Taking the Taxpayers out of General Motors

Ruggles – 12/26/2012

What many stockholders and taxpayers had feared, had Mitt Romney won the recent Presidential election, is coming true anyway. The taxpayers (U. S. Treasury) are quickly being taken out of their remaining General Motors ownership BEFORE the positive impact of the many new and exciting redesigned GM products to be introduced in the next few months can have the chance to boost retained earnings and share price. Waiting another 18 to 24 months could reduce or eliminate the loss that will be taken on the original taxpayer investment.

Honda as Japan's Exemplar

...Make where you sell, and that's not Japan...

For a while the impact on the auto industry of 3/11 – the earthquake and tsunami – and then the Thai flood garnered headlines. Lately the headlines in Japan have been politics, politics, and more politics. First there was the US election and the leadership transition in China – Japan's #2 and #1 trading partners. Then there are the upcoming elections in Japan and Korea. These have embroiled the auto industry, too, because of the attempt of various parties in China and Japan to wave the nationalist flag, with much of the fallout hitting bilateral Japan-China auto trade. All this has pushed more mundane news – the transition of the domestic Japanese auto industry – out of the headlines.

So here are two snippets, both using Honda as a foil, though these are more general issues.

Understanding the Mortgage Crisis

By David Ruggles

Preface: The following is the culmination of over 4 years of research. At one time I thought the mortgage crisis was due to “an unholy alliance between RW and LW forces. That was before I discovered that during the bubble period only 15% of mortgages and equity lines of credit (ELOCs) were made by Community Reinvestment Act lenders, and of those, only a small percentage were actual CRA loans. Further, according to the Federal Reserve study on the matter, those CRA loans have performed better than the overall mortgage loan market. The “fall back” position of the Republican Party when faced with the actual facts is to say, “There is certainly plenty of blame to go around.” This seems to be an attempt to equally apportion blame to both parties when it is clear that RW ideology is what caused the problem regardless of whether it was practiced by Republicans or the very few Democrats involved, Bill Clinton or Larry Summers, to name a couple.

I know it is RW orthodoxy to believe that Fannie Mae and Freddie Mac played a large role. The two Government Sponsored Enterprises (GSEs) were guilty of excessive lobbying, misstating their balance sheet based in a rather complicated legal case, and excessive executive compensation. But for those who want to know the truth and read further it will become clear that that Fannie and Freddie were victims of what RW ideology unleashed, not perpetrators. Had I seen “The Warning” earlier, I would have come to my conclusion earlier. As it was, I watched hours of Congressional testimony, the most entertaining being when Congress got again Hank Greenburg, retired CEO of AIG in front of them. So I studied AIG and Joe Cassano, head of AIG’s London Financial Products division. Then came, “All the Devils are Here,” by Bethany McLean and Joseph Nocera. I later waded through the highly partisan “Financial Crisis Inquiry Report” published by the panel entrusted to analyze the mortgage crisis. I then got my hands on the Federal Reserve documents issued by the Minneapolis Federal Reserve, link provided.

What Is The Mortgage Crisis? –

In short, the Mortgage Crisis is what is stymying the U.S. economy.