Instead of allowing General Motors to take a responsible path through bankruptcy to fiscal solvency, Comrade Chairman Obama kept it afloat with his massive auto bailout. Otherwise, union contracts would have been renegotiated with an eye toward fiscal sanity. This way, Obama’s UAW cronies can continue to ride high atop the gravy train at increasing taxpayer expense:
General Motors’ stock has been nose-diving. It has fallen 39 percent since its initial public offering in November 2010. And [last] Friday, the Treasury Department announced that expected losses to taxpayers from the bailout would increase more than $3.3 billion to $25.1 billion — up from $21.7 billion last quarter.
GM is less competitive than ever, now that it builds vehicles to please moonbat bureaucrats rather than customers.
John Berlau of the Competitive Enterprise Institute argues the stock decline reflects the liability of the federal government picking winners.
“They’re making the environmentally correct cars. The government, the Obama administration wanted them to make the Chevy Volt rather than some of their better-selling products like some of the GM trucks,” Berlau said.
A company that lives off government bailouts and subsidies is like a junkie; no matter how big a fix it gets, it will soon be desperate for another. To the surprise only of morons, Government Motors is already facing bankruptcy again:
[T]he 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 $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.
Right now, the government’s GM stock is worth about 39% 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 49% of their value relative to the Dow.
It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero.
GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term.
But with any luck, there won’t be a second Obama term. Next time, GM can go through bankruptcy, scrape off the union parasites, and go back to making cars rather than serving as a hose through which Obama siphons money from our bank accounts into the bulging coffers of Big Unions.
On tips from G. Fox and J.