General Motors Heading For Bankruptcy Again.

Forward!

[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.

So it could be said that GM stock has lost over half their value since the government took over. 

Related:  "Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry." [emphasis mine]

GM To Answer Some Tough Questions

Reason TV called out Ed Whitacre earlier here. Soon, Whitacre may have to answer to Congress.

Now Whitacre is not a dumb guy, nor are there any ethics scandals in his previous record as a very successful CEO at AT&T. He was even the national head of the Boy Scouts of America, so why all of a sudden is he making a transparently false statement in a GM TV spot?

Three Republican members of Congress are asking the same question and they are also demanding some answers from Secretary of the Treasury Timothy Geithner, who oversees the TARP program and who issued a statement endorsing the GM claim and citing the repayment as evidence that the government's bailout effort is working.

Be sure to read the entire thing.

Reason TV Calls BS On GM

Did GM really pay back the Government loan in full and ahead of schedule? Short answer, yes. Long answer, with someone else's money.



In other news, I made a buck by taking a dollar out of my right pocket and putting it in my left.

The Next Bubble About To Burst?

The first was the housing bubble. Too many sub-prime houses that went underwater. Meaning that the price that was owed on the house was more than what the property value is actually worth.

Now? The commercial real estate bubble is teetering.

By the end of 2010, about half of all commercial real estate mortgages will be underwater, said Elizabeth Warren, chairperson of the TARP Congressional Oversight Panel, in a wide-ranging interview on Monday.

“They are [mostly] concentrated in the mid-sized banks,” Warren told CNBC. “We now have 2,988 banks—mostly midsized, that have these dangerous concentrations in commercial real estate lending."

As a result, the economy will face another “very serious problem” that will have to be resolved. . .

SICKENING!!!!!

Everyone in D.C. should be fired.

Greed and Bail-Outs

I only need about $500,000 for my stimulus amount. Anything more would just seem greedy. And I'm being environmentally friendly about it too by posting it only online and not on any paper products.

h/t, RSM.

Remeber When?

Wasn't there a time when President Bush was evil for running up a deficit?

Ask Anyone

You cannot spend your way out of debt. Especially when you added in nearly a trillion dollars to the debt. *coff* Barack *coff*

The problem with this rhetoric is that it is based on a misunderestimation of the historic proportions of what has happened to the U.S. economy since 2006. We are not merely in a transitory slump that can be cured by Keynesian "pump-priming." The collapse of the housing bubble exposed systemic weaknesses in the American financial structure.

Like him or love him, this was over two years ago when Ron Paul gave this speech.

(below the fold)



Thanks to RMS

Free Money for All.

Well, not all.



For the details, go here.

Tip to RSM.

Whereas I totally agree with a policy from President Obama:

Now if he would only follow through. Fat chance, right?

Once More, With Feeling.

Dan Mitchell does a nice job on taking apart the Spendulus package. He references his old Keynesian video which you can watch here.



Thanks to Instapundit.

"Think we need a bigger truck"

From over on The Corner by Michael G. Franc

Last year’s tax rebate, Durbin now says, didn’t work. This bipartisan scheme operated on the theory that if Uncle Sam dropped tens of millions of checks from government helicopters to taxpayers and non-taxpayers alike, they would spend the windfall, revive consumer demand, and jumpstart an economic recovery. Unfortunately, as economist Martin Feldstein demonstrated in a Wall Street Journal editorial, Americans used about 80% of their windfall to pay off mounting credit card debts or stabilize their dwindling savings accounts. No economic recovery there.

It's the old joke realized about the two hill-billies buy hay at $3 a bale each. Load their truck and go down the road and sell it off at $2.50. At the end of the day the first hill-billy looks at the second and asks why they are broke. The second hill-billy scratches his head and looks around a bit, "I dunno," he replied, "Maybe we need a bigger truck."

It would be funny if it wasn't so true.

Good for a chuckle or two. Then the five stages of denial. Michael Ramirez captures the UAW in his editorial cartoon perfectly.

How is that even possible?

