Typically, one would think that in a particular industry, if one corporation is suffering mightily, then others would follow suit.  Apparently, that is not the case in the automobile industry as while Government Motors General Motors and Chrysler are struggling with the bottom line, Ford Motor Company seems to be doing just fine.

And they’re doing well without the benefit of federal bailout money, Treasury-led restructurings or bankruptcy judges.  To illustrate how well they are doing, their U.S. market share increased during the month of May, and their sales even surpassed Toyota’s last month; apparently, they’re doing something right.  Meanwhile, GM’s stock has become nearly worthless, falling into penny-stock territory.

What’s even better news for Ford and their stockholders is that the automakers’ stock even outperformed Honda so far this year.  Yet there are stockholders who are under the belief that when GM and Chrysler eventually become “debt-free”, Ford will have difficulty competing.  But again, Ford got to their current position by doing just the opposite of what got GM and Chrysler in their current state.

They didn’t take federal bailout money – basically cutting out the government’s involvement – or allow the union to participate in their restructuring, better positioning themselves for better flexibility and long-term financial health. 

And to think – if GM and Chrysler had at the very least had a better business model – even emulating some of what Ford has done – they wouldn’t be in the poor shape that they’re in.  Suffice it to say, Ford learned from lessons past.

Finally, it has happened.  General Motors, as we once knew it, can now be called Government Motors.  The storied automaker on Monday filed for Chapter 11 bankruptcy as part of the Obama administration’s “plan” to reduce  the automaker to a “sustainable” size and give a majority ownership to the U.S. government.  That folks, is one of those “Socialist” methods that I have spoken about both here at the website and the radio program.

So with this Chapter 11 filing, GM follows the path that Chrysler took in April - basically handing over its operations to the federal government.  At least Ford had the fortitude and balls to decline any assistance from the government.  Oh, by the way – with this plan – the federal government gets 60% ownership of GM, with the Canadian government owning 12.5%, the UAW (the union, folks) getting 17.5% and the unsecured bondholders getting the remaining 10%.  As expected, the existing GM shareholders get screwed.

Also, with the filing, GM will hold onto just the Chevrolet, Cadillac, GMC and Buick brands while its Pontiac, Saturn, Hummer and Saab brands will either be shuttered or sold.  In the UAW part of the deal, wages are frozen, bonuses will end and some non-competitive work rules will be eliminated.  The deal also moves billions in retiree health care costs of GM’s books; in exchange for its ownership stake, $6.5 billion of interest-bearing preferred shares and a $2.5 billion note, the trust (union-owned, by the way) will take on all responsibility for all health care costs for all retirees starting next year.

GM will also offer buyouts and early retirement packages to all of its 61,000 hourly workers.  And let’s not forget the ultimate goal here with the federal government taking over GM – they want all of the brands that GM keeps to become “green” – meaning that the days of the SUV’s and other full-size vehicles will become a thing of the past.  Which is kind of ironic due to the fact that the Cadillac and GMC brands were GM’s moneymakers.

And there’s no guarantees that the American public will want to buy these “green” vehicles.  Folks, this is another instance of the government imposing their will on another corporation and the American public.  and I am going to go on record and say that perhaps the American consumer should perhaps boycott GM products for the time being and purchase models that do not have the “green” stigma attached to them.  I will be damned if I am going to let the government tell me what type of vehicle to purchase and drive – neither should you.  Don’t let the government dictate your driving habits.  Once again, this another step by the government to slowly introduce socialism to the masses.

I am not about to accuse the White House of anything just yet, but it appears that according to an attorney representing hedge funds and money managers, the Obama administration – in this instance a lower-level operative within the administration – threatened one of the firms that he represents.  The administration, according to Thomas Lauria, is threatening to use the White House press corps to destroy its (the firm in question) reputation.

Here’s the inside skinny on this controversy.  Lauria, who is head of the Financial Restructuring and Insolvency Group at White & Case, stated that Steve Rattner – head of the Obama administration’s Auto Industry Task Force – suggested to the investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for their opposition to the president’s plan.  The plan, announced on Thursday, would require creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler.

As one would expect, the Obama administration denied the accusation.  Obama’s response to this accusation?  Take this any way that you want:

“While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none.”

And:

“I don’t stand with them. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices.”

In response, Lauria said that the president’s accusation that his clients were not willing to make any sacrifices is false, stating that they were willing to accept 50 cents on the dollar for all debts owed from Chrysler.  This all sounds rather curious to me.

Let’s say for the sake of argument that the threats by the Obama administration are in fact true.  Assuming this is the case, this could possibly balloon into something major.  I would hate to think that one of Obama’s henchmen made threats to a Wall Street firm simply because they voiced opposition to the administration’s plan.  If my history serves me correctly, I believe that the Marxist, Socialist and Nazi governments were masters of shutting up corporations who protested – and paid the price for doing so.

