The Headline Read...

What The Hell Is Going On Here?

GM bails out French automaker?

You bet your bippy that headline caught my attention in light of the fact the Government Motors (GM) still owes the US tax payer $25 billion that they have failed to pay back when we they were bailed out compliments of our incompetent lawmakers, Obama being the leader of that band. So off I went thinking to myself, "Self! This couldn't possibly be true!" It appears that it is though.

I have already sworn off ever again buying a GM product after the federal government intervened and basically ended up giving the company away to the United Auto Workers (UAW) who had such a significant hand in running the US auto industry into the ground in the first place. Now with this, Obama could give me a free Chevy Volt with the packets of free contraceptives they want to give away and I'd turn that down flat too. So now for the rest of the story.

GM has decided that it wants to mimic the bad investment decisions made by the Obama administration, You know - like Solyndra and all those other belly up alternative energy companies with junk bond ratings. So they plunk down $400 million of what could be, no probably is, our tax dollars that they still haven't paid back to obtain a 7% stake in French auto maker Peugeot. Peugoet makes the Citroen. The auto making branch of Peugoet lost $123 million last year. Connecting the dots here yet?

Ever hear of Moody's? Most people have after the recent down grading of the US government's credit rating. The story got worse as I read along and did more research. It turns out that on March 1st Moody's downgraded Peugoet's credit rating to junk bond status and slapped a "negative outlook" on it to boot. Moody's did that one day after GM divvied up the $400 million to bail it out. So continuing on with the connecting the dots we go.

The US tax payer owns about one quarter of GM to this day because of their failure to repay the $25 billion they still owe us. So instead of at least forking over the $400 million to help repay the debt in question, they decide to invest our hard earned dollars in a company with "junk bond" status? So now "we" own more junk bonds. Doesn't that just make you want to jump for joy? Top off what is going on with the fact that Government Motors is sitting on $34 billion in cash and we have yet to be repaid. I don't usually write too much about the auto industry but recently I also wrote this about GM. Lots of information, facts and figures available here too.

The thinking behind GM's decision, if there was much thought involved, doesn't appear too rational to me. They surmised that this move would give them access to Peugeot’s “expertise in small car and hybrid vehicle technology” and will allow both GM and Peugeot to “save money by pooling their resources." That comes out of the report of ABC News written by Jonathan Karl. Correct attribution is important here on the Hub. What the hell are they thinking? If Peugeot has such "expertise" in the technology, then why did they end up on the losing end of the stick last year at a loss of $123 million? I reckon all those belly up alternative energy companies Obama threw our money at had that same kind of expertise.

Completing the circle of dots goes like this. GM was able to free itself from some rather shoddy production costs and deal with its labor rates more effectively by giving the UAW ownership of the company and stiffing the investors who had a stake in the company in the first place by putting their paw out and having the federal government (read: US tax payer) bail them out of their incompetence which allowed them to take cash they still owe on the initial bail out and bail out a foreign automaker with a junk bond status. Throw in the "negative outlook" attached to the company and what have you got?

All I can say is that if there is any more bailout talk by our federal government there needs to be one of the largest marches on Washington DC this nation has ever witnessed. This latest episode is right out the "blind leading the blind" chapter of how not to conduct business. The market place needs to pick the winners and losers and not our federal money munching monster or the likes of Government Motors which has already proven itself to be run by incompetents.

As Always,

The Frog Prince

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Comments 13 comments

Davesworld profile image

Davesworld 4 years ago from Cottage Grove, MN 55016

James Bond drove a Citroen and got a pretty girl at the same time - that's good enough for me. http://youtu.be/CvJp1X3qiog

Seriously, the GM/Chrysler bail out was corrupt government at its shining best. And the mess continues with GM, having learned nothing from their last flirtation with bankruptcy, going off and throwing more money away. Unfortunately, it's same old, same old.


The Frog Prince profile image

The Frog Prince 4 years ago from Arlington, TX Author

Davesworld - Now here's something else I've been giving some thought. If the tax payers (federal government) own 25% of GM, which we do, wouldn't it be logical that there are bureaucrats inside of GM to provide oversight for the corporation. If that is so, what are they doing allowing GM to invest in junk bonds with a negative attached to it?

