws attempt to hold off creditors until the company can reorganize and have a chance to succeed. Bankruptcy can save faltering companies. President Obama believed that he was “saving” the car companies from bankruptcy, which he believed to be a bad thing. And he certainly didn’t want union wages cut back or pensions reformed.

Mr. Obama likes Unions and dislikes Business.  So he thought it was a good idea to illegally give a major chunk of GM to the Unions. And he illegally fired/ dumped large numbers of private businesses who were auto dealers — just put them out of business, along with their estimated 100,000 employees. He again showed his preferences with Delphi,the enormous auto parts organization, where Union wages and pensions were saved, and non-union workers, about 20,000, saw their pensions cut by as much as 70%. And of course the GM and bondholders who had first call on company assets in the case of bankruptcy by law, were illegally dumped.

Mr. Obama insisted that GM start producing the Volt, though they said the electric car was not yet ready for prime time. It costs $41,000 to make a Volt, and the sell it for $41,000. As of last November, the total taxpayer subsidy amounted to $250,000 per Volt sold. The production line is shut down again, because nobody’s buying, even with subprime loans, but GM has put $10.4 million into a retirement village to run entirely on Volts.

The administration has issued new fuel-economy mandates of 54.5 miles per gallon for 2025, which many have called the Electric Vehicle Mandate. Even the Obama Auto Task Force, as it was wrapping up the GM bailout, acknowledged the obvious to the New York Times:

At some point …the drive for profitability is likely to collide with Mr. Obama’s fuel-efficiency and low-emission goals.

So General Motors may “be alive again” but barely, and on life-support. Several sources are expecting bankruptcy again, in the not-too-distant future. Brought along much faster by the new fuel-economy rules.  Funny thing. We only started having fuel-economy mandates when we experimented with gasoline price controls in the 1970s, and like all things governmental and regulatory it never goes away, even if it makes no sense at all.

We Should Have Let GM Go Bankrupt! by The Elephant's Child

On the campaign trail, President Obama has regaled voters with his summary of the 2009 auto industry bailout. “When the American auto industry was on the brink of collapse and more than one million jobs were on the line, Governor Romney said we should just let Detroit go bankrupt.”

Somewhere in that statement lurks the idea than bankruptcy is a bad thing, and a company must be rescued from it. Our bankruptcy laws have been devised to help companies in trouble to restructure, regroup and recover, if possible.  Obama’s message was clear: the administration’s 2009 decision to bail out the auto industry saved it from a fate worse than death, if Romney’s position—bankruptcy— had won out. The notion at the heart of bankruptcy law — restructuring — was never allowed to happen.

The administration bailout was not applied to the “American auto industry.” it was applied to two failed companies.  Other American manufacturers : Ford, Subaru, Honda, Toyota, Nissan, BMW, Lincoln, Hyundai, Mitsubishi, Daimler and Kia all of whom have assembly plants in the Midwest and South, who had responsibly prepared themselves for a downturn, now had taxpayer subsidized competition.

The idea was that the White House should step in with their own bankruptcy process, avoiding and sidestepping a century’s worth of evolved bankruptcy case law, because the White House knew better. “If the administration had treated the UAW in the manner required by bankruptcy law, it could have saved U.S. taxpayers $26.5 billion,” read a headline in the Wall Street Journal.

Obama has ecstatically claimed that GM is now Number One in sales, and on top in the world. But it seems that their increasing sales were achieved with subprime loans. The treasury still owns 500+ million shares of GM. To break even they must be sold at $53 per share. General Motors stock has been hovering around $18. (Taxpayers lose $5 million for each penny that GM stock falls.)

General Motors seems to be imploding, and Team Obama is lying about it. GM Europe is in worse shape than GM: US.

Ooops! General Motors Lays Off 1,300 Volt Workers by The Elephant's Child
March 2, 2012, 3:32 pm
Filed under: Capitalism, Democrat Corruption, Economy, Election 2012, Energy | Tags: ,

General Motors has temporarily suspended production of the Chevy Volt, troubled electric car, the company announced on Friday. They are halting production for five weeks, presumably to allow demand to catch up with inventory.  This means laying off, temporarily, 1,300 employees.

A GM spokesman said that production will resume on April 23. “We needed to maintain proper inventory and make sure that we continued to meet market demand.”

They’re getting lots of help. President Obama wants to raise the subsidy to $10,000 per car and make it an immediate price reduction instead of a tax credit of $7,000. President Obama also gave the Volt a vote of confidence in a speech to the UAW this week, and promised to buy a Volt “five years from now, when I’m not president anymore.”

California decided to allow the Volt to qualify for High Occupancy Vehicle (HOV) lanes, which also should help a little.And of course the price of gas should help.

If you remember, back when Obama was bailing-out the car companies instead of allowing the normal bankruptcy laws to operate, GM did not want to produce the Chevy Volt. They didn’t think it was ready for prime time, but marketing expert Obama insisted.

Sales in February were up a little from January. I’m not sure what the sales figures mean — are those the cars GM has sold to dealers, or are they the cars that have been purchased by consumers? Dealers have cut way back on their allotments, and are not seeing much enthusiasm in the marketplace.

GM has argued that the debate about the Volt has become too political. GM CEO Daniel Akerson told Congress “We did not develop the Chevy Volt to be a political punching bag, We engineered the Volt to be a technological wonder.”

The odds of the taxpayers being paid back for the bailout have not increased, but then you didn’t really expect that they would, did you.

Things Are Not Going Well For General Motors by The Elephant's Child
July 7, 2011, 4:59 pm
Filed under: Capitalism, Economy, Liberalism, Politics | Tags: , ,

Government Motors General Motors has a glut of unsold trucks sitting on dealer’s lots. Two automobile plants in Indiana and Michigan are idle.  And  GM’s problems are being made worse by — regulations from the Obama administration.  Taxpayers still own 33% of General Motors.  The car maker has 280,000 Silverado and GMC Sierra pickups on dealers’ lots around the country.  The inventory is 122 days worth of average sales. The outlook isn’t good, said analyst Peter Nesvold:

It’s unbelievable that after this huge taxpayer bailout and the bankruptcy, that we’re right back to where we were,” said Nesvold, who has a “hold” rating on the stock. “There’s no credibility.” In a research note, he asked: “Is GM falling into old, bad habits?”

The EPA is requiring automakers to increase their fleet-wide average fuel efficiency standards to a level of 34.2 mpg by model year 2016 for passenger cars, light-duty trucks and medium-duty passenger vehicles.  The re-engineering is expected to add at least $1.000 to the sticker price of passenger cars.

GM shares have declined by 7.3% through Friday from their $33 initial public offering price. The Treasury which holds more than 500 million GM shares is waiting until at least August for another stock sale.

The 62 mpg standard proposed for 2025 would further drag down car sales,  leaving more vehicles on lots and more workers laid off.  The EPA does quite a job of killing off the jobs that the Obama administration claims to be trying to create. But no one has praised this administration for its competence.

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