It's Halftime in Canada, Mexico and Italy

UPDATED: 07-Feb-12

image ripped from Jalopnik

Yesterday, like most Americans, I watched the game (and commercials) and enjoyed both. I thought the Clint Eastwood Chrysler ad at halftime was excellent. It never occurred to me that this was an overtly political ad, or endorsing Obama's re-election, or supportive of corporate bail-outs. Who knew? Apparently I am not sufficiently politicized to recognize the offensive polarizing nature of the ad.

I naively saw the ad as simply a straight-line continuation of the theme and style of Chrysler's excellent "Imported from Detroit" Eminem ad last year.

Here is the 2011 Eminem ad:

GM pays back $6.7B in government loans using $13.4B of government money parked in an escrow account in order to secure $10B in new government loans.

UPDATED: 01-May-10
All week I've watched GM CEO Ed Whitacre walking down a factory floor in a GM advertisement, crowing about repaying government loans while saying he could respect the opinion of those who did not want to give GM a "second chance". It is good to know that Ed can respect my opinion of the bailout. He might be interested to know that my current opinion is that his claim that GM repaid the loan from the US Government in full and ahead of schedule is complete horseshit. I hope Ed still respects me.

Shikha Dalmia at Forbes goes beyond opinion and actually does the homework:

GM CEO Ed Whitacre announced in a Wall Street Journal column Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect--a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

I wonder - Does Mike Thompson really believe that anyone beside himself would uncritically take the GM PR, advertising, and administration spin at face value and say "I told you so!" C'mon, Mike. Who would do that?

But I digress. Shika explains how the shell game worked:

"...the Obama administration handed GM only $6.7 billion as a pure loan... The vast bulk of the bailout money [$49.5B] was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return."

"...the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan."

"...the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible."

I said this was like a carny shell game, but that is not fair - to the shell game. In a shell game a bean is presumed to be placed under one of three cups, and the mark is fooled by quick manipulation of the cups into guessing and betting incorrectly where it might be found.

In GM's case, the administration just keeps stuffing more and more of our money into the company's pockets, the company moves some of the money from one pocket to another, gives a little back, and finally both the company and administration that gave them our money misrepresent what is taking place. When all is said and done, GM winds up owing us more money than before they "repaid" the loan.

But, no worries. We'll get the money all back. Someday. Over the rainbow. Just as soon as the 72.5% of GM company stock that US and Canadian taxpayers own is worth as much as they are owed and can be safely sold to repay it. The GAO suggests this may happen just as soon as....

" It concluded in a December report (which a more recent April report has said nothing to contradict, despite media spin to the contrary) that: "The Treasury is unlikely to recover the entirety of its investment in Chrysler or GM, given that the companies' values would have to grow substantially more than they have in the past."

... hell freezes over.

Hat tip to McQ at Questions and Observations who sums it up with this depressing observation:

"...it's actually worse than first imagined."

In the meantime, as taxpayers, we can take comfort in the knowledge that our money is being used to prop up a failed competitor and make life harder for the Ford Corporation. Ford is a well run American company that took the hard management decisions necessary to survive in a tough environment and made the right management decisions to earn the respect of all Americans. Ford continues to innovate and build new products out of their own capital and profits, not requiring or requesting any government handouts. And we are all paying to subsidize their competitors.

We can all sleep better knowing that our tax dollars are being used to undermine a great American company that did the right thing by reanimating their zombie competitors.

I guess I'll just have to be satisfied with the knowledge that since GM and Chrysler took my money against my will, they'll never get a dollar from me willingly to buy one of their cars. It's something.

UPDATE: 01-May-10
Nick Gillespie at Reason TV distills the scam into an easily digestible 90 second video:




H/T to Fausta, who also weighed in with a post explaining how "GM Paid Nothing". The real question, for me, is why does the media for the most part simply regurgitate such a transparent misrepresentation of the facts?

Divided and Balanced.™
Now that is fair.

If they take the bailout - boycott GM and Chrysler. Buy a Ford.

