EnduringSense

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Posts Tagged ‘GM’

Chevy Volt Sales Tank

Posted by Steve Markowitz on June 11, 2013

Chevy VoltChevy Volt is a plug-in electric car capable of only traveling 40 miles before requiring recharge.  This restriction doomed the vehicle to failure in a marketplace from the very beginning.  However, this reality did not stopped President Obama from promoting this green technology nor stopped at least one car magazine from naming the Volt “car the year”.  Politics has a strange way of distorting markets!

Volt sales have been disappointing from the start.  At times General Motors has stopped production due to excess inventory.  Today GM put an explanation mark on the Volt’s poor sales announcing $5,000 rebates on 2012 models and $4,000 rebates on 2013 models, according to CNNMoney.  This is on top of the $7,500 per Volt tax credis offered by the federal government.

President Obama has picked another loser in the Chevy Volt, adding to his growing trophy list of government boondoggles that includes Solyndra and others.

Posted in General Motors | Tagged: , , , , , | Leave a Comment »

General Motors is Rigging the Numbers

Posted by Steve Markowitz on July 22, 2012

The Daily Caller posted an article indicating that General Motors has been fixing the numbers in order to make itself and the government that bailed them out look good.  The numbers are being manipulated via two methods:

Overbuilding – GM has built more automobiles than the market requires.  In the short run this inflates profit margins as overhead costs are spread over a greater number of units resulting in a lower per unit cost in the short term.  While GM has admitted to overbuilding, it justifies the move based on some supposed future plant closings.

Channel Stuffing – GM has also over shipped automobiles to dealers.  Since sales are booked on shipments, this offers a short-term boost while the inventory grows.  A class-action lawsuit in New York has been initiated concerning this GM tactic.

Both overbuilding and channel stuffing have led to GM having robust second quarter financial results.  However, these tactics will hurt the Company’s quarter results, according to a Standard & Poor’s analysis.  It should come at no surprise that the third quarter figures will not be released until after November’s presidential election.

President Obama promotes his bailout of the auto industry a major success for his administration stating two weeks ago: “When the American auto industry was on the brink of collapse, more than one million jobs were on the line, Governor Romney said we should just let Detroit go bankrupt.  I refused to turn my back on communities like this one.”  A reality check tells a different story:

  • What about the ultimate cost to taxpayers?  GM stock currently sells for about $20 per share.  According to the Reason Foundation, the stock would have to sell for $55 per share in order for taxpayers to be repaid in full.
  • How about the disadvantage to GM’s competitors?  Why shouldn’t more successful companies like Ford, Toyota, Hyundai, Honda, etc. have replaced the failed General Motors?
  • GM’s bailout did not come from thin air.  Successful companies of all types that paid their taxes were penalized for their success in order to bail out the failed General Motors.

The bailout of General Motors was ill advised and cannot be justified by economics.  It once again showed Progressives propensity to reward failure and penalize success.  Just as grotesque, the bailout was payback by the Obama Administration to organize labor in return for future political “favors”.

Posted in Bailouts, General Motors | Tagged: , , , , , , | Leave a Comment »

GM Bailout Benefits China

Posted by Steve Markowitz on May 24, 2012

One of the accomplishments President Obama often touts cornering his first term is the supposed success of the auto industry bailout; i.e. General Motors.  The claim of success relates to the fact that GM is still in business and is once again profitable.  However, this simplistic view of success is an illusion and would only come from people who have no experience running a business.  Any first year business student knows that the definition of business success must be defined in the terms of a cost and benefit.  Specifically, does the benefit exceed the cost of an investment?  The Obama Administration has never done such a study for rather obvious reasons.

Lee sent in the video below that helps explain why the GM bailout was a failure.  Specifically, this $80 billion bailout benefits people outside the United States more than Americans.  Here are some of the facts in the video:

  • 7 out of 10 General Motors cars are currently made outside of the United States.  So much for helpful US workers.
  • General Motors has 11 joint ventures in China with Chinese government controlled companies.
  • GM is moving a significant portion of its R & D from the US to China.

While the video is critical of President Obama, it appropriately points out that Mitt Romney supporters have also profited handsomely from the auto industry’s bailout by the US government.

Conclusion: Get the government out of the business of bailing out failed companies.  The funds used ultimately benefit some citizens (or foreigners) at the expense of paying taxpayers.

 

Posted in Uncategorized | Tagged: , , , , | Leave a Comment »

Chevy Volt Production Again Halted

Posted by Steve Markowitz on March 3, 2012

The New York Times reported that General Motors halted production for the Chevy Volt for the third time in less than one and a half years.  This time production will be stopped for four weeks with 1, 300 workers being laid off at the Volt Detroit factory.

