And So I Go: Yesterday, Today and Tomorrow

» Government Motors, Part II & III: Lobbyists Tops in the Bailout Business – Big Government

Posted on: March 8, 2011

» Government Motors, Part II: Lobbyists Tops in the Bailout Business – Big Government.

Remember the automobile company and union workers the Obama administration  bought with your tax dollars?  Well this same automobile company and its unions are using your tax dollars to pay lobbyist to glad hand and pay off Congressmen for their votes to give the automobile companies even more of your tax dollars!   AND, if that doesn’t get you just take a look at other companies bailed out  with your Tax dollars  are  paying lobbyists with this money to extort more from you.  BB

Government Motors, Part II: Lobbyists Tops in the Bailout Business

by Peter Flaherty

From the 1st quarter through the 4th quarter of 2010, GM’s lobbying expenses more than doubled from $1.8 million to $3.89 million – a 113% increase.  After all, when the government is your largest shareholder, your company execs will inevitably be spending an inordinate amount of time cozying up to Washington politicians.

Moreover, GM’s lobbyist team reads like a who’s who of the government bailout business. And why wouldn’t it?  When you’re lobbying Washington to privatize gains for your clients and socialize their losses among taxpayers, you hire those firms with the most experience representing other notorious companies that received massive bailouts by U.S. taxpayers — Fannie Mae, Freddie Mac, Goldman Sachs, AIG and others.

GM’s Lobbying Bench – Reported income from other government bailout recipients

–        The Duberstein Group: $600,000 in lobbying for Fannie Mae and $2.3 million for Goldman Sachs

–        Dutko Worldwide: $359,000 in lobbying for AIG

–        Public Strategies: $900,000 in lobbying for Fannie Mae and $960,000 of lobbying for Freddie Mac

–        The Nickles Group: $840,000 in lobbying for AIG

–        Davis & Harman: $1.48 million in lobbying for Merrill Lynch

–        Bob Moss Associates: $470,000 in lobbying for Freddie Mac

–        Clark Lytle & Geduldig: $360,000 in lobbying for Fannie Mae and $240,000 from Goldman Sachs

Source: Senate Lobby Disclosure Reports

 

More of your tax dollars being spend at Government Motors GM.  BB

Government Motors, Part III: GM’s Incentive Spending

by Peter Flaherty

3. GM’s Incentive Spending:  Slashing prices through discounts and incentives to juke market share is not a healthy business model

Famed investor Warren Buffett once said, “If you have to have a prayer session before raising prices by ten percent, then you’ve got a terrible business.”  So, what does it mean if your business is slashing prices month over month through discounts and other incentives? Take a look at the graph below.

From GM’s IPO last November through February, the incentives and discounts the company is offering to consumers have increased from 29.8% above the industry average to more than 50% above industry average according to Edmunds.com.

What this means is simple: Yes, GM can crow about its 46% sales surge in February, as it did last week.  But what they aren’t telling you is they are offering discounts and incentives 50% higher than the industry average helping to inflate their numbers, and that these discounts have grown by leaps and bounds every month since the IPO.

During GM’s IPO announcement in November, the company promised that it would offer fewer incentives that crimped margins.  In February, GM Vice President Rick Scheidt said regarding incentives “it’s way to close to the bankruptcy for us to be sliding back into old habits.  We know everybody’s watching.”  Last week, GM said it will fall back to regular industry incentive levels in March.

Yet, the same week, GM announced a new 72-month, interest free financing plan on several GM models.  The announcement prompted Edmunds auto-analyst Jeremy Anwyl to note “GM’s rhetoric has been saying one thing – discipline, discipline, discipline – and their actions have been going completely in another direction.”

 

The Wall Street Journal’s Evan Newmark remarked “We learned that GM North America is back to juicing incentive payments and boosting fleet sales, two of the very practices that got the ‘old’ GM into trouble.”

And Automotive News analyst Jamie Lareau said, “GM chased that market share right into federal bankruptcy court in 2009.  Here’s hoping history doesn’t repeat itself.”

We couldn’t agree more.

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