Posted on 11/17/2008 6:57:58 AM PST by yoe
Jim Manzi has done some of the best analysis of the proposed bailout of GM, Ford and Chrysler--or, one should more properly say, bailout of the United Auto Workers, otherwise slated for extinction. Here, he addresses the theory that the Big Three are in the midst of a turnaround, and if we only keep them afloat a while longer, they'll be profitable again.
This chart pretty much says it all:[go to site for chart] AutoSales713.gif
Bob Cunningham, meanwhile, does some basic arithmetic:
As of the close of business on Friday the market cap for General Motors was about $1.9 billion, Ford about 4.3 billion....Chrysler is privately held but it's a safe bet that their FMV is less than $2 billion...probably a LOT less....so for approximately a lousy $7 billion....a rounding error for the federal budget...the government could simply BUY the entire U.S. auto "industry" --- actually, of course, it's just the U.S. nameplate manufacturers, but that's another story --- for what amounts to a pittance.
So if these geniuses in the government, especially the best and the brightest coming in with The One, think they know better what to do...that they can defy the market's judgment....why don't they just cut to the chase and buy the companies, replace their boards and management and run the companies....can you imagine how disastrous that would be?....but that's in effect what they'll be doing...almost as much fun as Fannie and Freddie!
The numbers are literally absurd....Ford has $160 billion in debt!....with NEGATIVE book value of equity....GM has about $60 billion in debt...and a HUGE negative net worth on a book basis of $56 billion!....Essentially, the market is valuing the companies --- well above their (negative) book values --- but at what amounts to scrap value!...so $50 billion more from forced tax exactions should be thrown at them?....and that's NOT absurd?
Those figures are really amazing. It just goes to show how dumb our government is to bail someone out for 5 times what it would cost to buy them outright.
The result is that one political party is using the gov’t’s monopoly on the legal use of deadly force to keep itself in power.
Wealth confiscation through gov’t, channelled to a “private” group that funnels the money back into the political party.
Too bad the UAW backed the party that refuses to allow America to explore new oil supplies, which would keep gas prices low which would favor the purchase of the trucks and SUV’s that the big 3 build most profitably. No, instead they back the party that increases regulation, taxes and energy costs, driving jobs overseas. Real friends of the working man there, eh guys?
I have a better idea. Use that 50 billion as a loan guarantee to the energy companies to build the natural gas pipeline from the North Slope to the midwest. Jobs, energy and the start of getting us out from under the thumb of OPEC. That would fire up a new future and not put a patch of the leaky tire of the past.
Governor Palin already did it. The gas pipeline is operational.
That’s a long way from actual reality. AGIA is a first step but still needs financing to actually lay any pipe. The main energy companies are moving ahead with the Denali pipeline but still they need financing to build it, so stop wasting money on the auto industry.
That’s a long way from actual reality. AGIA is a first step but still needs financing to actually lay any pipe. The main energy companies are moving ahead with the Denali pipeline but still they need financing to build it, so stop wasting money on the auto industry.
Lots of left-wing yammering about helping the 'middle-class', while the majority get squeezed by the rich on the one hand (who always get what they want out of the govt.) and the armies of public employee, criminals and welfare parasites on the other.
bttt
Barney and friends would do us a great favor by simply issuing checks to his union voters and other all-round thugs. It would save us a fortune in stolen, misused tax dollars in the long run. I’m certain the Amerikan public would simply roll over and yawn yet again.
Norm Coleman says he’s leaning heavily to support the bailout. Big shocker there. I wish I had a senator in MN that represented me at least most of the time.
Makes perfect sense, though, doesn't it?
The UAW props up demoncrats for years, so now the dems in congress have to pony up the bucks to keep them in power.
Payback for all those votes.
Where are the Republicans in this?
They are:
1.) Holding the bag of blame.
2.) Going along with it for a favorable press.
3.) Raising taxes on thier stupid constituents to pay for it.
4.) Oh, what am I saying? There is no paying for it when all we have to do is print more money!
Never mind.
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