Good Times for Government Motors, not so for Investors.

Well, it seems General Motors had a good year in 2011.

"There is no doubt that GM has returned from the brink. It made $8 billion last year, a record high, and regained enough global market share to once again become the world’s biggest automaker, a title it had lost to Toyota. More impressive, it is planning to bump its profit margins from 6 percent last year to 10 percent this year, on par with its best-in-class rivals such as Hyundai and BMW. This, it hopes, will allow it to post $10 billion in profits this year, something that only 17 public companies managed to do in 2010."
Source: http://reason.com/archives/2012/02/22/gms-profits-dont-mean-taxpayers-will-be


Exciting right? Investors must be lining up to buy Obama's boondoggle, not quite. ,

"GM’s stock price, which has been hovering around $25 for months, barely budged. That’s $8 below GM’s IPO price. And it’s $30 below what’s needed for taxpayers to recover the $30 billion they still have stuck in the company."

Not to worry! I'm sure 2012 will be a great year for GM!  

"If investors aren’t buying GM’s rosy scenarios, it’s for some good reasons. Peter De Lorenzo, editor ofAuto Extremist, notes that GM is facing the most competitive market in history and investors are dubious that it can deliver. GM’s $8 billion in profits last year resulted partly from the tsunami in Japan that disrupted Toyota and Honda’s global supply chain."

Who cares? Those plants GM built in China and the one in Germany will save us!

"Tougher competition in North America is not GM’s only worry. Its sales in China are slowing. Also, Europe will probably remain a trouble spot. GM suffered $2 billion in losses in Europe last year, thanks to Opel, its hopelessly bloated German brand. But GM has been unable to obtain permission from the German government to restructure its labor costs, even as European sales plummet in an economic meltdown."

Hmm, let's do the math, higher salaries for Opels people aren't buying? Deutschland uber GM indeed. Hey Germany, now that you got rid of National Socialism how about getting rid of Socialism? I know we're setting a poor example with Obama bailing out GM, but come on! Learn from our virtues, not our mistakes. 

"If GM manages to address all these issues, notes Sean McAlinden of the Center for Automotive Research, its share price might go up $40 to $45, leaving taxpayers still $5 billion to $8 billion in the red. But that’s under the best scenario. If stock prices remain at the current $25 level, the losses could mount up to $15 billion. That’s not counting the $15 billion in tax write-offs that GM got as part of the bankruptcy deal. All in all, taxpayers are facing somewhere from $20 billion to $30 billion in losses."

Great! So instead of letting a bad private company collapse, now it's our bad private company. Yeah, nice way to "save" jobs Obama. If it was up to me, I'd would make Michigan the most business-friendly state and then you'd see car companies near and far setting up shop. Let GM collapse, break it into pieces, let investors build their own cars with FREE labor. That's what works.