I am of the hope that the Republicans on Capitol hill are taking heed of this and taking the initiative of demanding an invesiotgation on this matter.  If it is true, then there should be consequences to go with the action involved.  If they’re not true, then Wall Street looks bad once again.  Any way you slice it, there are no winners in this controversy at all.

More paving has been done on the road to socialism; to recap just a bit, it was almost two weeks ago when the House – after going into mock rage mode after the disclosure of the bonuses paid to some higher-ups at AIG – passed a bil that would have taxed those bonuses at a 90% rate.  Despite the overwhelming vote, support for the measure petered out almost immediately.  The Obama administration backed away from the idea as did the Democratic Senate leadership; however, the House Financial Services Committee is up to their old tricks.

The committee, led by that Socialist homo Barney Frank, has approved a move that would go even further than the original AIG bill; speciifcally, the new legislation, called “Pay for Performance Act of 2009“, would impose government controls over the pay of all employees – not just the top executives – of companies that received federal bailout money from the government.  The proposed bill would not only be retroactive, but would allow Treasury Secretary Timothy Geithner to obtain extraordinary powers which would determine the pay of thousands of employees of American companies.

The bill also gives Turbotax Timmy the power to determine what pay is “unreasonable” or “excessive”; it also directs the Treasury Department to come up with a method to evaluate the “performance of the individual executive or employee to who the payment relates.”  Folks, this is exactly why big government never works.  Anyone who remembers anything that FDR did during his time in office knows what I am talking about here.  It is a certified fact that the government has never succeeded in running anything in the private sector.

Right now, they are trying to run General Motors and Chrysler, now they’re trying to run select Wall Street institutions, as well.  This is exactly what nationalization is all about here – or you can call it socialism or whatever.  But nonetheless, this is exactly why – and yes again I am being redundant here – we, the people of these United States, need to get off our asses and get proactive.  The government is slowly but certainly taking away capitalism from its roots.  And you know what?  We have to organize and make a concerted effort in order to get our voices heard.

The government isn’t paying us much attention – just yet.  But rest assured, they most certainly will as there are lots of jobs at stake here – in the House, Senate and a few State Houses (governorships) during the 2010 election cycle.  They’ve already taken our money, now they’re trying to take our liberties from us, as well.  Do you want that?  I sure as hell don’t.  That is why getting organized is so important here; because if we don’t then we will most certainly become Socialist.  And I’ll be damned if I am gonna be a Socialist in my lifetime.  I’ll go down swinging if need be.  I, like the rest of you, want my country back.  Bottom line.

The GM/Chrysler crisis and President Obama’s trip to Europe took precedence on the Tuesday talk show circuit this morning.

Man, this Big Three automaker money-grubbing act is getting real old yet Chrysler is at it again.  On Wednesday, top executives of the automaker are meeting with the Obama administration’s auto task force, discussing requests for billions in additional new loans.

Thus far, Chrysler has received from Washington $4 billion  in loans and is seeking an additional $5 billion and an alliance  with Italian automaker Fiat; the task force is currently trying to restructure Chrysler and General Motors by March 31.  If neither automaker can make a compelling case for the government, the administration has the option to pull the loans and force GM and Chrysler into bankruptcy proceedings – most likely Chapter 11.

GM has said that they could run out of money by the end of March and will need $2 billion in March and another $2.6 billion in April to remain in business.  I know I have mentioned it here and probably on one of The Republican Temple’s podcasts, but I am convinced that GM and Chrysler – and to a lesser degree Ford – need to go this on their own; in other words, sink or swim.

Both automakers suffer from a shoddy business model, make models of cars that the consumer do not necessarily want, and they made bad agreements with their respective unions.  All of these bad decisions have snowballed and now it has come to this; there is no shame in filing for Chapter 11.  There’s corporations and smaller companies that have done it – the airlines are a good example – and they came out better because of it.  Throwing taxpayers’ money to the automakers needs to stop, and it needs to stop right now.

Just an interesting factoid for all of you.  All of the CEO’s who have received any parts of the federal bailout money are educated.  They went to highly regarded universities and yet, they somehow managed to run some highly recognizable corporations – both Wall Street and elsewhere – into the ground.  To give you an idea where these clueless CEO’s went to school, here’s a sample of where they received their degrees:

• JP Morgan Chase – James L. Dinon, Tufts and Harvard
• AIG -Edward Liddy, Catholic University and George Washington University
• General Motors – Richard Wagoner, Duke University and Harvard Business School
• Chrysler – Robert B. Nardelli- Western Illinois University in Macomb and University of Louisville College of Business

Surprisingly or not, the top two universities were Ivy League institutions.  To view the entire list, click here.