President Obama has made his case for his government’s purchase of a restructured GM. We’re still working to get a full embed of the speech. Meanwhile, if you can forgo the rhetorical flourishes for a moment, check out Obama’s fact sheet on GM’s restructuring. The first subheading is “General Motors Restructuring: Shared Sacrifice.” Hit the jump for more details.
Perhaps the most interesting portion concerns US government ownership of GM. In “Principles for Managing Ownership Stake,” Obama’s release reveals that “consistent with the goal of clearly limiting the government’s role as a reluctant equity owner but careful steward of taxpayer resources, the Obama Administration has established four core principles that will guide the government’s management of ownership interests in private firms.”The government will “will seek to dispose of its ownership interests as soon as practicable.” But to whom? Meanwhile,
“The government will reserve the right to set upfront conditions to protect taxpayers, promote financial stability and encourage growth. When necessary, these conditions may include restructurings similar to that now underway at GM as well as changes to ensure a strong board of directors that selects management with a sound long-term vision to restore their companies to profitability and to end the need for government support as quickly as is practically feasible.”
However,
“After any up-front conditions are in place, the government will protect the taxpayers’ investment by managing its ownership stake in a hands-off, commercial manner. The government will not interfere with or exert control over day-to-day company operations. No government employees will serve on the boards or be employed by these companies.
As a common shareholder, the government will only vote on core governance issues, including the selection of a company’s board of directors and major corporate events or transactions. While protecting taxpayer resources, the government intends to be extremely disciplined as to how it intends to use even these limited rights.”
Obama also revealed that “$361 million was funded to a special vehicle available to provide a backstop on the orderly payment of warranties for cars sold during this restructuring period.”
I heard the statement live. Of course the President says exactly the opposite of what he has done and will do. It’s like bills in Congress titled something like “free widgets act of 2009” and buried in the fine print is the real cost – $1000. Some free widget.
Just wait till GM proposes to close a plant in some state, the senator of that state will be protesting and calling the President.
Or the President will be picking out the new seat fabric for the 2012 Caddy. He’s a busy guy – very smart – but very busy doing many things. Central planning economies don’t work and this is central planning on a grand scale. It makes the old Soviet Union look like a lemonade stand.
Shared sacrifice? When does the federal government and the UAW start sharing the sacrifice?
My prediction – Government Motors will continue to soak up billions in federal subsidies for years to come and will still fail. People, myself included (a current Cadillac owner), will not buy another GM product as long as they are a department of the federal government. And if you thought GM was inefficient before the bankruptcy, wait until it’s run by a government committee. As Obama told his Hollywood sychophants last week, “You ain’t seen nothing yet”.
what a load of crap
this generation will sacrifice for the good of the next generation? Equal sacrifice? This is going to get uglier.
gdavisda, you’re right on target here:
“My prediction – Government Motors will continue to soak up billions in federal subsidies for years to come and will still fail. “
The only thing missing is the armband:
http://blogs.citypages.com/gop/Obama%20nazi.bmp
Change you can BELIEVE!!!!
Here is one last toast to the former US economy we all used to know, may it rest in peace.
The hope for a simpler, more sustainable (independent)economy is now out of reach for a while. Zombie automakers get to join forces with zombie banks to raid what little tax-payer resources are left.
My guess on the next sacred cow in a future crisis:
Banks (check)
UAW (check)
Education unions (on the way!)
Hmmm, how many wheelbarrows of cash will I need to buy a GM car? There must be smoke coming off the printing presses at the Treasury.
Why do people listen to President Obama? I can’t see that what he says in prepared remarks ever really means anything. The President loves a well-crafted speech, but they are just words, signifying nothing.
This guy at the helm reminds me of Mike Tyson with his ridiculous entourage.
In the absence of real leadership, people will listen to just about anyone that tells them what they want to hear. Unfortunately Washington is in a state of catatonic worship and has completely lost their sense of hearing.
Shared sacrifice?
Like spending a tens of thosands of dollars to go to a broadway play?
Ya the Pres is scarificing.
Just like the commie dictators, Everyone suffers, but those in powers,
You must all share in poverty, except me.
AlexD: says
Hmmm, how many wheelbarrows of cash will I need to buy a GM car?
I say not not many. The Feds will likely subsidize the cost of a new GM vehicle. This way said vehicle appears (and is) less expensive to the consumer and undercuts the competition. GM moves the metal and Obama looks brillant in return.
The Day Cheverolet Died
And we were singing:
Bye, Bye, to the American Way
Drove my Chevy, it’s a the tax levy
Hope the government pays
With apologies to Don McLean, and tears in my eyes
How about Obama’s pledge that the government will intefere with GM only in the most fundamental issues. Do you feel relieved? The most fundamental issues facing any automaker are what products to build, where to build them, how much to charge for the products, and who’ll sell your products. Now, i know you feel relieved. I know I sure do.
Just another example of Obama saying one thing, and doing the opposite.
I bet Ford appreciates having its own government now being a competitor. That’s Ford’s reward for not taking bailout money. Wonderful.
@gdavisda, great posts.
