General Motors takes plunge in the stock market
Unlikely the Obama administration will sell off GM stake before Election Day
General Motors shares fell to a new 2012 closing low of 19.57 this week.
The stock hit 19 last December, the lowest since the car maker came
public at $33 in November 2010 following its June 2009 bankruptcy.
The Volt hybrid was supposed to provide a green veneer to GM's entire lineup, much in the manner of what the Prius did for Toyota.
U.S. President Barack Obama let GM keep $45 billion in past losses to offset future profits, which are usually wiped out or slashed, along with debts, in bankruptcy. The White House essentially gifted $45 billion in write-offs to GM. So when GM earned a $7.6 billion profit in 2011, no taxes were paid. Including the $18 billion gift, the taxpayers' true loss climbs to nearly $35 billion.
It is highly unlikely that the Obama administration will sell off its GM stake before Election Day, forcing Obama to recognize actual losses, which would remind voters that the bailout was a massive transfer from taxpayers to unions.
Union workers made sacrifices in bankruptcy, but not nearly enough, as GM only narrowed the labor cost gap vs. what Japanese automakers pay their workers. Given that Toyota still enjoys a price advantage over similar GM vehicles, the U.S. auto giant needs a labor cost advantage, not near-parity.
The Volt hybrid was supposed to provide a green veneer to GM's entire lineup, much in the manner of what the Prius did for Toyota. The Volt instead has become a public relations disaster following fires and anemic sales that led to a temporary production halt earlier this year.
GM's market share and profits got an artificial boost in 2011 as Japan's earthquake and Thailand's massive floods wrecked havoc with supply chains for Toyota and other Japanese automakers. Toyota is now happily back on track and VW and Hyundai are both expanding in America.
Overall U.S. auto sales were strong to start the year, but that momentum has faded along with slowing economic growth and hiring. Falling gas prices also may reduce the incentive to replace aging cars and trucks with higher-mileage vehicles.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: GeneralMotors, Government Motors, tax breaks, stockmarket, Volt
Rate This Article
Leave a Comment
More Business & Economics News
- China, India, Brazil could dominate global investment by 2030
- Unemployment in U.S. comes roaring back - in a big way
- Criminally unfair? Why disgraced Enron CEO Skilling could see freedom sooner than you think
- Berkshire Hathaway Inc. hits first quarter record profit at 51 percent
- China and Japan now hold record amounts of Obama debt
- Does shift to mobile mean Facebook's salad days are done? Not at all
- U.S. annual growth rate slowest since 1929, start of Great Depression
- Prosperity gap between races in U.S. widened during recession
- Here's what's wrong with the Koch brothers buying the Tribune
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?
Disclaimer: The columns, articles, advertisers claims and any other features provided on Catholic Online Business & Economics are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Catholic Online and there is no implied endorsement by Catholic Online of any advice or trading strategy.