Misery Index

STATE BAILOUTS

The governors of New York, New Jersey, Massachusetts, Ohio and Wisconsin – all Democrats – urged the federal government to provide !1 trillion in aid to the country’s 50 states to help pay for education, welfare and infrastructure as states struggle with steep budget deficits.

The initiate is for a two-year package and was backed by other governors and follows a meeting in December where governors called on Obama to help them.

Gov. Paterson of NY said 43 states now have budget deficits totaling some $100 billion as tax revenues plunge.

The latest package calls for $350 billion to create jobs by building or repairing roads, bridges and other public works; $50 billion to maintain educations; and another $250 in “counter-cyclical” spending such as extending unemployment benefits and food stamps.  The remainder would be used to fund middle-class tax cuts, stimulate the housing market, and stem the tide of home foreclosures through a loan-modification program.  [Yea, we’ve seen how well those loan-modification programs are, with increases of $300 a month to a homeowners mortgage.]

STEEL INDUSTRY

Industry executives are pleading for a huge public infrastructure investment program – of up to one trillion dollars over two years – under Obama’s proposed stimulus plan.

“What we are asking,” said Daniel DiMicco, chairman and chief executive of the Nucor Corporation, a giant steel makers, “is that out government deal with the worst economic slowdown in our lifetime through a recovery program that has in every provision a buy America’ clause,” the New York Times quoted him as saying.  Only two U.S. steel makers are in the top steel producers of 2007.

Basically, the steel industry is petitioning Obama for major infrastructure development, thus stimulating the steel industry.

This commentary comes from a “We Beat the Street” commentary, an Investment Strategy company, via KITCO.   The author is Roger Wiegand, who I’ve also never heard of before and don’t know too much about, other than his biography on We Beat the Street and a bio on IIC.  But , lets take a gander into his crystal ball, shall we? [Hat Tip to Nightblogger]

Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery.  While some of his ideas are noble indeed the overall plan will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009.  We think the worst of the worst hits in late September 2009.

Hey, what do you know, the one year anniversary of when millions lost nearly all of their 401(k)s when the market dropped out.  What a time to choose!  But I’m getting ahead of myself… lets hear about spring.  A time of green, fresh air, and everything coming back to life.  But the death of the stock market according to Wiegand.

During the spring of next year we see:

(1)  A second larger wave of residential housing mortgage failures; [Now, to be honest, I heard about this about two months ago.  Its a different kind of mortgage than the ARMs but it’s more “deadly” to the market  and banks.  Good thing we don’t have to pay a mortgage!]

(2)  The first big wave of auto loan failures and repossessions; [I heard about this one too about two months ago.  But if people can’t pay their mortgages, the next big ticket item is their car.  Good thing we don’t have to pay a car loan or lease!]

(3)  Over $40 billion in credit card defaults, smashing the bank lenders; [This is already happening, and again, another “big ticket” item are peoples credit cards.  Good thing we’ve never EVER used them.  If you can’t pay for it in cash, you don’t need it.]

(4)  The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; [This too is inevitable.  It is estimated that over 16,000 businesses will fail in the next year, leaving a lot of empty space in malls, strip malls, and business complexes.  Already, Circuit City has left quite a few leases up in the air, due to them filing bankruptcy.  Whose next?]

(5)  And finally, the grand smashing finale of CDS Credit Default Swaps originated with No margin money or down payments!  We heard today the total is 500 trillion!  I cannot even fathom that number.  These five converging train wrecks could take the Dow from a dead cat bounce of 10400-10800 back to 7250, or even 6600, or 5600.  [My other half and I have said, the Dow will crash out around 5000 in 2009.  So much for our stocks.]

But if you think the Dow at 5000-6000 is bad, you haven’t heard it all yet.  The above is just in the spring of 2009.  There’s how many months in the year, and how many seasons?

Then, in late September and early October, the New York, London, Tokyo and Asian markets take a monster crash.  how low is low and how bad can it get?  We think the Dow could end-up on November 1st, 2009 anywhere from 5,600 to a low of 3,000 or even 1,500. 