UPDATED: 15-Dec-08
This is the 2009 Ford Shelby Mustang GT 500. I want this car. I've always wanted this car. When I was in high school I wanted the 1967 Shelby Cobra GT 500. Lunchroom debates raged over the merits of the Shelby Cobra vs. the Corvette Stingray. In my mind, it was no contest, even if Motor Trend was clearly in the bag for GM. I'd even be happy with the GT350 - then or now - '67 or '09. In the bailout debate, I keep hearing that Detroit does not build cars that people want to buy. I am here to bear witness that this is simply not true. I want this car. My wife won't let me have one, but I want it. I may still get one some day. Just sayin...

I've been hearing so much negative about the "Big 3" and the bailout, that I wanted to start this post by saying something positive. I'll have some more positive things to say about Ford later, but first - the bailout. Not much positive there. Last night, the House of Representatives voted 237 - 170 to pass the Federal Auto Loan Bill. As I write this, the Senate is debating the bill.

Stephen Green at Vodkapundit sums it up nicely:

The merits of a "Detroit 3" bailout has been debated at Donklephant ad nauseum. Since I cross post and already weighed in there, I won't repeat those arguments here. But there is one point that seems to get lost in all the discussion and is repeated in Stephen's otherwise brilliant ad spoof. The question is not about whether the "auto industry" or the "Big Three" should get taxpayer money. The point is that these three companies are not the "auto industry' and are not even the "domestic auto industry". Moreover, they are not monolithic, do not have the same operational structure, do not have the same financial needs, do not make the same cars, do not have the same competitive status and they should not be lumped together in this debate. These companies are competitors. So in the spirit of this blog, lets divide them up and treat them separately.

General Motors

GM is a basket case, plain and simple.

• In 2007, Toyota sold 9.37 million vehicles.
• In 2007, General Motors sold 9.37 million vehicles.
• In 2007, Toyota made $17.1 billion.
• In 2007, General Motors lost $38.7 billion.

Source:Mises Blog (H/T Crossing Wall Street)

GM has massive manufacturing overcapacity in workers and plants compared to to the number of cars they sold, are selling, or have any realistic expectation of selling. Nothing short of a meat axe restructuring can make them profitable. It is not the kind of cars they make. It is not their quality. It is their business model. It is their labor costs. It is their overcapacity. The only way they can accomplish the radical restructuring they need will be under the inevitable chapter 11 bankruptcy protection. Every penny they get from the taxpayer between now and then is money thrown into the bottomless pit.

Chrysler

Chrysler was taken private by Cerberus, which is one of the richest and best connected private equity firms on the planet. Michael W at QandO blog has been beating the drum on the Cerberus issue for a couple of weeks, and the story is getting traction in mainstream media and other blogs. This from Forbes and the NYT:

"Buried on the business page of The New York Times Saturday were the details of Detroit's biggest snow job yet—literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."

That's right. Not to save the jobs of Chrysler employees or America's disappearing manufacturing base, mind you, but to prevent "one of the world's richest and most secretive private investment companies" from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers."

This stinks to high heaven. As far as Chrysler is concerned, all the Kabuki theater in Washington has nothing to do with "saving Chrysler". Nothing. It has everything to do with asking taxpayers to bailout the Cerberus investors and seve them from extending any additional risk to support their own speculative investment.

Ford

That brings us to Ford, and a ray of hope. Don't get me wrong. Ford CEO Alan Mulally did not cover himself or his company in any more glory than the rest of the bozos in either of his two appearances before Congress. But this week, with the help of the great-grandson of the man who founded the company, Ford finally got it right:

"Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr. told The Associated Press on Tuesday they are confident that the borrowing, coupled with restructuring and new product plans, will get them through the recession without relying on the government. Ford even said the century-old company that bears his family's name might be able to use the independence from loans to its advantage. I think if they see Ford as a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers, I think that could be a positive for us," Ford said."

