Monday, August 08, 2011

GM Volt Fail

Wow. This is pretty devastating.

Look, we have a pretty good way of finding out whether a company is succeeding: stock price. Plenty of folks are saying that the auto bailout was a big success. Well, let's see! Now, sure, there is a recession. But is the recession WORSE than it was a year ago? So that can't be the reason that stock price is falling. The stock price is an evaluation of future profitability. And it does not look good...

And yet, we get idiots like this guy saying what a success it all was. There are plenty of other examples of half-wits saying auto bailout was a success because the administration SAYS it was a succes. (GAO says maybe not, but what do THEY know, bunch of sharp pencil idiots?)

Let's review:

1. MSM says bailout success, because Prez Obama SAYS it was a success, and why would he lie?
2. But no one wants to buy crappy cars now, just like they didn't want to buy crappy cars three years ago, or ten years ago
3. GM is tanking and is going to "need" another bailout.

We'd be MUCH better off directly paying all those workers their full salaries to stay home. The success of the auto bailout is a myth.


John Thacker said...

One of the things about the auto industry is that it counts as "sold" a vehicle that has been shipped to a dealer. They've sold it to the retailer; getting it sold to a customer is the customer's problem.

Other industries do this too, but they tend not to keep shipping product after the supply has backed up. They also tend not to have as many "factory to dealer incentives" and so forth encouraging the dealers to take extra product.

Any time you see that "sales" are up in the auto industry, ask to see what's happening to the number of days supply on dealer lots.

Anonymous said...

Another way to look at it:
GM vs Dow

Anonymous said...

Regarding your point about the recession and the share price. I'm not saying the cause of the decline is recession, but the argument that "the recession isn't worse now than a year ago therefore the price decline can't be that" misses a few important points.

Firstly, the prospects for 2012 do now look far worse than they did a year ago. So the economic stagnation and low growth has been longer than expected. It's because the share price is forward looking that we get this.

The other aspect is that with the average unemployed American being unemployed for 40 weeks, it is arguable that some things are worse now than last year.

Anonymous said...

This is Detroit and this is what we do.

Anonymous said...

Wait, that's Chrysler new tag line... Perhaps GM should have gotten to Eminem first...