The 2011 Earthquake and Tsunami both Helped GM and Hurt the Economy

Posted by PITHOCRATES - August 5th, 2012

Week in Review

Sadly for President Obama and GM the Japanese have recovered from the 2011 earthquake and tsunami.  And GM has to face some formidable competition once again (see More Bad News for Obama: A Slump at GM by Rick Newman posted 8/2/2012 on U.S News & World Report).

The downshift seems to have scotched any notion of the government selling its stake in the company prior to the November elections, since that would amount to a taxpayer loss of roughly $17 billion, and a major embarrassment for Obama. The government can hold onto its shares as long as it likes, and sell when the price is high enough to get all its money back. But the stock would have to hit about $53 for Uncle Sam to break even—a threshold that seems a long way off…

One reason GM has lost market share this year has been the resurgence of Toyota, Honda and Nissan, after the 2011 earthquake and tsunami disrupted production and temporarily boosted the market share of Japan’s competitors…

Funny.  For the 2011 earthquake and tsunami was responsible for America’s lingering recession.  According to President Obama.  And here it was propping up GM and all the economic activity it generated.  Which was why the government bailed out GM.  To save jobs.  And all of that economic activity GM created.  So if the 2011 earthquake and tsunami was responsible for propping up GM why didn’t it prop up the rest of the economy?  Like Japan’s Lost Decade helped Bill Clinton’s economy during the Nineties?  Simple.  Because President Obama’s economic policies are just that bad.

GM will probably regain some momentum in 2013, when it rolls out its next generation of large SUVs, which are usually highly profitable. Meanwhile, Cadillac is on a roll, thanks to the new ATS compact, the XTS large sedan, and improving quality ratings. Chevrolet has three new models out or on the way—the Malibu and Impala sedans and the Spark subcompact—and a refreshed version of the popular Traverse crossover is coming next year as well…

Nobody would like to see the government sell its stake in GM more than GM. CEO Dan Akerson has complained about the company’s unhappy status as a political football, and the toll that takes on sales and morale. But he’s probably going to have to put up with it for a good while longer.

The car President Obama wanted Government Motors, I mean, General Motors to build is not even mentioned in this article.  The Chevy Volt hybrid.  Which is conspicuous by its absence.  Instead they mention the things his administration opposes.  SUVs.  And large sedans.  Vehicles the American people want to buy.  Perhaps encouraging GM to build something the American people didn’t want to buy also had something to do with GM’s falling stock price.

Perhaps it would be best for the government to sell its shares now.  Even at a loss.  So GM can run the car company.  And not politicians who don’t know the first thing about running a car company.  Ending his war on the stuff that makes these cars run, refined petroleum, would help, too.  A lot.  By bringing the cost of gasoline down.  Helping GM to sell more of the vehicles people want to buy.  Doing these things would help the economy more than 2011 earthquake and tsunami helped it.  Now that would be smart government.  Sadly, something we just don’t see much of these days.

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