I'm just asking...

TFP


Davesworld profile image

Davesworld 4 years ago from Cottage Grove, MN 55016

Surely you don;t think that government bureaucrats are wise stewards of other peoples money? It is probably easy to bamboozle a bunch of governmenht employees who, other than a college era stint at McDonalds, have never worked in private industry. I'm sure the government thinks this is the greatest idea since sliced bread.


Partisan Patriot 4 years ago

Froggy

I'm with you; I wouldn't drive a GM product let alone buy one; Barrack Hussein Obama Ummh-Ummh-Ummh bailed out his union buddies in exchange for a second term and unfortunately it appears to be working!


The Frog Prince profile image

The Frog Prince 4 years ago from Arlington, TX Author

PP - I'm not too sure about that regarding this issue. A recent poll I read had the majority of respondents not too happy about the fact that the bail out occurred in the first place.

They should have been made to file for bankruptcy and restructuring abut that would have made his union goons have to actually make the sacrifice they should have had to make anyway.

The Frog


FitnezzJim profile image

FitnezzJim 4 years ago from Fredericksburg, Virginia

Frog? If Moodys downgraded Peugeot to junk status after GM invested, does that imply something about GM? And sheesh, that smells. Isn't dumping paper money in a paper failure equivalent to throwing money down the drain? Do they need a loss for tax purposes, or what?


The Frog Prince profile image

The Frog Prince 4 years ago from Arlington, TX Author

Jim - Is anyone keeping a tally of how much money Obama has been pissing down the hole satisfying his crony capitalistic green energy buddies? I have...

TFP


breakfastpop profile image

breakfastpop 4 years ago

Only the union people got bailed out. Workers not in the union got the shaft. This has to be the most corrupt administration in history! Up, useful and awesome.


Stu 4 years ago

It never seems to stop. GM already flopped with the Volt, and now they want Peugeot's "expertise in small car and hybrid vehicle technology." Were Peugeot doing well, I might buy the story. But it seems GM is doubling down on a failure. As the $400 million sloshes around from account to account, I wonder how many skims, kickbacks, bonuses, and takeover contract fees insiders are going to get. We have to remember that GM shareholders and creditors got creamed. The US taxpayer got creamed. GM should be focusing on making its true fiduciaries as whole as possible, rather than rolling the dice on unproven technologies from a money losing company. With the US government currently having such a big stake in GM, it wouldn't surprise me if a tree hugging transnationalist from Kenya planted an idea in the heads of the people running GM. I'm not usually one for conspiracy theories, but if it walks like a duck, well, you know the rest.


Ghost32 4 years ago

Well, I have to confess to driving a GMC truck, but at least it's a pre-shaft 1996 model. Which, my favorite auto mechanic tells me, is one helluva lot better built than some of the newer stuff.

Watched Obama on tube a few minutes ago. Said he didn't run for Prez in '08 to go "back to where we were", but to get to "where we need to be".

Delusional as usual, in full campaign smirk.


The Frog Prince profile image

The Frog Prince 4 years ago from Arlington, TX Author

Stu - Look on the bright side. Every GM worker received a 7K bonus this year. For what? Not paying the American tax payer back in full?

Ghost - My business was going great guns "back where we were" so what can I say other than "Remember In November." I can only stomach so much of Obama in his campaign mode since he's been there for over three years as our country melts down.

The Frog


Alastar Packer profile image

Alastar Packer 4 years ago from North Carolina

Unbelievable Frog. Is there no sense of responsibility with GM; if they're going to do a deal like this can it not at least be with an auto company that didn't lose 123,000,000 last year. Hard to see how anyone could argue against this one Frog.


jimmar profile image

jimmar 4 years ago from Michigan

Hey I work there. Every time I hear talk about doing something to improve profitability I think (I wish I could say) ah hmmm...did we forget about the 24B we still owe the US taxpayers. I know, I know...but I need a job.

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