During the month of February, General Motors managed to sell only 1, 023 of the plug-in Volts.  These low sales indicate that the Chevy Volt is a failure in the marketplace, especially when compared to the Toyota Prius that sold 20,589 vehicles during the same month.

It doesn’t take a rocket scientist to determine why the Volt has failed.  Forgetting for a moment any aesthetic or mechanical issues that buyers might have, the numbers just don’t add up.  The Volt cost $41,000, approximately double the price of the least expensive Prius.  In addition, its overall fuel economy is at best marginally better, and under some conditions worse than that of the Pirus.

The Chevy Volt is subsidized by the US government, its largest shareholder, who gives buyers a whopping $7,500 tax credit.  In addition, with gas prices over four dollars a gallon in many states it is evident that the Chevy Volt is a modern-day Edsel.  However, GM will not admit failure even with this indisputable evidence.  In making the announcement of the plant closing, a GM PR executive said “Sales for the Volt in February were significantly better than January, and we anticipate that to continue.  We see good things in the future, but right now we had to make this adjustment.”  This gentleman not only works for the President, but offers the same type of political doubletalk.

Once again, President Obama who has been an ardent supporter of the Chevy Volt, has proved inept in picking winners and losers in the marketplace.  More to the point, the President’s vision for green energy is totally out of sync with economic realities.  However, that will not stop this President from continuing to waste the people’s money on his pet projects.   Like the PR puppet that works for General Motors, the President seems to believe that if he says it, it becomes reality.  Yikes.

Posted in Chevy Volt | Tagged: , , , , , , , , , , | Leave a Comment »

Chevy Volt Becomes Another Green Energy Boondoggle

Posted by Steve Markowitz on December 2, 2011

General Motors’ Chevy Volt has proven to be a product blunder and yet another example of the results that come from crony capitalism.  The Volt cannot be justified for consumers based on any cost benefit analysis, as outline in this Blog’s December 8, 2010 posting, Chevy Volt: Car or Boondoggle of the Year.  For example, the Volt can only go about 35 miles on battery power before requiring a small gasoline generator to keep the car running.  Even with a $7,500 federal tax subsidy for each vehicle sold, the demand for the Volt has been puny with only about 6,000 in total units sold to date since product introduction December 2010.  As it turns out, this marketing flop may turnout saving General Motors during a growing cleaning now required.

This week the news got worse for General Motors and the Volt when it was announced that the NHTSA (National Highway Traffic Safety Administration) has opened an investigation into fires that have started in the cars’ lithium-ion batteries.  This is the result of some Volts catching on fire including one that happened a few weeks to a car after be crash tested by the NHTSA.  It seems that some trauma to the Volt’s batteries may make them prone to spontaneous fires.

General Motors in now in scramble mode, offering to buy Volts back from owners fearful that the cars will catch fire.  Also, the Company has set up the Volt’s OnStar safety to notify GM of Volt crashes so that it can dispatch teams within two days to drain the battery and prevent additional fires.

The other all electric car is the Nissan Leaf that has not had fire issues after crash tests or real-world crashes.  However, a major technical difference is that the Leaf’s battery is air-cooled and the Volt’s water cooled.  There is some speculation that this difference may be related to the problem.

The Chevy Volt was a car that was not ready for prime time and the market did not want.  It would not exist today if not for the illegal interventions of the U.S. government.  These interventions included setting up fuel efficiency standards that favor certain builders over others, union protectionist measures that do not allow some cars to be counted in a company’s fleet fuel economy number, the bailout of GM, and a $7,500 tax rebate to incentivize people to buy Volts.  The Volt costly mistake is now added to the Solyndra debacle.  The government’s reckless and precipitous pursuit to go “green” will cost society much more than any ultimate benefit it might receive.

Progressives often show an infantile response to wants and needs.  When a young boy sees the cookie jar on top of the stove, he rarely considers the consequence of getting burnt when reaching for that jar.  Similarly, when Presidente Obama visited the Solyndra factory or drove an early Volt off of the assembly line, he only saw his want and could not conceive of the inevitable negative consequences.  However, unlike the boy who burned himself in the reckless behavior and learned to avoid the stove in the future, Progressives in government burn the People and therefore are all too willing to keep up with the dangerous behavior.  They also use causes like “green energy” as vehicles to funnel taxpayers money to political associates.


