Sunday, July 08, 2012

Government Motors: Morally Hazardous...

... to the Rule of Law; to the economy; to taxpayers; to shareholders.

This is not Capitalism, it is Fascism. Capitalism actually requires that bad companies be allowed to fail. And their assets, or lack thereof, cannot appear on a government balance sheet.
"It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the "success" of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June."
And the old channel stuffing trick has been revived to inflate "earnings."
"Old habits die hard at GM. According to a Bloomberg report, "GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May." 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers."
There's now a shareholders' class action suit filed because of that.

Who'da thunk there would be political motivation to maintain the illusion that UAW/Federal joint-ownership of a car company was a good idea? In an election year yet... from the most transparent Administration ever to preen before a mirror.

Mitt Romney, along with many others, was right: GM should have gone bankrupt.

2 comments:

Mitch said...

Couple the channel stuffing with the woeful underfunding of their pensions, we are back to the old GM.

Anonymous said...

A supply of 135 days at any point on the calendar would have been considered a crisis back in the days when GM was a private company. To have that much inventory in July would have been considered disastrous.

-Lady Astor