Ouch…. and how interesting that it’s just about the same time that the stock market crashed in 1929.  But the best.. err.. worst is yet to come.  And the capitalization isn’t my emphasis, it’s Wiegand’s.

Unemployment nationally in the USA is now touching 16%.  The officially posted number is somewhere near half of that.  By the fall of 2009, American REAL UNEMPLOYMENT WILL BE NEAR THE ALL TIME 1930’S DEPRESSION HIGH OF 25% UNEMPLOYED.  SADLY, THAT IS NOT THE WORST AS IT GETS MORE DIRE.  WE PREDICT, USA UNEMPLOYMENT REACHES 30-40%.  IN THE RUST BELT STATES OF MICHIGAN AND OHIO, WHILE 40% IS NOT UNREALISTIC.

Great… wonderful.  Buy your tents, Coleman stoves and sleeping bags now.  And maybe a nice little 9mm and shotgun.  Aww heck, splurge for a Desert Eagle.  Size is intimidating!  Make sure to not forget the ammo!  And begin to stockpile food, you might need it.  This might be the “new” money and a good bartering tool, as long as people don’t kill ya for it.  And LOTS of stocking up on toilet paper and um.. ah… guys look away on this one… feminine items.  And don’t forget things like cold medicine, aspirin, and topical antibiotics!But more realistically, stockpiling at least two months of food is a good way to make sure you have a food supply and “other” items if you lose your job or have to choose between food and a house payment.

The American federal government departments for food stamps and the job of providing welfare provisions will be overwhelmed.  This will be a Katrina event for the hungry citizens of the United States.  Urban areas will see skyrocketing crime and in parts of some cities, life could become totally uninhabitable.

The last report we’ve seen on those receiving food handouts and related welfare amounted to 11 million USA citizens with 700,000 children going hungry each day.  We suspect the true amount of those needing food help will rise to 35 million with an untold tragic number of them being little, defenseless children.  Governments remain in denial and are not prepared for this national emergency whatsoever.  As things worsen, food riots and others with violence aimed at the “have” are common.

Did I happen to say that I am also professionally trained in sword fighting?  And raised by a Father who taught me to shoot a .38 & .45 around the age of 8 and a shotgun at the age of around 10?  Who would have ever thunk it that I would need those skills in my personal life!  And a chick to boot!

And as for that stockpiled food, didn’t I just say it was going to be the new “money”?  Dollars will be worthless. 

The number of bank failures over the next three years will be in the thousands.   In addition, the US Dollar’s valuation could break recent lows near 70.00 on the index, dropping to 46.00 by 2011 or 2012.  Inflation or potentially hyperinflation is quite real as the Federal Reserve and US Treasury strain to print and circulate cash to prod our stalled economy.  It is simply not working even with the dramatically lower interest rates of late.

But to continue, Wiegand says just like in the Great Depression, families are “renting” out rooms, or “bunking” up to pool their money.

Consumers are broke and going broker.  Households of interrelated families are doubling and tripling up even with several employed members being under one roof.  Basic costs of rent, mortgage payments, health care, food, utilities and taxes are too much to bear on stagnant and in some cases falling wages.  In some areas of America, there are entire subdivisions of homes totally abandoned or existing with only a hand full of occupants.  The millions thrown at lenders for new mortgages are not getting through to buyers, as there are fewer of them.  We are witnessing a system breakdown.

Isn’t this already happening?  I recently blogged about Detroit and how many of the homes are already empty, and have been gutted for their copper and such.  And additionally, many who are behind on their mortgages, and said bank gets a bailout, refinances the mortgage, only to increase the payment by $300 to $500 a month, and also demands several thousand dollars just to stop the foreclosure within 30 days!

And states and cities will be broke also, so forget about getting any help from them, which is already happening.  Say bye bye to welfare and to schools.

Municipalities and states are sinking into a spending, debt-ridden morass.  It was reported today that 22 of 50 USA states are in serious budgetary trouble.  California is one of those in terrible condition and Michigan is already technically broke as many of her cities. [Don’t forget Ohio as the governor called Rahm and said he needed $5 billion!]  Detroit will file bankruptcy in 2009 and there will [be] many other surprises as well.  There will be a cascade of bond defaults and the outcome will cap the ability of these cities, states and countries to borrow ever more.

