Yesterday's news was filled with hoopla about General Motors emerging from bankruptcy protection in a new company. This "new" company is 60.8% owned by the U.S. government and will have a puppet board of directors that takes its marching orders from the Oval Office. The press played the positive spin to the hilt. They didn't talk much about the "old" General Motors" that was left in the dust. I guess that is left up to me.
The first group of people are stockholders of the original company. These folks include just about anyone that has had a 401-k or retirement plan that road the stock to the dirt. Hopefully most fund managers had since enough to dump that dog of a stock years ago. Also in this group was individual investors that thought you couldn't go wrong investing in GM. Whether these people paid $50 per share or $1 per share that money is gone, never to be recouped. There was never any consideration to give them an interest in the new company.
The second group is the debt holders. These are banks and financial institutions that made good faith loans to General Motors. Also are institutions and individuals that did the same thing in the form of bonds. Unless they took the bone the government offered them they also lost everything.
The final, almost forgotten, group is the U.S. taxpayer. We loaned GM $50 billion and there is no guarantee that we will ever see any of it again. This is because we kept propping up the old company instead of letting it fail like it ultimately did. The ironic thing is that we, the U.S. government, are not in any better shape than the old GM and had no business loaning them anything. The only advantages we have is we haven't been abandoned by our creditors (yet) and we have no problem mortgaging our children and grandchildren's future! Otherwise we are just as insolvent as they were.
The only hope we have of getting back any of our money is if GM can produce a car that people will buy. It's folly to watch the earnings reports of the new company because they will most likely make money out of the blocks. However, it will be important to watch year two, three and four, if they last that long. Watch for more trips to the White House for more money. Watch the streets for new GM cars on the street. I believe many people are unhappy with this sad chapter and will not buy one of their cars. And as long as our economy keeps flopping around like a fish out of water you won't see people making large purchases like cars unless they have to.
I'm not popping any champagne open right now.
Saturday, July 11, 2009
Friday, July 3, 2009
Surviving in the Socialist Wilderness
Back in my young adult years a great man named Ronald Reagan came along and inspired me and millions of others. Not only was he a leader but a CONSERVATIVE one to boot that shared my dreams of a future with limited government interference in our daily lives, allowing us to reach our maximum potential. Opportunities were available for anyone that was willing to work hard and take the risks.
Fast forward almost 30 years and I hardly recognize our country. The dreams of yesteryear have given way to the realities of the future. And that future is more uncertain than ever before. For the past six months the government has been on a frenetic pace to co-op as many facets of our lives as possible. Their goal is to redistribute wealth in the name of global warming, health care for the uninsured, and bailouts of the financial and auto industries. The end result of the efforts is a dramatic increase in government intrusions into the daily lives of businesses and individuals.
Unfortunately this is only the first act! The dizzying speed of the growth of the national debt has increased to warp speed and does not seem to have brakes. Pretty soon our "creditors" are going to require more compensation for lending us money and inflation, which has been minimal for the last 20 years, will skyrocket. The money we make will no longer support our standard of living and we will see a general decline in the economy. The engine that this Socialist regime depends on will not perform at the level required and we could find ourselves in an extended economic malaise.
So where do we go from here? I believe the only salvation will be to accelerate the slap-in-the-face that will be coming in a second Obama administration thereby waking up the voters in time to make him a one-term president. More urgently, reduce or eliminate the Democrat majority in Congress in next year's election. Most of this "urgent" legislation Obama is cramming down our throats could be thwarted by a switch of 5 senators and 20 congressmen. Both of these goals can be accomplished by not supporting any of the initiatives they come out with. First, do not buy a car unless you absolutely need one, especially from General Motors or Chrysler. Second, any givebacks the government comes out with (rebates, tax rollbacks, global warning credits) to stimulate the economy should not be spent but put into savings. Do not spend it on what they want you to. The economy has always been the key so as long as we do not contribute to its recovery the harder it will be for Obama to spin a 9.6% unemployment rate as acceptable. I feel that the American public is going to lose patience with these liberals and Obama will be remembered with Jimmy Carter as one of the worst presidents in history.
Will this work? I don't know. It is a different world than it was in 1980 when we took back our government. More people are sucking from the system today than then and each of them would be resistant to giving up what they are getting. The key will be letting our current representatives in government know and understand how tenuous their circumstance is and that they stand to lose their gravy train if they do not come to their senses on this runaway government. It starts with each of us. Our country's future depends on it!
Fast forward almost 30 years and I hardly recognize our country. The dreams of yesteryear have given way to the realities of the future. And that future is more uncertain than ever before. For the past six months the government has been on a frenetic pace to co-op as many facets of our lives as possible. Their goal is to redistribute wealth in the name of global warming, health care for the uninsured, and bailouts of the financial and auto industries. The end result of the efforts is a dramatic increase in government intrusions into the daily lives of businesses and individuals.
Unfortunately this is only the first act! The dizzying speed of the growth of the national debt has increased to warp speed and does not seem to have brakes. Pretty soon our "creditors" are going to require more compensation for lending us money and inflation, which has been minimal for the last 20 years, will skyrocket. The money we make will no longer support our standard of living and we will see a general decline in the economy. The engine that this Socialist regime depends on will not perform at the level required and we could find ourselves in an extended economic malaise.
So where do we go from here? I believe the only salvation will be to accelerate the slap-in-the-face that will be coming in a second Obama administration thereby waking up the voters in time to make him a one-term president. More urgently, reduce or eliminate the Democrat majority in Congress in next year's election. Most of this "urgent" legislation Obama is cramming down our throats could be thwarted by a switch of 5 senators and 20 congressmen. Both of these goals can be accomplished by not supporting any of the initiatives they come out with. First, do not buy a car unless you absolutely need one, especially from General Motors or Chrysler. Second, any givebacks the government comes out with (rebates, tax rollbacks, global warning credits) to stimulate the economy should not be spent but put into savings. Do not spend it on what they want you to. The economy has always been the key so as long as we do not contribute to its recovery the harder it will be for Obama to spin a 9.6% unemployment rate as acceptable. I feel that the American public is going to lose patience with these liberals and Obama will be remembered with Jimmy Carter as one of the worst presidents in history.
Will this work? I don't know. It is a different world than it was in 1980 when we took back our government. More people are sucking from the system today than then and each of them would be resistant to giving up what they are getting. The key will be letting our current representatives in government know and understand how tenuous their circumstance is and that they stand to lose their gravy train if they do not come to their senses on this runaway government. It starts with each of us. Our country's future depends on it!
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