A very expensive federal bailout

To the editor:

How can a major U.S. corporation show a profit for 11 straight quarters after going through bankruptcy, sell a product at well below its production costs, and pay their CEO a seven-digit bonus after one year when their stock value declined by about 40 percent? Easy: They got a bailout from the government and it’s all done with taxpayers’ money.

General Motors has now been restructured for two years, and the government still holds 500 million common shares, currently trading in the low 20s, which they purchased mostly in the high 30s for and will have to sell for more than $50 per share to break even. The profit they show is on a cash-flow basis, where the loss in value is probably shown as a loss in shareholders equity.

Had the entire bailout been in the form of a loan, the interest would have been deducted and likely have shown an operating loss; it would not have burdened the taxpayers with a $20 billion plus unrealized loss and it would have given them some return, but it would not have looked as good for GM or the government and their infinite wisdom.

As for their products, for the most part they seem to be competitive. However, it should be noted that their highly publicized Volt is sold at well below its production costs (around $49,000 per unit as stated by Reuters as recently as September.) The government also gave $7,500 in the form of a tax credit to anyone who would buy one.

Besides this, the administration largely funded the construction of a plant in Holland, Mich., for a Korean company, LG Chem, to make Lithium batteries for the Volt. This plant was built and staffed almost two years ago and has yet to deliver a Volt battery, although the Feds have provided over $7 million in job training with no revenue.

And in a company being saved by bailout money, was it appropriate to give CEO Jack Akerson a $1 million-plus bonus after one year? He admits that their major expansion is earmarked for China.

I personally would like to see GM succeed and the American workers maintain their job security. I further would like to be able to afford one of those great Corvettes. However, if we allow out tax dollars to be drained under the premise that we are helping fellow Americans, when the major expansion is headed toward Asia, we are being had.



Can they do better?

To the editor:

No one likes to see anyone lose their job, particularly around the holidays and when the country is heading into deep economic trouble. That’s why the closure and liquidation of the Hostess Brands operation is sad. According to CNNMoney, nearly 18,500 workers will lose their jobs.

CNN says the closure was due to a strike by the bakers union, who claimed that the company was mismanaged. Hostess, already in bankruptcy, didn’t have the resources to weather the strike and decided to shut down and liquidate.

But doesn’t this liquidation offer the union an opportunity? Why doesn’t the bakers union buy Hostess Brands? Then they can manage it properly and pay themselves whatever they want.



Takes the cake

To the editor:

I heard on the news today a Hostess union driver commenting “This country is really screwed up when they let a company like Hostess go under.”

Like all union people who blame everyone but themselves, he doesn’t understand that the “they” he speaks of is himself and his fellow union folks. They would rather let the company go under than give an inch.

More, more! Raises and benefits! Gimme, gimme, gimme! Now they have no job and no income. Brilliant strategy, people.



Who’s greedy?

To the editor:

Regarding Daniel Olivier’s gloating Nov. 18 letter, “Loss for greedy, win for rest of us”: It’s ObamaClaus who’s taking from the productive – those who pay the most taxes. That’s greedy.

But the free marketeers are going on strike. Large and small, privately and publicly, they’re laying off, cutting hours, and delaying investing to defend themselves against overregulation and more tax grabs.

Who will Mr. Olivier blame when the already weak economy really tanks? Hint: The party that controls one half of one third of the government won’t make a credible scapegoat.



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