Proponents of this bill make much of the argument that consumers will not buy a car from a company operating under Chapter 11 protection. Given the fact that this bridge loan will do nothing more than bridge the time until GM asks for much more money under the single party rule of Barack Obama in March, that argument is becoming moot. Who would you buy a car from? From a basket case of a company that refuses to take the strong medicine they need to survive? From a private equity firm without the balls to back their own investments? Or from a company that has already taken the right steps, has figured out a plan to weather the storm (and also BTW makes some really great cars)? A company like Ford.

If Ford declines the taxpayer money , Ford deserves the support of American car buyers. If GM and Chrysler take taxpayer money, they do not deserve the support of American car buyers.

Polls show that a majority of Americans oppose taxpayer dollars being used to support the Detroit 3 bailout. The bill is facing oppostion in the Senate, and it is not clear whether it will pass, even with administration support. In my dreams, Americans take matters into their own hands if this bill passes. In my dreams, Americans begin to apply the discipline that our representatives in Washington do not. In my dreams, Americans vote with their car buying dollars and stop buying products from any company that solicit government bailouts. This might be tough to do with the banking industry which has effectively been nationalized, leaving few choices. But it is certainly something that Americans can do when choosing to buy a car between Ford, Chrysler, and GM.

I drive a 1999 Jeep Cherokee that I purchased new from a Dodge/Chrysler/Jeep dealer ten years ago. I thought I would replace it next summer. With all the great deals being thrown around, I may move that purchase up. I love that Jeep, it has been a great car for me. But if Chrysler/Cerebrus takes Federal money - I won't buy another Jeep. If Ford declines the loan, I'll be a Ford man now.

I have no illusions about the limited reach of this blog, but for FWIW - in a small token of support for Ford doing the right thing - DWSUWF offers a little free advertising for a great American car company that builds great cars, is capable of making tough decisions in a tough market, and running an automotive business without picking the pockets of the American taxpayers.

Boycott Chrysler/Cerberus. Boycott GM.

Buy a Ford.

Want fast? Consider this ....
Ford Shelby Mustang GT 500

Need a truck? Consider the ....
Ford F150 Pickup Truck

Going off road? Consider the ...
Volvo XC70 SUV Crossover
I'm going to look at this one to replace my Jeep.


Going green? Consider the ...
Ford Escape Hybrid

The Ford Shelby Mustang kicked the GM Corvette's butt when I was in high school in 1967, and with the decision to decline government bailouts, Ford is still kicking GM butt today.

UPDATE 1:
As often happens on the intertubes, after posting this screed I find I am not the first thinking along these lines. Sphere informs me The Lonely Conservative beat me to it yesterday, as did Polipundit (by a few hours). There is even a website - "Boycott the Bailout".

UPDATE 2: 12-Dec-08
Nevermind. The bailout was defeated in the Senate.

UPDATE 3:
Oops. Stay tuned. The President and the Bailout Czar are apparently going to give them our money anyway, as James Joyner notes:

"President Bush may ignore Congress and give the Big 3 the money they want, anyway... That the bailout fund in question was designated for entirely different purposes and is blatantly unconstitutional doesn’t seem to bother the president. One wonders if Democrats will rail against this as an abuse of power or see it as an act of benevolence."

American car buying consumers can yet make the right decision that our representatives in Washington did not, by shunning the companies that take the funds and supporting the auto manufacturer that chooses to not take Federal bailout funds.

UPDATE 4: 15-Dec-08

Thanks to Bobo for linking this post in his fine weekly carnival compilation.

I also cross-posted this at Donklephant, and got the usual intelligent and provocative responses from the commentarium there. Well worth the read. Notable was one particular response from Scott Monty, a "Social Marketing" author, guru and blogger who -since June - has been the Global Digital Communications Social Marketing Director for Ford Motor Company. I responded on both his blog and the Donk. I'll be interested to see if it was just a drive by comment from a corporate flack, or if he actually engages in a dialog. In either case, just the fact that Ford has hired someone to interact with social media and bloggers says something about Ford "getting it" all by itself.

Divided and Balanced.™
Now that is fair.

Technorati tags: Big 3, libertarian, Ford ,Bailout Nation, Shelby Mustang, Divided Government, GM, Chrysler, Cars