GM - "Government Motors"

My first car in 1955 was a Pontiac, my second car was a Chevy, my third car was a Dodge, and my fourth car was the classic 1957 Chevy convertible - arguably the most beautiful car ever to come out of Detroit. I now drive a Dodge truck and have owned at least one American made car most of my adult life. Those days may be over.

Last November I wrote a blog entitled "Let them die". Here is an excerpt from that blog:

"If I were President, I would tell the CEO's of the auto companies to pack their briefcases, go back to Detroit and solve these problems by themselves; or go bankrupt. If all three US auto companies went out of business it would be a dramatic event in the history of this country, but out of the ashes of their destruction would come a better, stronger auto industry that would be competitive with the rest of the world. Detroit's problems are all of their own making primarily as a result of ridiculous union agreements and lack of long term research.

Automakers are trying to renegotiate union agreements but the damage is done. If any of the big three go bankrupt many of those union employee pension and lifetime health benefits will be gone. Or maybe the government will give these auto workers a "bailout" too. "

Well, the government gave the auto workers more than a "bailout". In the "restructuring" that was announced today the United Auto Workers could own 55% of Chrysler and 39% of General motors. With the government owning the majority of the remaining stock in both companies, the UAW will have control of Chrysler and GM will essentially be nationalized. Incredibly, in the case of GM, common shareholders who owned 100% of the company a year ago, will now own about 1% of the company.

These plans will most likely happen whether or not the companies go through a restructuring bankruptcy. So we could have a "government owned" (nationalized) auto company and a "union owned" auto company; which raises some interesting questions:

1/ If GM (Government Motors) continues to fail and lose money, will the government subsidize their own company to keep it in business?

2/ Will the government come up with new rules like "Card Check" that could penalize the non-union companies that compete with them?

3/ With the UAW owning 55% controlling interest in Chrysler, how will they negotiate union contracts? Will the UAW majority owners decide what salaries and benefits their own union workers will get?

One has to wonder if this bailout and reorganization was not the plan all along by the Obama Administration - "Nationalize" GM (Americas largest auto manufacturer), and allow the UAW to get control of Chrysler.

I predict both of these companies will now eventually fail unless the government continues to subsidize them. They simply will not be able to compete with a private business (e.g. Post Office vs UPS or FedX).

As for me, I have bought my last GM or Chrysler automobile.

"The Party is over"

"The Party is over"...a parable.

For us Christians today is Palm Sunday; a day that celebrates Jesus' triumphant entrance into Jerusalem on a donkey with multitudes waving palm leaves and shouting "Hosanna" (Arabic for "save us"). The bible says, "He proceeded to a temple where he drove out the merchants, knocked over the money changers tables, and began to heal the blind and the lame".

Today our Pastor gave a sermon about that week in ancient religious history. After arriving in Jerusalem to such a celebration on a Sunday, by Thursday the "party was over" with Jesus hosting the Last Supper, being tried and convicted by the Jewish High Priests, and crucified on Sunday.

To me there is a parable here. Our charismatic President arrives in Europe this past week to the celebration of thousands in Europe, all wishing for hope and change...someone to "save them". And he rose to the occasion; not healing any of the blind or lame; but in his charismatic way promising the world that he is here to turn the world economy around and return us to the days of prosperity. But even though the multitudes flocked, the "High Priests" in Europe did not buy his sermon. No, he won't be tried or convicted of anything, but after apologizing for America's "arrogance" he left Europe with nothing more than the adoration of thousands, who like many here, look at him as a savior.

The future will tell if he really is a "savior", because economically we need one. But I predict all the reckless spending in Washington and uncontrollable growth of debt will catch up to us and within a few years Obama's star will die out, and his "party will be over". Unfortunately our children and grandchildren will live with the legacy of this financial madness.