Government Motors (GM)

by Larry Levin

Have you seen the recent commercials running where the CEO of GM claims the company has "proudly paid back the government in full" or some similar claptrap? The claim is utter, complete, pure political nonsense! In short, Government Motors is lying.

You didn't really believe that drivel when you heard it - did you? Of course you didn't! When you heard the commercial, I am sure your bull$#!t detector went haywire but haven't looked into yet. Well, let me explain it to you in my special way.

The inspector general for the mother of all bailouts, also known as the Trouble Asset Relief Program, or TARP, agrees. Watchdog Neil Barofsky told the Senate Finance Committee that General Motors used bailout money to pay back the federal government. You heard that right, Government Motors (GM) tapped other bailout funds...to pay back a portion of its bailout. Call it a money shuffle or 3-card-monte hustle if you like, but do NOT call it "paid in full" like the liar in the commercial.

Senator Grassley said in a letter that a SEC form filed by GM showed that $6.7 billion of the tens of billions the company received was sitting in an escrow account and available to be used for repayment. He called on Tax-Cheatin-Timmy to provide more information about why the company was allowed to use bailout money to repay bailout money, and how much of the remaining escrow money GM would be allowed to keep.

"The bottom line seems to be that the TARP loans were 'repaid' with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials," he wrote.

The inspector general agrees and told a Senate Finance Committee "I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn't from earnings. ... It's actually from another pool of TARP money that they've already received," he said. "I don't think we should exaggerate it (the repayment claim) too much. Remember that the source of this money is just other TARP money."

That's the TRUTH of the matter and everyone knows it, especially at the highest levels of government. However, that will never stop a politician from crowing about a non-truth, since politicians think your too stupid to find out what really happened. Vice President Biden on Wednesday called the GM repayment a "huge accomplishment."

In the commercial we see the CEO triumphantly prancing through an assembly plant claiming that the government has been paid in full...IN FULL. The clear impression that we are left with is that the government was paid back by a newly healthy company and from its huge profits. Poppycock.

1. As mentioned - what was paid was simply taken from one tax payer's pocket and put into another; therefore, it is still owed to the taxpayer.
2. The newly owed sum of money is surely free of TARP restrictions so the "talent" at GM can earn bonuses again.
3. The government owns about 70% of GM's worthless stock.
4. GM still owes over $50 BILLION to the taxpayer.
5. Last quarter alone, GM managed to LOSE $3.4 billion.
6. GM's pension plan is underfunded by more than $27 billion.
7. Guess who's on the hook for #6? Yep - YOU.

GM is still MASSIVELY in debt and now in the propaganda game. If you are in the market for a new car, I would suggest buying Ford. Stay away from this welfare queen.



Previous Day's Trading Room Results:

Trade Date: 4/22/10

E-Mini S&P Trades*
(before fees and commissions):

1) FT sell @ 9:25am at 1192.00 = -1.25 & -1.25 (2 lots)

2) 80% buy @ 12:45pm at 1198.75 = +.75 + 1.50 (2 lot)

3) Algorithm positions (7)

4) "Reading the Tape" positions (12) ...combined Secret's, Algo, & "Reading the Tape" total...+5.25



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