Posted in Chevy Volt | Tagged: , , , , , , , , , , , , , , | Leave a Comment »

President Obama’s Real Numbers

Posted by Steve Markowitz on September 13, 2011

A few days prior to the President’s jobs speech to the joint session of Congress, Michael Boskin, an economics professor from Stanford University, wrote an interesting piece on Obama’s policies.  He correctly points out that the President came into office with the Country facing huge economic problems.  However, the President’s policies outlined by Boskin below have exasperated these problems.

  • Stimulus Package – over $825 billion.
  • Public-Private Investment Partnership – government purchased toxic assets from banks.
  • Cash for Clunkers” – Subsidized auto purchases.
  • Home-buyers Credit – Subsidized home purchases.
  • Auto bailouts – for GM and Chrysler.
  • Foreclosure relief – Multiple versions offered to home owners.
  • Fannie Mae and Freddie Mac bailouts.
  • New financial regulation – FinReg.
  • Health-care reform – Obamacare.
  • Energy subsidies – Green energy.
  • Record spending and budget deficits that have led to exploding US debt.

This list of policies implemented by the President is impressive in breadth and width.  However, the results do not match, as evidenced by Obama’s latest call (demand) for action of the Congress that includes still more governmental stimulus spending.

Boskin also lists some of the dubious records achieved since Obama became president that includes:

– First US debt downgrade.

– Highest Federal government spending since WW-II; 25% of GDP.

– Largest Federal government budget deficit since WW-II; 10% of GDP.

– Highest Federal debt spending since just after WW-II; 67% of GDP.

– Lowest employment since 1983; 58% of working population.

– Highest long term unemployment rate since before WW-II; 46%.

– Slowest job growth after 26 months of the start of a recession since WW-II.

– Lowest home ownership rate since 1965; 60%.

– Lowest percentage of taxpayers since Federal income tax was initialed; 47%.

– Highest rate of governmental dependency in US history with 47% of Americans receiving at least one Federal government benefit.

******

The United States has radically changed since the initiation of President Johnson’s Great Society programs of the mid 1960’s.  What was once a country built on the individual and self-reliance has morphed into a society that too often looks to the nanny-state for handouts.  Along the way we have created an industry that thrives on supplying the services offered by the government that is just as greedy and dangerous as the Military Industrial Complex that President Eisenhower warned America of over 50 years ago.  President Obama has added to this industry in historic proportions.  It is evident that he is not done yet even though the policies have not brought about improvement to the economy or society.

Posted in Governmental Intervention, President Obama | Tagged: , , , , , , , , , , , , , , , , , , , , , , | Leave a Comment »

Obama’s Failed Green Car Strategy

Posted by Steve Markowitz on August 21, 2011

Adding to the list of President Obama’s failed programs is strategy to promote and subsidize green or energy-efficient automobiles.  During his 2011 State of the Union address, Obama said that he would “break our dependence on oil” and “become the first country to have one million electric vehicles on the road by 2015.”   Those words were oureObama; sound great but no substance.

Assuming Obama’s desire to promote green cars is the correct one, then its execution of this strategy has been a failure to date.  Two recent news reports help show these failings; the Chevy Volt and Costco.

General Motors recently released the July sales figures for the Chevy Volt and they are dismal.  According to GM, only 125 Volts were sold last month.  Making this low figure even more incredible is the fact that each one sold is subsidized by U.S. Taxpayer funds in the amount of $7,500.  In a bit of dishonest public relations, a GM spokesperson attributed the low sales to “supply constraints“.

Since the Volt was introduced in late 2010, only2,029 units have been sold.  Another electric car, the Nissan Leaf, has made only 1,044 sales.

Not surprising in light of the lack of electric car sales is a recent announcement by giant membership warehouse-club chain Costco.  Costco jumped on the green car bandwagon even before President Obama was elected.  By 2006 it had installed over 90 automobile charging stations, mainly in its stores in California.  Recently, Costco unannounced that is was pulling the plug on the chargers, removing them due to lack of use.  A Costco executive said of the stations that: “We were early supporters of electric cars, going back as far as 15 years.  But nobody ever uses them.”

It is evident that the market has spoken.  This again proves that the government does not understand the market and cannot create demand.

When the government attempts to implement social policy by picking winners and losers in the marketplace, is merely taking certain taxpayer money and gives it to others.  Such a questionable practice might be justified if it resulted in successful outcomes.  However, all too often the government picks and invests in the losers that private capital would not.  Such is the case with electric cars.

