Column of the Day: George Will on How GM and Uncle Sam Have Failed
More perspective on what I wrote about here (”GM, Chrysler, and Uncle Sam Have Already Failed”) from the esteemed columnist:
The government’s $50 billion — so far — acquisition of the shadow of GM will injure, with unfair financial advantages, the surprisingly healthy U.S. auto company, Ford. Of course, the government does not intend that injury, any more than it intended to cause protests in Mexico over the high price of corn tortillas, a result of Washington’s mandate that Americans burn corn (ethanol) in their cars.
Washington’s “rescue” of GM began because GM is “too big to fail,” and bankruptcy is (well, was) “unthinkable.” Big? GM’s market capitalization, $375.8 million on Wednesday, is about the size of California Pizza Kitchen’s ($340 million) — is it too big to fail? — and one-eleventh that of Harley-Davidson ($4.3 billion). Fail? If GM has not already failed, New Coke was a success.
The administration is determined to prop up GM as a jobs program for the UAW and Midwestern states rich in electoral votes. This frenzy will intensify as the administration’s decisions deepen the debacle.
Even the “jobs program” aspect of the government’s bailout effort has failed. Ask workers at five Chrysler plants in four states, who were told by Obama, administration officials, and the company executives that their jobs were safe just before its bankruptcy filing, only to see them saw them disappear when the filing took place, how much of a success it has been. Also ask GM workers at 14 plants to be closed in the wake of that bankruptcy.
Meanwhile, Ford’s capitalization as of Friday’s close was $17.8 billion — almost exactly 50 times GM’s. Those investment gurus at Uncle Sam’s place really know how to pick ‘em.
If it weren’t for the Obama Fear Factor, Ford might be worth double what it currently is.
Some absolutely amazing anecdotes on how GM treated one of its long-time customers.
http://foxforum.blogs.foxnews.com/2009/06/08/de-seno-why-i%E2%80%99m-buying-a-used-foreign-car/
Best anecdote excerpt:
Back to me and my decision to buy a used foreign car. This year the lease was up on our Chevy. After 39 months the buyout was more than $22,000. This was between $7,000 and $10,000 more than the value of the car, which we priced not only on Kelley Blue Book but also at dealer lots and online.
…..I offered to pay off my lease and buy the car for market value.
“No chance,” they said. They wanted the full $22,000 and wouldn’t take a penny less. …“We know we will lose money at auction. But we want to make you buy a new car, so we won’t sell you the used car for less than $22,000. ….”
I was furious. …
I figured a way out of it (so I thought). A friend owns the local Chevy dealer. I went to him and asked him to bid on my car for me at auction. I would then buy it from him at a profit, and still pay much less than $22,000. “Can’t do it,” my Chevy dealing friend said to me. “GM tracks the title. If I buy it and sell it to you for less than $22,000, they charge me the difference.” Wow.
Realize where we are now: For being a life-long loyal customer, GM will sell my leased car to anyone in the whole world at a discounted price, except for me. For me they’ll charge a premium. They’ll lose money at auction rather than sell it to me. I guess GMAC can afford to do that when they are shoveling around taxpayer money they didn’t earn.
Comment by Cornfed — June 8, 2009 @ 6:47 pm