Wednesday, June 3, 2009

Can we attend future GM stockholders’ meetings?

Since the government of the people owns 60% of Government Motors, formerly General Motors, I guess that means any or all of us can attend stockholders’ meetings. Hmm, I wonder where the meetings will be held.

Obama said “What I have no interest in doing is running GM." Unfortunately Obama has a history of lying and saying one thing and doing another – so how can we believe Obama’s men won’t be calling the shots at the auto company at Obama’s direction? Furthermore, Obama said that he wouldn’t be involved in decision making at GM “except in only fundamental issues.” Wow – doesn’t that mean that Obama won’t get involved in day-to-day minutia but will be involved in any important things?

What Obama said in the principles of ownership is that the administration acknowledges that in "exceptional cases" of substantial assistance to the private sector, it reserves the right to set up conditions to protect taxpayers, promote financial stability and encourage growth.

But, Obama stressed: "The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions. When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the New GM, not the United States government, will make that decision."

But, it's certainly not lost on the administration that automakers have a huge presence in Indiana, Michigan, Ohio, Wisconsin and Missouri — all potential battlegrounds in a presidential contest. “Whether voters there will remember the 66 percent of GM jobs Obama helped retain, or the 34 percent that GM had to let go to satisfy Washington, won't be known until the next election.”

While Obama may not make daily operating decisions, the administration has made substantive moves already, even before he took ownership of 60% of the company.

The president a month ago forced Rick Wagoner out as GM's CEO. The Treasury Department dictated what bondholders should get for the $27 billion they held in GM debt. Obama's team determined that GM needed to downsize so that it could break even if car sales remain at 10 million vehicles a year, instead of the 16 million auto sales threshold it needs today (which requires GM to reduce retail outlets). GM will also be required to not sell in the US cars GM makes outside the country. And on Treasury's instructions, GM will replace a majority of its board members in consultation with the Obama administration. – But Obama says he won’t be involved with the management of the company; do you believe it?

Obama has imposed tougher fuel efficiency requirements by which GM (and all other auto companies) will need to observe. The government assured consumers that it will guarantee GM warranties – (does this mean the government will take care that oil leak on your new car?).

The new CAFÉ standards will make all companies have to produce small unsafe cars but will the public buy them? On the other hand if that’s all that Obama makes available as he controls auto companies, will we have any other choice?

Consider this too; if these small Junkers don’t sell is Obama above raising fuel prices by increasing federal tax on gasoline?

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