The Government Accounting Office released a study last week that officially stated what many have known for months: The $50 million given to General Motors to get the company back on its feet may as well have been flushed down the toilet. Since GM has been in bankruptcy since summer, I suppose we taxpayers shouldn't be very surprised. And, compared with the gigantic bailout of the financial industry, GM's freebie seems like peanuts. However, every million counts in this economy, and I know I wouldn't turn down 50 million big ones because the amount seemed too measly. I'll bet you wouldn't, either.
If GM had actually made an effort, perhaps this news wouldn't sting so much. Besides hammering its employees to give up pay and benefits (not a requirement for the financial bailout, mind you), the automaker seemed anxious to accelerate its downfall. Right off, GM began closing 20% of its dealerships. Now, if you need to make money fast, does it make sense to close down the purveyors of your product? Next, it forced those with dual dealerships to choose between GM and the other product. Our local paper interviewed one of those dealerships, who, exercising good business sense, choose Volkswagen over GM. Much has been made over Chevy's new Volt, a plug-in hybrid. Remember, though, that GM is also the car maker who had the brass to market a vehicle like the Hummer. In my opinion, that alone should have made them ineligible for taxpayer assistance.
Now the government tells us that even as they were handing out these funds, they knew they would never be repaid. To do so would have required GM to attain a market value that they couldn't sustain even in better times. At 61% (versus 10% of Chrysler), the government's holding is too large for it to simply break even on this "investment".
Meanwhile, Ford Motors, the only automaker to decline a handout, is turning itself around, and showing a profit. It seems that there is a lesson to be learned here. The question is, will anybody pay attention?
If GM had actually made an effort, perhaps this news wouldn't sting so much. Besides hammering its employees to give up pay and benefits (not a requirement for the financial bailout, mind you), the automaker seemed anxious to accelerate its downfall. Right off, GM began closing 20% of its dealerships. Now, if you need to make money fast, does it make sense to close down the purveyors of your product? Next, it forced those with dual dealerships to choose between GM and the other product. Our local paper interviewed one of those dealerships, who, exercising good business sense, choose Volkswagen over GM. Much has been made over Chevy's new Volt, a plug-in hybrid. Remember, though, that GM is also the car maker who had the brass to market a vehicle like the Hummer. In my opinion, that alone should have made them ineligible for taxpayer assistance.
Now the government tells us that even as they were handing out these funds, they knew they would never be repaid. To do so would have required GM to attain a market value that they couldn't sustain even in better times. At 61% (versus 10% of Chrysler), the government's holding is too large for it to simply break even on this "investment".
Meanwhile, Ford Motors, the only automaker to decline a handout, is turning itself around, and showing a profit. It seems that there is a lesson to be learned here. The question is, will anybody pay attention?
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