Fire Sale

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NEW YORK — CNNMoney reports that General Motors Corp. will sell its Saturn unit to Penske Automotive Group, owned by racing and business legend Roger Penske. The deal gives Penske the rights to the brand, but GM will continue production of the Saturn Aura, Vue and Outlook.

If anyone can make it work, Mr. Penske can.

I hope he still has his unfair advantage.

Too bad Pontiac isn’t part of the deal. The excitement of the Pontiac line comes from Australia’s Holden right now: the G8, the GTO, and the El Camino-style Holden Ute which the motoring press called the G8TR (“Gator”) but Pontiac expected to sell as the G8 ST. Since Mr. Penske will “import” his Saturns from the GM plants, he could do the same with the best of the Pontiac line and sell them all under the “no haggle” Saturn roof.

Wow.

Shares of Penske (PAG) rose 3% in morning trading.

Meanwhile, GM announced on Tuesday it would sell its Hummer line to China’s Sichuan Tengzhong Heavy Industrial Machinery Company Ltd. thus moving the U.S. Army’s primary ground vehicle production into the hands of a foreign nation.

When Pigs Fly. Or Something.

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SAN FRANCISCO — The California Supreme Court overturned gay marriage in the Land of Fruits and Nuts last week. Meanwhile the, um, corn-fed Iowans upheld gay marriage last month.

That seems more than odd.

Five states (Connecticut, Iowa, Maine, Massachusetts, and Vermont) have legalized gay marriage. More than 40 states explicitly ban it.

California has an unusually strong direct democracy. Voters can decide almost any question via propositions and state constitutional amendments. Proposition 8, the gay marriage ban, passed in November.

The California Supremes upheld that Prop 8 was a permissible amendment to the constitution. “The measure carves out a narrow and limited exception to these state constitutional rights, reserving the official designation of the term marriage for the union of opposite-sex couples as a matter of state constitutional law…”

California is not alone in changing its constitution on a whim. Florida had six constitutional amendments on the November ballot.

I generally favor direct action by an electorate. Every citizen votes directly in the classic New England Town Meeting. That works well but it is worth remembering that when the majority tries to teach a pig to sing, that majority ought not also be able to legislate the pig’s pleasure.

It is time states like California and Florida learn that a state Constitution may be a living document but it ought not be one that sways in every breeze. Oh yeah, and that pigs don’t like to sing.

[apologies to Robert A. Heinlein]

General Motors, The Final Rant

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Auto czar and Commander-in-Thief Barack Obama has raced General Motors through a complex series of last-minute deals to speed the automaker way into the fast-track, presidentially engineered, bankruptcy they filed this morning. The company will emerge in 60 to 90 days as the nationalized U.S. Government Motors.

Oh, yeah?

What else would you call a car business that is

  • Beaten down by political maneuvering
  • Stolen from its owners
  • Handed not just in majority but almost in entirety to “your” government.

History has textbooks full of taking industries or assets into public ownership under a national government or a state. Wikipedia reports that “The motives for nationalization are political as well as economic. It is a central theme of certain brands of ‘state socialist’ policy that the means of production, distribution and exchange, should be owned by the state on behalf of the people.”

Charged with operating “in the public interest,” nationalized industries are under strong political pressure to make social goals instead of decent products (or profits).

Here are some examples of historic nationalizations:

  • The Castro government “expropriated” all private companies after the Cuban Revolution of 1959.
  • The Yeltsin government seized Gazprom assets in 1998, claiming the company “owed back taxes.”
  • In the past two years alone, Hugo Chavez stripped control of the Orinoco oil belt, nationalized the cement industry, steel mill Sidor, and much more.
  • The Obama government will nationalize General Motors today by seizing its assets. They will claim the company might default on its loans.

“We won’t keep it any longer than necessary,” President Obama said.

Have you noticed? Every thief has an excuse.

Thomas Jefferson wrote, The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.

Was King George III really any worse? That poor monarch just wanted the profits on our tea.

Posted early to match the 8 a.m. filing deadline.

Guest Post: Bob says I ask you, Senator Specter–DID YOU KNOW?

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Arlen Specter (D-PA) is the correspondent’s senior United States Senator from Pennsylvania.

Dear Senator Specter:

I will make this as short as possible.

As of Monday, May 24, just 6 days ago, the federal government was supposed to get 50% of General Motors new stock, the UAW 39%, the bondholders 10% and the original stockholders the remaining 1%. (I bought GM stock based on that.)

This was sure never to fly as the bondholders would expect the courts to give them more so it was a “deal” designed to ensure bankruptcy.

On Friday, the deal suddenly changed. Now the UAW gets 17.5%, the Feds get 72.5%, and the bondholders still get only 10%, albeit with warrants to buy 15% more stock. Common stock becomes pure trash.

Why did the UAW ownership drop? Did the UAW agree because they thought that the additional money would go to the bondholders, potentially averting a bankruptcy that destroys the value of their own common stock?

I ask you, Senator Specter: DO YOU KNOW?

If you do not know. do you know anyone who does know? There hasn’t been a word breathed in the press, so I assume the media must not know (or doesn’t care since a bankruptcy would sell more copy. Even the Wall Street Journal thinks the government “sweetened the offer” to the bondholders (at the same time the government upped its own holding by almost a third, a little fact that keeps slipping through the cracks.)