GM should have done this in 1992, back when they had the cash and could have kept the government out of it. But what’s with the blame Obama crowd?
Barry didn’t even come into office until long after GM was already doomed, and all he’s done in the last 4 months is try and soften the blow. All the tin foil hat types talking about some conspiracy for the Dems to run auto companies, they’re just nuts.
Liquidation of that much US manufacturing just isn’t an option, and an uncontrolled GM bankruptcy in Dec 2008 would have resulted in far more job losses/economic pain & suffering than we’ve got now.
Look, the Chrysler bankruptcy is going much more smoothly than anyone expected (including me). The time when GM comes out of this and kicks us (taxpayers) out can’t come soon enough.
But maybe I’m an optimist.
1169hp :
June 1st, 2009 at 1:38 pm
AlexD: says
“Hmmm, how many wheelbarrows of cash will I need to buy a GM car?
I say not not many. The Feds will likely subsidize the cost of a new GM vehicle. This way said vehicle appears (and is) less expensive to the consumer and undercuts the competition. GM moves the metal and Obama looks brillant in return.”
I was wondering, aren’t there international trade agreements that are supposed to stop that kind of unfair advantage?
@ sean362880:
Ok, I agree with you on the comments. I’m no Obama fan but he’s not exactly a Nazi…
I also agree that this isn’t some Democrat conspiracy to turn the United States into a Marxist paradise. However, I think you are being optimistic about how smooth and costly the auto CH11’s will be.
Sure the Chrysler CH11 proceedings went much smoother than I would have ever expected, but the actual emergence of a profitable company is quite a long way off still. Likewise for GM, I have no doubt they will quickly complete the sale of good GM to the government. Yet, while I do doubt that Obama or the PTFOA truly want to run GM, I don’t see how they will avoid exerting control over major product decisions from GM in cases where they are at odds with CO2 and CAFE regulations or manufacturing resource allocation when the choice is between low cost, ie Korea/Mexico, and domestic production, just to name a couple of potential snafu’s.
As for the cost of this vs the nuclear option, I would also love to see someone crunch the numbers. If this works and GM and Chrysler emerge as sustainable companies without many more job cuts, then I am confident this approach will have been the cheaper option. If, however, GM and Chrysler continue to falter and we dump more and more money into them while simlutaneously hurting Ford and driving domestic production of transplants overseas only to see GM and Chrysler eventually fail anyway…
Idiocracy.
You would have to have the mind of a child to vote for that thing…And just look at those thieving socialist freaks behind him.
“the government will protect the taxpayers’ investment” When has government on any level ever done this?
Boycott Government Motors
Shared Sacrifice? I really hate to pull the socialism card, but when you make a statement like that…
Another thing that irks me is how badly they’re screwing over Ford. If GM and Chrysler would have died liked they should have, Ford would be going gangbusters right now. Way to encourage companies who are doing the right thing.
This is our new government. The losers still lose, but now the winners get to lose too.
Barry’s comments set off the BS detector:
1. How many times did he say “I”, referring to his decisions? Isn’t this supposed to be a team effort, or are we living in some form of dictatorship?
2. He starts by saying he doesn’t want to keep spending more taxpayers’ dollars, then concludes by saying there is another $30B being “invested”. I can’t even count the hundreds of billions we “had” to “invest” to help everyone covered under TARP.
3. We’ll never see the $30B again. “Investment” to a Democrat equals “open your wallet”.
4. Hey Barry – people don’t want fuel-efficient cars when fuel is cheap. They just want the cars they want and they are fickle. Our free market permitted people to buy fat SUVs and super-quality imports at the same time. Nobody wants a $40,000 government-subsidized Volt.
5. You can’t embrace the UAW and a viable business model at the same time. Building more cars under the auspices of the UAW doesn’t seem like a winning idea – only a jobs program.
6. You can’t blame GM’s woes on the economy you “inherited”, since you already said GM’s problems were decades in the making.
7. You can’t call GM a private company any longer, when the POTUS can fire the CEO, and then the government owns 60% of the carcass.
8. The “bad” GM is nothing but a toilet in which to throw all the bad debt, paid off by the US taxpayer. How convenient and swift, soon to be spun as a success story. It stinks.
9. That great sucking sound is the last breaths of American Leyland, hanging on for a few more years.
In a separate conversation today the President announced that this new direction of GM and Chrysler will ultimately be realigned with an existing government program.
That program is AMTRAK.
What the government has done to the railroads it will now do to the highways.
The name of this new program is CLAPTRAK.
Shared sacrifice? When does the federal government and the UAW start sharing the sacrifice?
They share our sacrifice.
The government will “will seek to dispose of its ownership interests as soon as practicable.” But to whom?
It’s not much different than worthless (30c on dollar) MBS baskets the gov has been buying to ostensibly prevent bank failure.
People need to realize this is what inevitably happens when you precious capitalism fails you.
Don’t like it? Then stop listening to charlatans who keep telling you that trusting the captains of industry will always turn out dandy, when they pocket all the profits and then go to the public trough to beg for bailouts when their greed fails them.
I would’ve thought the gullible could at least figure out the scheme after they’ve been duped, but I apparently I overestimated them.