Monday, November 18, 2013

The Government's Bailout Of General Motors Is Strangling GM

The Government's Bailout Of General Motors Is Strangling GM 

One would think it would have outperformed the market, but it’s selling for just about the same price as the 2010 IPO for the “new” GM, around $35 a share when the rest of the market is up 40 percent.

The significant government stake in the company has hindered recovery. The White House forced policies on GM’s management that were oriented toward its own ideology rather than market factors. Obama himself bragged about it at a town hall meeting in Minnesota in 2011:  “What we said was, if we’re going to help you, then you’ve also got to change your ways. You can’t just make money on SUV’s and trucks….And so what we’ve now seen is an investment in electric vehicles.”

That “investment” gave us the money-losing Chevy Volt, and political control of the company led to a series of other policy decisions that sapped the energy out of GM’s rebirth. These decisions including everything from union pension policies to advertising campaigns that did more for Obama’s reelection than GM’s market share.