Can Obama Pick ‘em, Or What?
Can President Barack Hussein “kill list” Obama pick winners, or what? But it really does not matter to him since he is using taxpayer money to invest in companies. There is a myriad of topics about which to write about his picking prowess, so I will limit myself, in the interest of the typical liberal reader attention span, to only two topics: the “green or renewable” energy boondoggle, and the “auto industry bailout” boondoggle, particularly General Motors (GM).
- First, there is the green or renewable energy boondoggle. There are many paths we can take here. Can anyone say Solyndra? Or SunPower? Or Beacon Power? Or Ener1? Or Evergreen? Or SpectraWatt? Or Nevada Geothermal? Or Abound? Or …? Despite Media Matters‘ attempt to categorize them all as low risk loans, they ALL cost taxpayers quite a lot of money.But this statement, from Peter Schweizer in his book Throw Them All Out, pretty well says it all: More than 70 percent of DOE grants and loans under Obama went to Democrat donors and bundlers. For example:
- Obama bundler George Kaiser was a major stakeholder in Solyndra through his Kaiser Family Foundation.
- Steve Spinner, after bundling more than $500,000 for Obama in 2008, was named to the White House transition team and later served as “chief strategic operations officer” of the DOE loan program that funded Solyndra.
- John Doerr has personally contributed more than $2 million to Democrats over the past 20 years. Doerr is a principle at Kleiner Perkins Caufield & Byers (KPCB). Of the 27 companies list in KPCB’s “green-tech” portfolio, 16 received some form of taxpayer support.
- Steve Westly was a National Finance Committee member of Obama’s 2008 campaign and currently sits on the DOE’s Energy Advisory Board. Westly has bundled at least $700,000 in campaign donations for Obama, and personally given about $260,000 to Democrat campaigns and committees since 2007. Westly’s investment firm had a financial stake in four green energy companies that received more than half a billion dollars in federal funding in 2009.
- Second, GM. In December, 2009 (under George W Bush), GM received $13.4 billion from the $700 billion Troubled Asset Relief (TARP) program. Then, in June, 2009, GM file for bankruptcy. The US Treasury Department (under Barack H. Obama) provided GM with $30.1 billion. Does the phrase “Throwing good money after bad” come to mind? Anyway, no matter how you slice it, GM received $43.5 billion, 69.2% of that from the Obama administration.So how is the GM investment, from a taxpayer perspective, doing? We know that, from an “auto worker unions supporting Obama” perspective, the investment has done/is doing quite well.Following its June, 2009, bankruptcy, GM stock was offered in November, 2010, at $33 per share. Today (July 19, 2012), GM is at $20.10. The analysis offered here is based on the July 2 price of $19.57, so everything offered here is still pretty much up to date. Just reduce our exposure by about 1%. But this source shows the price for the past year, so we taxpayers may be in for more of a bath than what is offered here predicts.
We taxpayers own a 26.5% stake in GM. Based on the July 2 price, we are out a whopping $16.6 billion. We own 500 million shares of GM, and those shares are now worth $9.8 billion.
But wait, as they shout on TV, there’s more! Obama let GM keep $45 billion (book value $18 billion) in past losses (usually eliminated along with debts in bankruptcy) to offset future profits. So when GM earned a $7.6 billion profit in 2011, it paid NO taxes. Include that $18 billion gift, and taxpayers’ true loss climbs to nearly $35 billion.
The share price would have to rise to about $53 before we could break even!
But wait, there’s even more. In late February, 2012, GM bought a 7% stake in PSA Peugeot Citroën, a French company. So what, you ask. Now the incredibly inept policies of French president avowed socialist François Hollande are becoming quite personal. PSA Peugeot Citroën has a greater than 50% chance of debt default, even as Hollande said PSA Peugeot Citroën must renegotiate a plan to lay off 8,000 workers and to close a plant. Hollande said that PSA Peugeot Citroën must lessen its social impact, even as he acknowledged that PSA Peugeot Citroën is currently losing €200 million per month.
And we all know what a winning investment the Chevy Volt has been, making absolutely no money, and costing us taxpayers hundreds of thousands of dollars each. In fact, GM has announced that it will assemble 2013 Impalas and Malibus at the underutilized Hamtramck assembly plant.
GM recently announced a 60 day money back guarantee policy for all new Chevy models, including the Chevy Volt which receives a $7,500 tax subsidy. This buy back policy establishes a possible tax fraud situation. Will it happen? Only time will tell.
We can all see the obvious, that the Obama corporate investment strategy is based not on highest (or any) taxpayer money return, but on crony capitalism and political payback. I just don’t think we can afford another four years of his investment strategy.
But that’s just my opinion.
Please visit RWNO, my personal web site.