Posted in Government Ineptness, Governmental Intervention | Tagged: , , , , , , , , , , , | Leave a Comment »

Government Numbers and Fuzzy Math

Posted by Steve Markowitz on April 12, 2011

Blog reader Carl from New York is rightfully concerned with the U.S. government’s manipulation of the Country’s numbers.  Using trickery that could have taught the Eron accountants a thing or two, the data is often manipulated for political purposes.  The best current example is the CPI (Consumer Price Index) that indicates nearly no inflation in the United States.  There isn’t a “consumer” of food, energy and/or medical services that believes the government’s CPI data.

The outrage that Carl has with the government is reverberating with many across the Country.  This is not the result of “extremism” as the Progressives proffer in their talking points.  No, it is the result of the People understanding that the irresponsible behavior in Washington must stop.  That was the message of this past November’s elections.  The only ones that do not understand this are knuckleheads in Washington D.C.

*******

Many of us might remember reading Richard Connell’s short story “The Most Dangerous Game“.

The author in the NY Post article below refers to government’s economic numbers as a “dangerous game”.  Those questionable numbers can lead to assumptions and policies by the Fed and Treasury that would devastate the USA’s economy at a time of looming $5 per gallon gasoline forecasts and global economic turmoil, 3 wars, and the remnants of a tsunami.

This is indicative of what you’ve been saying on Enduring Sense about the mythical job numbers (and the recent US census  numbers, by the way).  For years the federal government and Congress have manipulated jobs numbers and GDP for political reasons, giving those running for re-election something to crow about.

For example, a common assumption is: if the government’s GDP calculation can show several consecutive quarters of growth above 3%, then they trumpet that the Recession is over.  And, typically, when recession’s end, of course, the government’s numbskull, politically-motivated economists will estimate that the economy adds between 115,000 and 125,000 per month (this is based on the history of the 1950’s and 1960’s, by the way, when private sector growth in the USA was strong following WW-II, and it had little to do with government action and more to do with leaps in technology and industry).

The same kind of mythical assumptions have been made that for every dollar spent to “create” one government subsidized job, there would be some sort of spinoff of private sector support jobs.

Where I live in upstate New York (near a town called Malta) a spinoff development company of chip maker AMD called “Global Foundaries” has come to town.  It is partially a Middle Eastern owned corporation and is building a new chip plant with the aid of over $1.5 billion in direct tax breaks, grants and indirect NY state subsidies in the form of infrastructure improvements to “create” about 1,200 jobs – never mind the fact that many of these jobs were previously in Austin, Texas.  Our local politicians have stated that there will be 5 private spinoff jobs for every one of these 1,200 jobs that actually cost over $1 million each to create.  Already the company has requested even more tax breaks before the plant has even been completed.  As a result, our real estate prices have not declined as much as nationally and school improvements have been approved to accommodate the influx of 1,200 jobs and another 6,000 in spinoff jobs!  Yet, in my neighborhood, no less than 25 homes have been for sale, some for over 2 years…

I can’t imagine an truly commercial company operating for very long with imaginary sales and expense data?  How can Uncle Sam get away with this?  Anyone that has created a new job understands that rarely does it create five more jobs, especially not instantaneously.  By the same token, if you eliminate one, it does not suddenly create five other lost jobs.

Where are the savings and efficiencies that Obamacare promised now after $105 billion in new taxes, regulations, waivers and spending are being “invested”?  Has the media asked the Commander-in-Chief about his “fuzzy math”?  Or, about the “fuzzy math” involving the bailouts, the Stimulus or the favorites game being played with GM, Chrysler and GE?  Are the job numbers tied to the $1.5 trillion deficit?  Do the American people or the Congress understand what the difference in a few decimal points means, or between a million, a billion or a trillion dollars?

And, so, the Democrat’s have decided that the best way to combat their own “fuzzy math” assumptions is Talking Points to call “EXTREMIST” the ordinary citizens of the Tea Party (and the cowardly GOP) for simply bringing the alarming failure of government fiscal policy to the forefront of public opinion.

The most amazing thing is that same people in Washington DC who oppose energy exploration or cutting spending and who clearly have gotten us into this situation are still in charge!

So, I’m supporting the relentless, plain talking Donald Trump.  And I am looking forward to Mr. Trump telling Mr. Obama

“You’re fired!”.

CARL HACKERT

Faux Job Numbers Could Lead to Real Trouble; John Crudele, NY POST

 

Posted in Government Ineptness | Tagged: , , , , , , , , , , , , , , , , , , , , , | 1 Comment »

GM Loses CFO in Surprise Move

Posted by Steve Markowitz on March 10, 2011

Given that we the taxpayers own a majority interest in General Motors (GM), it is important that we the people follow up its progress to see how our investment is doing.  Today, GM made announcement that is troubling.

