GM wants $30 Billion from Congress now – $12 Billion more than their previous request. Their stock closed at $2.15. If they don’t get it, they have threatened catastrophic (a word which, when used in the economic context, has now officially officially been beaten to death) bankruptcy to follow. The very thing which, during their last hat-in-hand visit to Washington, GM’s execs told Congress would be unthinkable, signaling the end of any consumer ever considering buying another GM car again. Crying wolf.
To “sweeten the deal,” GM has also said that it will fire 47,000 people it presently employs by the end of the year – this, out of 244,000 employees around the world– roughly one-fifth of GM’s worldwide workforce, of which some 20,000 jobs will be lost right here in the U.S., and five more plant closings, leaving more monster factories taking up miles of space to rot. And, if GM doesn’t get the $30 Billion it now wants, they predict that by the end of March, some 6 weeks from now, that’s all for GM. . . Last one out turn off the lights.
G.M. also offered this uplifting estimate, if the others have not yet got you down – they say that financing a GM bankruptcy could cost as much as $100 million. And Tuesday, the Dow lost 300 points, world markets tumbled, and by day’s end, GM’s stock was trading at a little over two ITunes songs (ask your teenaged kids)- about $2.15 a share.
Now, simple arithmetic, made idiot-proof by calculators, tells us that, at $2.15 per share, $30 Billion would buy 13,953,488,372.09 shares of GM’s stock, if there are 13 Billion+ shares outstanding – there are actually only 566,059,000 outstanding shares of GM’s stock according to “TheStreet.com”.
Why don’t we ‘nationalize’ GM and put them and us out of their misery? Why pour your and my hard-earned tax dollars down a rathole trying to save a dying behemoth of a car company that makes no more sense continuing to exist than trying to save the glaciers from melting in Alaska or scooping up the Sahara Desert in a giant sieve? Am I missing something? The U.S. government could make a tender offer at the princely sum of $3 per share, nearly a 30% premium — $1,698,177,000 – and still have $28+ Billion left over for! Virtually every other major industrialized country props up their automakers, why do we keep up the ‘What’s Good for General Bullmoose is Good for the USA’ fantasy when it makes no sense anymore?
Considering that the major banks right now are dead zombies walking right now and that, eventually, Congress will have to pony up many more Billions to keep them at least looking like they are still alive, is this the best use of $30 Billion right now? To give more money transfusions to US automakers to keep them upright dead zombie companies makes absolutely no sense whatsoever.
This Death by a Thousand Cuts approach to BailOuts for US Automakers might have made sense last Fall, Trillions of dollars in BailOut money ago, before we truly had the chance to digest the massive extent of the economic TrainWreck we now watch daily. It makes no sense now at all.
When President Obama signed the Stimulus Bill in Denver on Tuesday, he pointedly said that this nearly $800 Billion will not be the last time we go back to this well of money. We don’t even have to print it anymore – the Treasury just sends electronic signals to major banks, they add a few zero’s and we’re off to the races. Let’s stop fooling ourselves; the US Automakers should not be rewarded for failure, or arrogance, or for having dismantled public transportation in cities like Los Angeles and many other places, just to sell more cars (and tires), or for making gas guzzling SUV’s so suburban housewives and mothers can tool around in vehicles the size of tanks, burning fossil fuels and making sure that the oil companies can keep setting new world records for corporate profit year after year and quarter after quarter. Enough already.
Then, we can use the $30 Billion, or the $28+ Billion left over after the tender offer, to incentivize inventors, startups and entrepreneurs to compete for projects in alternative fuels, electric cars and the high tech batteries that they will require, and so many other innovations so long blocked by the Dinosaurs of Detroit.