Recently General Motors, or as I like to call them, Government Motors announced plans to invest nearly $300 million dollars in a joint venture with a Chinese company to build GM trucks in China. If you are at all like me, this announcement probably leaves you a little confused. After all, wasn’t this company on the verge of bankruptcy. Wasn’t Jack Wagner, its CEO crawling up the Capitol steps begging lawmakers for a bailout? Weren’t thousands of American GM employees being laid off and factories being closed? Where does a bankrupt company get $300 million to invest in a foreign venture? The American taxpayer; where else?
GM has been building cars in China for years now, and currently builds Buick, Chevy and Cadillac models. This venture will add light trucks and minivans to their Chinese production. To date almost none of this production ends up in U.S. showrooms, but how much longer can we expect that to last?
This week Government Motors managed to add insult to injury for the American taxpayer when they announced a new sales strategy, a sixty day money-back guarantee. That’s right, buy it and drive it for sixty days (up to 4,000 miles) and if you don’t like it, they’ll buy it back. No wonder this company has lost $88 billion since 2004. This may just be the worst idea in the history of automotive sales. A returned car with 3,800 miles is worth thousands less than it was new. It will not take very many of these to off-set any gain in market share GM manages to snag with this gimmick.
When this silly stunt fails to save the company, the management team will undoubtedly come up with another. Or perhaps they will decide to invest further in China. Either way, more of the American taxpayer’s hard-earned money will be wasted trying to save a dinosaur that was brought down by complete management incompetence and grotesque union greed.
At a time when many Americans can’t afford the basics such as food or the mortgage let alone a luxury like an island vacation, the Obama administration is paying $200 million to send 17 Muslim detainees on a luxurious Pacific island get away. OK, not exactly, but the truth is not any better. In truth, , in its determination to close the detainee facility at Gauntanamo the Administration will be providing Palau with $200 milllion in aid (those are your tax dollars folks), and in exchange, Palau will take in the 17 Chinese Muslim detainees and allow them to take up residence on the islands. They will be free men, subject to periodic review by the Palau government. Washington Times Article
Meanwhile, the Chinese government considers these individuals criminals and wants them extradited back to their native land. Sending them back to China where they belong would be free for the U.S. taxpayer, but the Obama administration fears they may not be treated fairly by the Chinese government, and thus arranged this alternative plan. So, we have interfered in how China deals with its own people and spent another $200 million of the American tax payer’s hard-earned money to do it. $200 million this government will have to borrow of course due to this year’s record $1.8 TRILLION deficit.
This follows on the heels of reports that the Administration has also begun Mirandizing foreign fighters captured in the war on terror. Coming soon to a court room near you will be suspected terrorists hiding behind Constitutional protections designed for and promised only to American citizens. Interestingly, just a couple months ago, President Obama laughed this idea off saying it was, “ridiculous”!
Apparently, it wasn’t so ridiculous.
Al Gore calls it an Inconvenient Truth, but I would say the global warming, carbon emissions, cap and trade situation is a Complicated Truth. Any one of these topics would be hard to delve into in a single blog entry or even in several entries, but I will point you to this article which is a compelling look at the complexities of the issues – Bound to Burn by Peter W. Huber. If you are looking for a common sense, honest analysis of these difficult topics, here it is.
Mr. Huber explains the real truth, that China, India and other developing nations are not going to be convinced to cease the burning of fossil fuels and thus impede their rapid advancement out of poverty. Not even to “save the planet”. If Democrats persist in placing extreme regulatory limits on carbon emissions in this country the resultant job migration overseas will make us look back longingly to the “outsourcing” job migration of the last 10 years. I might add, that when cap and trade is coupled with the current administration’s plans to raise corporate tax rates, every employer in America that has the ability will have all the reason they need to take their operations and the associated jobs overseas.
Likewise, the $40 trillion in oil under the Middle East is coming out of the ground. If you think it isn’t, I beg you to explain to me how a few sheiks, who hate us to begin with, will be convinced to give away $40 trillion by not drilling that oil. Of course, that’s rhetorical because there is no way that will happen.
Simple logic tells us that 1 billion people in developed nations cutting their carbon emissions, while the other 5 billion people on this planet are increasing their emissions rampantly, is not a formula for solving this problem and will only put those people doing the cutting at a huge competitive disadvantage. Bottom line this is a much more complex issue than the politicians make it out to be, and certainly too complex for Henry Waxman to cram comprehensive climate change legislation through Congress in less than 30 days.
Now this can’t be good. The Chinese government is warning the U.S. to watch its spending for fear continued haphazard spending by Washington will devalue the Dollar and by association the Chinese investment in U.S. Treasuries. “We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” said China’s premier, Wen Jiabao.
Just to make sure we all understand exactly what this is, this is like your banker calling you up and saying, “Steve, it’s Pete from ABC bank, I’m worried about you making this month’s mortgage payment, maybe you should save some money and not go on vacation next week.” At first I’m guessing you’d be a little angry wondering where this guy gets off telling you how to spend your money, but then after a minute you’d probably sit down and think, “uh-oh, guess I won’t be getting that new car loan from Pete!”
And that’s really the point. Every time the government spends money it doesn’t have (and let’s be clear, that’s every day these days), they have to raise/borrow it from somewhere. The most common source in recent years has been China – this in and of itself might send chills down your spine, but that’s only the beginning. China is now signaling some concern and that brings into question whether the “window” will be open the next time Ben Bernanke shows up for a loan. If the Treasury can’t raise the money through selling notes, they have to fall back on the ever popular print more money strategy. Now I won’t bore you with the economics lesson (and I’m not qualified to teach it) but the print more money approach must eventually lead to inflation.
Bottom line – the current administration and the Congress better listen to their banker and get their financial house in order, or that next “auto loan” may be hard to get.