"I've abandoned free-market principles to save the free-market system," Bush told CNN television, saying he had made the decision "to make sure the economy doesn't collapse."

That's like saying:

• I've abandoned being faithful to my wife in order to save my marriage.
• I gave up on my diet in order to lose weight.
  

To save the free market system, the market would have to be free in the first place to allow for failure.


Again, thanks to Michelle Malkin

Keynesian Economics is a fable.

When watching this video, keep in mind that everyone that is advising the President on the economy subscribes to the Keynesian Economic system.



One way to an economic recovery would be threefold.

• Cut Government spending. Even the cliche of the drunken sailor would be ashamed. This includes the bail outs of institutions that are 'too big to fail'.
  
• Cut Corporate taxes. Why punish the people making the jobs and their achievements?
  
• Let the companies that are failing, fail. The marketplace is flexible enough to take in the slack and move away when others business start up.

Thanks to Michelle Malkin for the hat tip.

22 pounds.

This is the United Auto Worker's contract with Ford. There might be a page or two difference between GM and Chrysler. Not too much in there on how to make a better car to compete with imports.

I’ll tell you this much, those 2,215 pages don’t include much regarding efficiency and competitiveness. What you’ll find are hundreds of rules, regulations, and letters of understanding that have hamstrung the auto companies for years.

This is why the Big Three are sucking wind when the UAW labor contracts are sucking the life out of the Big Three. Any pontential 'bail out' from the federal government will be going on to pay off the unions. Even when the bill was voted down in Congress on the Senate side, the White House may still set aside a chunk of change for the automakers. Which will be passed on to the Union workers. If GM, for instance, would be forced into Ch. 11, one thing they can do is to cancel a 22 pound labor contract and have 'Right to Work' instead to get by. Even catch up with Toyota in terms of profit.

Thanks to Ace and Hotair

Need a Bail-out?

Vanity Fair has an application someone leaked out. Soon you can have millions of free money for the failing industry of your choice. The Federal Reserve will print more.

Thanks to Ken M. at Michelle's. and yes, I know it's a joke.

The Myth of Government Deregulation

I wish I had a dollar for every time I read or heard someone say that 'deregulation' of the markets is what caused the downturn in the economy. When was the last time the federal government deregulated anything? And what was the part that was deregulated to cause this? Shouldn't it make sense to regulate that part again to help correct the economy?

There never were any 'deregulation of the markets' only a buzzword that a Democratic controlled Congress drops to pass the buck of blame to someone else, namely, the President.

Why then should capitalism take the blame today--when capitalism doesn’t even exist? Consider the current crisis. The causes are complex, but the driving force is clearly government intervention: the Fed keeping interest rates below the rate of inflation, thus encouraging people to borrow and providing the impetus for a housing bubble; the Community Reinvestment Act, which forces banks to lend money to low-income and poor-credit households; the creation of Fannie Mae and Freddie Mac with government-guaranteed debt leading to artificially low mortgage rates and the illusion that the financial instruments created by bundling them are low risk; government-licensed rating agencies, which gave AAA ratings to mortgage-backed securities, creating a false sense of confidence; deposit insurance and the “too big to fail” doctrine, whose bailout promises have created huge distortions in incentives and risk-taking throughout the financial system; and so on. In the face of this long list, who can say with a straight face that the housing and financial markets were frontiers of “cowboy capitalism”?

My thanks to Cox and Forkum.

Too Good To Pass Up.

From over at Ace of Spades
.

The Big Three Bail-out.

Hat in hand and fresh off private planes, the CEOs of GM, Ford and Chrysler asked for part of their bail-out pie on Wednesday.

The 'Bail-out' will not even go to the company but to help keep paying of the UAW. Why not when they pay their employees more than Toyota, Honda and Nissan. As well as paying workers to sit in a room to do crosswords while getting paid to do so (yes, it's from 2005 but nothing has changed since then). It's throwing more leaves on the fire to give it the impression that it's still burning when the fire needs to be put out.

Ace and Drew at Ace of Spades has more about the UAW sucking down GM, Ford and Chrysler and how SUV's helped them out. For a while.