Posted on 11/17/2008 8:20:55 AM PST by 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.
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
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