President Obama likes to tout General Motors as one of his administration's big successes, but in reality the GM bailout has been a disaster for the company and for taxpayers.
Since GM's IPO almost two years ago, the broader S&P 500 has gone up about 30%. During that period, Ford shares have gone down about 15%, Toyota up about 15%, Honda up about 5%, Nissan up about 35%, Hyundai up about 60% and Volkswagen up about 85%. Make no mistake; GM is vastly underperforming the industry, despite an influx of approximately $50 billion of taxpayer funds. In addition to US taxpayers anteing up, Canada put in over $10 billion and GM was relieved of about $28 billion of bondholder obligations as UAW claims were protected. That's an improvement of almost $90 billion to the balance sheet and the company still lags the competition!GM's performance is an embarrassment to its Obama-appointed leadership and an indication that the Administration has not fixed the underlying problems there. Worse yet, when a possible solution to one of the biggest overhangs, GM Europe, was on the table, the new leadership nixed the deal. And now an unstable management team, which seems to be constantly reshuffling as it tries to find direction, does not inspire confidence. Unfortunately for the taxpayers, it appears the damage is done and the ability to pull out a recovery is all but passed. There is no reason to continue the market-timing gamble that sees taxpayer money risked on a company that should be allowed to sink or swim on its own, without government input. It's time to simply cut the losses and dump taxpayers' remaining stock and end this failed experiment once and for all.
This failure in the market highlights that the Obama Administration's eyes are not on the bottom line, but rather on the number of union jobs propped up with taxpayer money.
"On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen," the president said. "Today, General Motors is back on top as the world's No. 1 automaker."Even that's a stretch. GM edged tsunami-crippled Toyota by counting sales at its joint ventures in China, which aren't wholly owned subsidiaries. And the government is directly subsidizing new GM auto lines like the star-crossed Chevy Volt.
But GM is on the verge of bankruptcy again! When all is said and done, the bailout will be recognized as a huge failure and tons of jobs will be lost along with the billions of taxpayer dollars.
