Saturday, May 30, 2009

The Future GM - Government Motors Corporation

On June 1, 2009, it is highly likely GM will file for bankruptcy, resulting in the US government owning over 70% of the new automobile company. While the government denies that they will be running the auto company, I can't help but to speculate what a US government run car company might do. Here are some possibilities:

  • Offer one car model. I know the current plan is to keep four brands. However, the government should only offer only one brand and one model, the GMC Obamamobile. The Obamamobile is the car that is all things to all people, sporty, all terrain, green, nuclear powered, and seats up to eight.

    If the average person can't afford one, they will receive an auto stimulus tax rebate that is financed by tax that takes the remaining income of the top 2% of earners.

  • GMIC insurance. The FDIC can run Government Motors Insurance Corporation, which will guarantee that a GM vehicle won't lose any value for the first 100,000 miles, or 250,000 miles until December, 2009.

  • TAFP financing. The Treasury will use the remaining TARP moneys to fund the Troubled Auto Financing Program (TAFP). Senator Chris Dodd (D, CT) can be in line to get "friend of TAFP" special financing and Rep. Barney Frank (D, MA) can to introduce legislation making everyone automatically qualified for TAFP funding.
  • Of course, the Obama administration could present the changes with the spin of, "What's worked for financial institutions should work for the automobile companies." :-)

    For more on Reflections and Musings, check back every Friday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2009 Achievement Catalyst, LLC


    Brian said...

    Shame on you everyone knows the Obamamoble will be solar powered and will only go about 30 miles before having to be recharged.

    Anonymous said...

    Or, we could be negative and offer no positive suggestions, continue to obstruct measures that would make car companies more competitive and more green, call it a free market as we pad the wallets of auto and oil execs, and pay for all of this with special interest tax breaks and earmarks, all-the-while pretending to be against big government.

    I know someone on TV already said this, but maybe we should have the oil companies bail out the car companies, instead of having taxpayers do it.

    Oh wait, I forgot. Our capitalist strategy is to privatize corporate profits and socialize corporate losses...

    Super Saver said...

    @ Anonymous,

    I guess I could be positive, but it was more entertaining to write a piece of satire about the situation. Anyway, I offer the folowing to address your points.

    First, I believe it's the government's strategy to privatize corporate profits and socialize corporate losses. A capitalist strategy would have let GM and Chrysler fail and allowed Ford to succeed.

    Second, it seems reasonable to also include UAW workers in the list of beneficiaries of obstructive measures, calling it free market, tax breaks and earmarks. I wouldn't want execs to get all the benefits :-)

    Finally, on a positive note, one option for a better outcome would have been to use the bailout moneys for GM and Chrysler to fund a comprehensive efficient public transportation strategy. I lived several years in a country with an excellent national public transportation system and chose not to own a car during that time.

    Super Saver said...

    @ Brian,

    You're right, it should be solar powered. But since the Obamamobile is all things to all people, I chose to make mine nuclear powered :-)