Blatant examples of media agenda and spin as seen in the coverage regarding the GM Payback . . . Wow. Just wow.
Fallen giant General Motors Co. accelerated toward recovery Wednesday, announcing the repayment of $8.1 billion in U.S. and Canadian government loans five years ahead of schedule.
The Obama administration crowed about the “turnaround” at GM and fellow bailout recipient Chrysler LLC, saying the government’s unpopular rescue of Detroit’s automakers is paying off.
The American auto industry is showing signs of revival. The question is how that’s being played. Chrysler posted improved quarterly results this past week, and sales to auto fleets have surged. But some are saying that General Motors CEO Ed Whitaker went too far with television ads that have been playing constantly this week.
General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments, a move its CEO says is a sign automaker is on the road to recovery.
GM CEO Whitacre formally announced the loan paybacks Wednesday at the company’s Fairfax Assembly Plant in Kansas City, Kansas, where he also announced that GM is investing $257 million in that factory and the Detroit-Hamtramck plant, both of which will build the next generation of the midsize Chevrolet Malibu.
GM got a total of $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments as it went through bankruptcy protection last year. The U.S. considered as a loan $6.7 billion of the aid, while the Canadian governments held $1.4 billion in loans.
photo courtesy of chevrolet.com
But is the news really that simple, or anywhere near that positive? Rather a lot of people don’t seem to think so:
So the taxpayer funded their bailout, and now we will repay the loan via stock purchases, GM never actually feeling the total bite of the 52 billion? That loan never coming out of their pockets, never facing the responsibility for their actions?
They cut nearly 70,000 Union jobs and reductions in the Pension, and moved more manufacturing over seas which had generated enough profits to pay this back. The truth is that GM is a taxpayer funded sinking ship, and not viable as it iscurrently structured. We are just funding the same behavior, the same failed business plans by being their crutch.
TTAC Bailout Watch
PDF of Sen. Chuck Grassley’s (R, Iowa) letter to Secretary Geithner
NYT Op Ed Piece
Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy. The rest of that account will be used to cover fourth-quarter losses (including $2.8 billion pledged for the rescue of G.M.’s major parts supplier, Delphi), repay loans from the Canadian government, and possibly prop up the automaker’s shaky European operations. That escrow account is due to expire in June, at which time G.M. will repay what remains of the $6.7 billion from this week’s pledge — and then pocket the estimated $5.6 billion remainder.
In fairness, G.M. was clear up front that it would not be able to make the taxpayers whole through cash payments alone. Rightly so: for all the talk of slimmed-down cost structures and booming sales in China, G.M. isn’t making any profit with which to repay its debts.
Ultimately, I find myself much less concerned about partisan politics these days, and much more concerned about this kind of ultra-rich and corporatist warfare on the working classes.
By the way, GM seems to be pinning their hopes of a return to profitability on the upcoming and much-hyped Chevy Volt, reportedly being built in GM’s Detroit/Hamtramck facility.