Hey, at least we are all in this together….. *smirk*  True worldwide Socialism!  YIPPIE!

The shining light through all of this is the faster we find the bottom the faster we can recover.  Sadly, the recovery process will take years.  Futures and commodities traders should continue to earn steady profits as the stock markets slide into oblivion for years.  We see no recovery until 2015.

Let see… Obama Jan 2009 – Jan 2013.  I wonder if he will run for re-election?

I find it interesting that there is no mention of the Big 3, or of a company such as Wal-Mart still being in business.  If Wal-Mart collapses, we are in trouble.

But wait.. according to the Russian nutjob, by 2010 we will be in a civil war and the United States will be split between Canada, China/Japan, Mexico and the EU with Alaska going back to Russia and Hawaii going to China/Japan so all of this won’t happen!

Of course there’s always Gerald Celente’s prediction of a total collapse of the economy and a revolution by 2012.

So well.. there’s my first post of the new year…… oh and… um… might be a little late… but have a happy and prosperous  New Year, while you still can? *shrug* *nervous smile*

The Black Lake golf club and retreat, is the newest addition to the UAW’s Reuther Center, which are among the union’s biggest fixed assets which total $1.2 billion for net assets, is situated on “1,000 heavily forested acres along the southeast side of Black Lake.”  According to Michigan Magazine, “Native trees such as ash, aspen, beech, birch, hemlock, maple, oak, red pine and white pine outline the course and provide habitat for an array of wildlife species in the area, including bald eagle, beaver, coyote, duck, fox, osprey, owl, stork and white tailed deer.”

According to it’s website, compliments include “the Center’s recreational facilities, which now include a beautiful gym with two full-sized basketball courts, an Olympic-size indoor pool, and exercise and weight room, table-tennis and pool tables, a sauna, beaches, walking and bike trails, softball and soccer fields and a boat launch ramp.”  According to “Butcher and Associates”, the golf clubhouse has a pro shop, restaurant, full kitchen, locker rooms, a dining room for 150, an outdoor terrace, and refrigerated storage.  Other related projects at the Club include a cart storage facility, maintenance garage, and the course restrooms and shelters.  On the Black Lake Course website, is a video tour of the course.

And it’s lost $23 million in the past five years alone and yet the UAW tries to manage about a multibillion dollar pension plan that the Big 3 “owes” them.

The UAW covers costs for the Reuther Center from the interest it earns on its strike fund, according to tax documents, but massive losses in the past five years have forced the union to make heavy loans to keep the center afloat.    While the UAW International has a huge reserve of money, the union filed financial records with the federal government stating that it spent about $2.7 million more than it took in during 2007 --  the third time over the past five years that the union spending exceeded receipts, records show.  The 2007 UAW receipts – union dues, fees and other income – was $327.6 million, and it had spent $330.3 million.

The golf course and the resort are held by UAW=controlled holding corporations called the Union Building Corp, which is a not-for-profit organization that holds real estate for the union, records show.  However, the golf course is operated by a for-profit corporation called UBG Inc., which was set up for just that purpose, according to Labor Department records.  The education center, which reportedly has rooms to sleep 400 people, is operated by the for-profit UBE Inc.  The operations were hit hard last year by a $5.9 million payment to an employee pension fund.  [Hmmm… is this why the UAW is crying and screaming about their pension fund?  Oh it gets better…]

Audits of both UBE and UBG by Clarence Johnson, a certified public accountant from Royal Oak, MI, said UBE had a negative retained earning of $20.6 million and UBG had a $4.2 million negative retained earning at the end of 2007.  The two entities had loans payable to the UAW International worth a total of $24 million.

Aside from the loans, UAW International’s financial statements show expenses to the UBE for several conferences and other activities.  In 2007 alone, the UAW International paid UBE $3.3 million for services.

Critics call it a resort for union leaders that wastes money from union dues.  “it’s the members’ money that they’re spending on this thing,” said Justin Wilson, managing director of the Center for Union Facts, a union watchdog group.  “The union has bigger issues at hand than managing a golf course.”  “It’s funny that they call it an education center – it’s a resort.  If I was a union member, I would prefer that they rented out a room at the Ramada Inn, ” Wilson added.

