-By Warner Todd Huston
At the Detroit Economic Club today, Treasury Secretary Timothy Geithner tried to claim the auto bailout is a success.
It certainly doesn't seem like a success for the taxpayers. GM stock is about $30 today, and unless it gets up to $54, the taxpayers lose money on the deal. Why would it go up? You want to fight high gas prices by buying a Volt? How does $41 grand a pop sound? And still GM loses money on every one it sells even at that price. Not only that but we are seeing that government subsides for electric cars is good tax money wasted in any case.
It doesn't get any better. Worldwide, U.S. cars aren't selling worth beans and domestically, GM is lagging because people who hate the bailouts won't support it with their car-buying dollars any more than they did with their votes last year when they kicked out every incumbent they could find who'd been for it. And GM still has all its old problems, too, like those big fat union pension obligations. Sadly, nothing that caused GM's financial trouble has been fixed. But the spin continues. Last December, Geithner said the auto bailouts were "investments," which "will show a positive return, not a negative return."
As the 2010 midterms proved, the people know better. They know government can't run an automobile company and they know the deal was mostly political payback to the UAW, the biggest culprit in why GM and Chrysler were in trouble in the first place -- not that company execs did themselves proud, either.
People didn't believe Geithner when he said we'd make money on the deal, and they were right. Today's speech was more of the same, and it still won't fly.
Geithner, Obama and the rest of the gang that brought us this monstrosity may or may not actually still think they kept the economy from chaos by the bailout, but they're just believing their own scare tactics if they do.
As George Mason University Professor Todd Zywicki pointed out in depth, a normal bankruptcy would have worked just as well. Sorry, Timmy. Your spinning wheel is getting us nowhere.