GM’s chief financial officer Chris Liddell will be departing on April 1.  In a hastily arranged news conference GM indicated that Lidell, who has no job yet lined up, will be replaced by Treasurer Dan Ammann, who has held that position for only 14 months.

GM has been an executive turn-style ever since the government bailed them out$50 billion.  They have had had four CEOs, as well as changed its top sales, marketing, product development and engineering executives in the past two years

It remains to be seen whether some bad financial news will follow CFO Liddell’s departure.  At the very least the constant executive changes at GM indicate a less than stable corporate environment.

 

Posted in General Motors | Tagged: , , , , , | Leave a Comment »

Consumer Reports Pans the Chevy Volt-II

Posted by Steve Markowitz on March 8, 2011

On March second we posted Consumer Reports Pans the Chevy Volt that reviewed Consumer reports negative view of GM’s electric car.  The posting concluded that: “Had GM survived without the U.S. government’s bailout, the Chevy Volt would have be put out of it misery long ago.  The fact that it survived helps prove the inefficacy of governmental intervention into business ventures.  If private capital won’t risk a product’s development cost, it is not worth developing.”

Blog reader Will disagreed with the negative conclusion about GM and the Chevy Volt, which resulted in a worthwhile exchange included below.

****

What you don’t seem to understand is that this country can no longer depend on its enemies for our future energy supplies. GM is gambling that in a few years, the costs can be driven down to surpass gas fuel efficiency. If US companies don’t take risks like this, where are we going to lead. The US has got to be energy self-sufficient. We have to stop being sucker to the ARABS and transferring US wealth to people that hate us. I love the USA…it’s about time we started making moves that protect this country’s future. More nuclear power plants, finding alternatives to petroleum-based products and electric cars makes more sense than allowing the current state of affairs to continue.

This is not about short term profits, but long term viability for GM and the rest of the country as a whole.

Will

Will,

Thank you for taking the time to comment on this Blog’s Chevy Volt posting.  I will reciprocate by making additional comments based on the issues you raise.

1. “What you don’t seem to understand is that this country can no longer depend on its enemies for our future energy supplies.”

I fully understand and appreciate this crucial issue.  I am, however, unwilling to entrust the correction to this problem to a government that has proven incapable of doing so.  Over 30 years ago when the Country imported about 30% of its oil, our government created the Department of Energy (DE) to reverse this trend.  Now we import about 70% of our oil, but the DE still exists, employing thousands and has a multi-billion dollar budget.  Did the DE (government) actually make our dependence on foreign oil worse or are they merely incompetent?  Either answer the government is not the solution.

2. “GM is gambling that in a few years, the costs can be driven down to surpass gas fuel efficiency.  If US companies don’t take risks like this, where are we going to lead.

Risk is good and important in capitalism.  But so is failure, the price capitalists are supposed to pay for imprudent ventures.  Here the government is taking on a “risk” with taxpayer funds, since no private venture would fund it because the numbers just don’t add up, as per my initial posting.  The government repeatable takes on imprudent risks since they are playing with OPM (Other Peoples’ Money)

3. “The US has got to be energy self-sufficient.  We have to stop being sucker to the ARABS and transferring US wealth to people that hate us.  I love the USA…it’s about time we started making moves that protect this country’s future.”

I agree with you completely!

4. “More nuclear power plants, finding alternatives to petroleum-based products and electric cars makes more sense than allowing the current state of affairs to continue.”

Here, I agree with your goal, put not the suggested methodology.  Forgetting the fact that the Chevy Volt’s numbers don’t work, when you plug a car into the grid for charging it is burning fossil fuel.  Once again this is the result of the DE not allowing nuke plants to be built, bending to the same special interst groups that now are against drilling for oil in t the United States.  In the short run we need to drill in the U.S. quickly.  In the medium term, we need more nuke plants.  Only in the long term will new technologies be able to make a significant dent in our dependence on fossil fuels.

5. “This is not about short term profits, but long term viability for GM and the rest of the country as a whole.”

While it is not about the short term for you and me, it is for GM.  They promoted the Volt before the bailout to get short term government backing.  Since the bailout they promote it to keep their largest shareholder, the goventment, happy.

*******

If we continue to allow the knuckleheads in Washington to run what passes for an energy policy the same way they have for the last four decades, we should expect no better results.  The government’s backing of the Chevy Volt is but another manifestation of their failed policies.

Steve

Posted in Chevy Volt, Energy | Tagged: , , , , , , , | 3 Comments »