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L. Neil Smith's
Number 537, September 20, 2009

"I have a big question for neoconservatives:
what's worse, a 9/11 truther or a 9/11 liar?"

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That Sinking GM Feeling
by Jim Davidson

Special to The Libertarian Enterprise

They used to advertise "that great GM feeling." Nowadays it seems more like "that sinking GM feeling." Case in point, car-neophyte Ed Whiteacre's current ad campaign.

"Car for car when compared to the competition, we win. Simple as that," he says in this bright new ad promoting his complete ignorance about automobiles. [YouTube]

Sure, the white haired old man looks alert and sentient as he parades through a nearly empty show room with strange other people wandering around not selling any cars. But the words make no sense.

Car for car when compared to the competition, GM sucks. And they gave up competing on cars when they went for the enormous taxpayer bailout. It isn't simple as winning in a head to head car making competition. Remember? GM played that game and they lost. They lost all of their money, so they demanded all of our money.

Later he lies again, "So we're putting our money where our mouth is." No, you bastard, you stinking lackey of big government, you filthy thief, you aren't. GM tried putting their money where their mouth is, and they lost. They went under. So now they are putting our money where their mouth is. He isn't a nice old man, he's an evil old liar.

Then he promises a sixty-day guarantee. If you aren't happy with their crappy cars, which you wouldn't buy when they were only risking their shareholders' money, bring it back. But that isn't their guarantee. Once again the taxpayers are ponying up for the risk. GM wouldn't take its own risks, so they demanded the taxpayers put up our money to take the risks.

Ad Age describes it this way, "Or, because this is GM after all, maybe it's just another heartbreak for America: an insane risk attached to an outrageous lie."

"Put us up against anyone and may the best car win." Bullshit. The head to head competition didn't work for GM. So now it isn't the best car, it is the car GM happens to make and the might and muscle of a huge government and a giant enormous subsidy of dollars and protectionist tariffs and trade barriers and regulatory hurdles that smaller, more efficient companies can't leap.

In July of this year the old GM sold its assets to the new GM. The old GM's shareholders? They get screwed, completely. They get nothing. And that's good, they deserve nothing for investing in this worthless company. That was the risk they took, or were supposed to be taking, when they invested in GM.

Let's put GM in historical perspective. In 2005 the company posted a loss of $10.6 billion. That year, GM's credit was downgraded. In 2007, losses were $38.7 billion. They lost over $30 billion in 2008. So, of course, they had to get bailed out. They got some money from European governments, but the sale of Opel and Vauxhall seems to satisfy that taxpayer bailout.

Meanwhile, the USA government pledged $50 billion of American taxpayer money for whatever GM needs. The Canadian government ponied up about $6 billion of their taxpayers' money. As a result, here are the new owners of GM—which is not on the publicly traded market presently since they just finished shafting their common shareholders.

  • United States Department of the Treasury (61%)

  • United Auto Workers Voluntary Employee Beneficiary Assoc or VEBA (17.5%)

  • The Queen in Right of Canada (7.9%)

  • The Queen in Right of Ontario (3.8%)

  • Bond holders of Motors Liquidation Company (9.8%)

Isn't that clever? The taxpayers of the USA and Canada turn over tens of billions of dollars and GM is owned mostly by the USA treasury, some by the workers, and some by the Hanoverian usurpation. Oh, and the bond holders of the old GM get something, but the shareholders of the old GM, including a lot of American pensions and 401Ks—nothing.

Now, keep in mind that the government is never going to pay you a dividend for the money you put up to have them buy GM. You get nothing out of this deal, not now, not ever. You get the shaft, they get the money.

But, don't frown. Relax. Because you don't want a shareholder's deal. There are losses coming.

Oh, they'll lie about it, tell you about operating profit, claim profits based on the one-time sale of Opel, etc. They'll cheat and steal and lie and murder and rape, whatever it takes. They are the government and you are here to suffer.

But the reality of 2008 is they lost over $30 billion on sales of about 248,000 cars per month, or around 2.98 million cars sold in the USA.

Their best month, with the big cash for clunkers subsidy? August they made about 131,100 in car sales. That is they claimed 19% of the market on 690,000 cars sold See NY Times.

Sales in other months have been even lower, around 60,000 in one case that I can recall reading about (though not where I read it). But, let's be generous. Let's suppose a big Autumn sales bonanza. Thirty-five million Americans are on food stamps, more than ever in history, and the 1980 way of measuring unemployment shows it running about 17%, but, hey, what the hell, let's guess GM pulls sales out of Ed Whiteacre's nasty old colostomy bag.

Let's say that 2009 averages 131,100 cars sold per month, coming in at 53% of 2008 sales. Do you honestly believe that they'll have cut 47% of their costs? I don't. Remember, the United Auto Workers union owns 17.5% of the company. Even by eliminating the pensions and benefits of 100,000 white collar employees and cutting back all over the place, GM cannot possibly cut its overhead to make a profit on 131,100 cars a month. Remember? They couldn't make a profit last year selling 248,000 cars a month.

The reality is that General Motors is a dead albatross which hangs around the neck of the economy stinking up the place and bringing more bad luck. GM should have been broken up for parts in a bankruptcy liquidation so that more competitive companies could make cars that buyers really want.

I think it is the same with the banks. The big banks that are too big to fail? Well, gosh, the Sherman anti-trust act has been around for over a hundred years. If the government wanted to break up those banks into chunks not too big so that any one failure would not wreck the global financial system, they could have done so long ago.

Instead, the government has set the incentives so that banks grow and grow and have greater and greater influence over government policy. Until trillions of taxpayer and Federal Reserve money are thrown at failing bankers to sop up all the risks they took.

When the banks made tens of billions this year, they paid their shareholders and their senior employees huge amounts of money. But when they lost money, they demanded the government make the taxpayers take up the cost.

It is gangster cronyism, not capitalism, that is at the heart of this system. The gangsters smash the faces of the customers, the workers, the taxpayers, and pay their cronies in senior management huge bonuses.

And you? What are you going to do about it? Nothing. You are going to sit there and wank off at your computer screen. You are going to fume and fuss. And on a good day, some of your friends are going to march on DC and not be counted, except maybe by the Daily Mail.

It is not in your stars, but in yourselves, that you are underlings.

Jim Davidson is an anti-war activist involved in the divestment project detailed at He is also an author and entrepreneur. His latest book comes out this Autumn at 623 pages plus notes. Two of his current projects involve financing films, one a documentary about destination resorts in orbit. See for details.


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