Archive for August 24th, 2012

Will GM go bankrupt again?

August 24, 2012

That’s the question posed in a recent Forbes article that’s worth reading.

Here are some of the underlying facts … read the article for the editorial stuff …

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Stock Market

The federal government owns 500,000,000 shares of GM, or about 26% of the company.

The stock is trading at about $20/share, so the government is holding about $10 billion worth of stock

The government’s GM stock is worth about 39% less than it was when the company went public at $33 /share

Since GM’s IPO almost two years ago, the broader S&P 500 has gone up about 30%.

During that period, Ford shares have gone down about 15%, Toyota up about 15%, Honda up about 5%, Nissan up about 35%, Hyundai up about 60% and Volkswagen up about 85%.
Source

It would take about $53.00/share for the gov’t to break even on the bailout.

 

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Car Market

As a company, General Motors peaked in 1965, when it commanded 50.7% of the U.S. market, and made a stunning-for-the-time $2.1 billion dollars in after-tax profits.

In the 1960s, GM averaged a 48.3% share of the U.S. car and truck market.

For the first 7 months of 2012, their market share was 18.0%, down from 20.0% for the same period in 2011.

GM is flailing in the D-car segment (Malibu, Camry) which accountd for about 20% of the U.S. car market.

Recent (and forthcoming) versions of the Malibu score dead last in Car & Driver reviews.

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Uh-oh

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Spreading the wealth … from the suburbs to the center city.

August 24, 2012

Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center and author of the new book, “Spreading the Wealth: How Obama Is Robbing the Suburbs to Pay for the Cities”.

His central premise was summarized in Forbes:

In the eyes of the leftist community organizers, suburbs are instruments of bigotry and greed — a way of selfishly refusing to share tax money with the urban poor. 

To reverse the trend, some groups advocate systematically redistributing the wealth of America’s suburbs to the cities via  “regional tax-base sharing,” a practice by which suburban tax money is directly redistributed to nearby cities and less-well-off “inner-ring” suburbs.

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President Obama has lent the full weight of his White House to the  efforts.

A federal program called the Sustainable Communities Initiative, for example, has salted planning commissions across the country with “regional equity” and “smart growth” as goals. 

These are, of course, code words. 

“Regional equity” means that, by their mere existence, suburbs cheat the people who live in cities. 

It means, “Let’s spread the suburbs’ wealth around” – i.e., take from the suburbanites to give to the urban poor.

“Smart growth” means, “Quit building sub-divisions and malls, and move back to where mass transit can shuttle you between your 800 square foot apartment in an urban tower and your downtown job.”

Suburbs are for sellouts:  That is a large and overlooked theme of Obama’s famous memoir, Dreams from My Father.  The city is the moral choice.

He attributed urban decline to taxpayer “flight” to the suburbs. 

So, compulsory redistribution of suburban tax money to cities was the only lasting solution to urban decay. 

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