Is GM and the U. S. Auto Industry a Good Investment?

[Candybar]

Would Barney Frank, Nancy Pelosi, Harry Reid or Obama and his motley crew invest THEIR OWN MONEY (if they could) in the auto industry? The answer would be a RESOUNDING NO.

Let's look at a few facts thanks to John Hinderaker of the Powerline Blog and Paul B. Samuelson, courtesy of the Washington Post Co.:

### The market cap for GM, Ford, and Chrysler is approximately $7 billion.

### Ford has a negative book value of equity.

### GM has 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. GM's hourly compensation - wage plus fringe benefits - totaled $71 in 2007, compared to $47 for Toyota's U.S. plants.

My fellow Americans, would the greatest of all investors, Warren Buffett, the Oracle of Omaha, invest Berkshire Hathaway money in the auto industry? I think not. In fact, I own a few shares of Berkshire stock. I should hope that he would never make such an investment!

This is neither an investment nor a speculation. Would you put up $25 billion of your own funds for a total market cap of $7 billion? Would you put up $25 billion of your own funds for a negative book value of equity? Would you give GM $25 billion when their hourly compensation is $71 compared to $47 for Toyota? The answer is abundantly clear! NO!

This is neither an investment nor a speculation.

Well, then, what is it? I'll address this in my next post.

[sebastianWoof]

The 25 Billion bailout is no different than a a doctor trying to cure a cancer with expensive pain killers....a disgrace... What it has come to is that our Washington politicons have in effect become the neo-snake oil salesmen of the old west.These shrewed hucksters have improvised their pitch and replaced the cure-all snake oil treatment with cure-all tax dollars.....our hard earned money. Keep the faith! Albert S