If you do not know, why is this bankruptcy allowed to proceed without a timeout for hearings, so the executive branch can explain under oath what the hell they are doing to the American people?

A bankruptcy will insure that the GM stock in millions of 401Ks (actually already “201Ks” or even “101Ks” ) around the country can NEVER recover their value. Without a bankruptcy, they could eventually recover.

This government takeover leaves millions of people’s retirement prospects destroyed, including many who are already retired and unable to start over. That includes the UAW members who accepted a smaller share of the new company plus non-union GM employees, dealer employees, in addition to mutual funds that are held by people all over the country. A large number of Pennsylvania retirees and stockholders are your own constituents and voters.

I ask you, Senator Specter: What is the benefit to destroying the common stock? Why destroy business ownership if the deals in place let the GM stock in those 401Ks recover?

Is it the business of this government and the political party you joined to insure that people can never retire?

I ask you, Senator Specter: What will the impact of the bankruptcy be on the healthcare programs for GM employees and retirees? We are not just talking UAW line workers, but all GM employees, union, non-union, and professional. Is it the business of this government and the political party you joined to make sure people have poor healthcare?

Or is it the intention of this government and the political party you joined to build demand for nationalized healthcare!

I ask you, Senator Specter: Wouldn’t such an approach be fraudulent?

Ralph Nader, whom I historically have despised for the fraud he perpetrated with Unsafe at Any Speed, published an editorial in Wall Street Journal on Friday. I laud him for raising the issues and for pointing out that IT IS NOT TOO LATE TO AVOID THE BANKRUPTCY OF GENERAL MOTORS.

It will take more than that lone voice in the wilderness.

We need a major voice in the Senate to call for a time out and for hearings to that the American Public can understand what is being done in their name. YOU MUST DO THIS TODAY.

Thank you.

(signed)
Bob Post, registered voter

Footnote:
Arlen Specter (previously D-, then R-, and now D-PA) is the correspondent’s senior United States Senator from Pennsylvania. Senator Specter had been a member of the Democratic Party before switching to the Republicans to win a campaign for district attorney. Elected to the Senate in 1980, Specter rejoined the Democratic Party this year when he discovered he would lose his upcoming Republican primary.

Why Does Obama Want to Bankrupt Me?

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The pundits all expect that General Motors will file for bankruptcy protection on Monday.

Why?

We (used to) assume that people act to preserve their economic interests. Government acts to preserve the governors.

Given the horse puckey that has already gone on in the Wall Street-Pennsylvania Avenue continuum, I think I have it figured out why Barack Obama wants to bankrupt me:

  • 1. The Democrats need to generate demand for universal health care. Imagine that.
  • 2. Big bond holders bought credit swaps, the financial innovations that insure debt. Credit swaps pay off only in a formal default. Imagine that.
  • 3. Congress needs to shore up Social Security; all the calls to strip that pot of gold from their hands scared them silly. Imagine that.
  • 4. The Administration needs to be able to say, “See, this is what happens when you sell gas guzzlers; you go bankrupt.” They are already saying that about the Dodge Hemi. Imagine that.

1. One might think demand for universal health care would be, well, universal. Oddly it isn’t. That said, if half the country suddenly loses its benefits when the bankruptcy domino train rolls through, Democrats hope that changes. A GM bankruptcy almost guarantees that all those workers jump on the Medicare bandwagon.

2. Credit swaps pay off only in a formal default. Look at which Wall Street player whisper in President Obama’s ear to see how financial policy is formulated. A GM bankruptcy could guarantee the credit default.

3. Congress is not afraid that the Social Security will be bankrupt by 2050. Congress is afraid that the Social Security will become irrelevant within their elected terms. Congress absolutely cannot give up that “revenue” stream. A GM bankruptcy guarantees the Social Security revenue stream.

A GM bankruptcy means autoworkers now have 201Ks because the stock in their (former) 401Ks tanked. If GM shares are not wiped out and the company recovers, the autoworkers’ 401K’s will recover eventually. A GM bankruptcy means autoworkers and everyone else with GM stock in a retirement account is more than ever dependent on Social Security. I hope the UAW has finally discovered that a boughten politician doesn’t stay bought. And I hope that you, gentle reader, understand that bankrupting GM decimates my own personal retirement account.

4. Finally, the Administration needs to eliminate the popular gas guzzlers to push forward their Consumer’s Union vision of the perfect car: the 1985 Yugo. After all, it is not right to sell ten million popular cars and trucks. It is only right (should that be left?) to this Administration to sell about half a million Yugos. Or Fiats. A GM bankruptcy guarantees there won’t be anything else sold.

“Those cars are ugly,” Rufus said about the looming Chrysler-Fiat deal. “Americans may not remember all the problem cars Fiat made the last time they were sold here, but Americans don’t buy ugly.”

I dunno. The Democrats sold us first Al Gore and now Barack Obama so perhaps they can sell us Flea Flops, too. But I’ll betcha not one Congress Critter buys one. According to the Intert00b, Far Green darling, multi-millionaire Mr. Gore owns a giant 10 mpg Ford Expedition.