Gregg Shotwell, a UAW activist, is not troubled to learn that the education center is losing money.  “When you are educating and training union members, that’s the business of the union.  That’s never a loss,” Shotwell said.  But the golf course is a different story to him.  “We should be running a union – not a country club.”

Roger Kerson, a UAW spokesman has said that “The UAW family education center is an integral part of our union.  It provides very important training and education activities for our members.”

It would seem that paying Union dues would give UAW members free access to the resort, however, that’s not the case.  Union members are charged to belong.  For a individual member, its $800 per year for a UAW retiree, and $1000 a year for a UAW member.  Public membership is $1,200 per year.  And if you wish to stay at the Black Lake Golf Club, it will cost you $74 a night if you are a UAW member for a single, and $92 if you are a guest.

So bailing out companies to support other “organizations” to keep properties, continue to allow junkets, and waste taxpayers money “par” for the course now?

Obama issued a statement on the bailout loan to Detroit:

Today’s actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers.  With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together – including labor, dealers, creditors and suppliers – to make the hard choices necessary to achieve long-term viability.  The auto companies must not squander this chance to reform bad management practices and begin the long-term restricting that is absolutely required to save this critical industry and the millions of American jobs that depend on it.

DETAILS ON THE “LOAN”

Here’s a sneak peek of the plan, as released by the White House:

THE WHITE HOUSE AND THE UAW

The Senate failed to pass the $14 billion bailout and the head of the UAW,  Ron Gettelfinger, blamed the Senate Republicans stating, “This was just simply subterfuge on the part of the minority in the Republican Party who wanted to tear down any agreement that we came up with, the auto industry around the world is in peril.”

“The current weakened state of the economy is such that it could not withstand a body blow like a disorderly bankruptcy in the auto industry,” White House press secretary Dana Perino said today.

Treasury spokeswoman Brookly McLaughlin said, “Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry.”

Obama said he was disappointed that the Senate failed to act.  “My hope is that the administration and the Congress will still find a way to give the industry the temporary assistance it needs while demanding the long-term-restructuring that is absolutely required,” he said in a statement.  Yet on this Sunday’s past “Meet the Press” Obama stated, “We don’t want government to run companies.  Generally, government historically hasn’t done that very well.”  Is this “change” your mind, or another instance of “double speak”?

According to Congress, the Emergency Economic Stabilization Act which created the $700 billion fund known as the Troubled Asset Relief Program, or TARP, could be used for the $14 billion bridge loan to the Big 3.

In recent weeks however, Paulson has resisted the idea of using TARP funds for the Big 3 since it was created to provide liquidity to the financial sector, not the auto industry.

Speaker Nancy Pelosi said she would never support an auto bailout that used money originally set aside to help the Big 3 develop fuel-efficient vehicles.  Then Pelosi “changed” her mind and clamed she wouldn’t support a bailout bill unless the Big 3 promised to drop their lawsuit against California’s emissions requirements.  Then Pelosi “changed” her mind again, this time saying she is willing to support the bailout without the Big 3 dropping the lawsuit, but only if Republican lawmakers support the bill. 

SORRY, ITS ILLEGAL

About $15 billion from the first half of the $700 billion remains uncommitted since about $335 billion has already been used for banks and insurance companies.  To begin tapping the second half of the bailout, the administration would first have to notify Congress, which could block it or put new conditions on how the money is used.

The Treasury lacks the statutory authority to direct TARP dollars to the automakers.  While the statue, passed by Congress in October, grants the secretary extremely broad discretion to decide how to employ the funds, it clearly limits the recipients to “financial institutions.”  And the definition of that term is quite clear:

FINANCIAL INSTITUTION – The term ‘financial institution’ means any institution, including, but not limited to, any bank, saving association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Island, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.

Now one could say that GMAC qualifies under this, well it doesn’t.  GMAC is not a bank.  Providing customer financing is a function that many non-financial institutions, from department stores to bars, engage in regularly.  In other words, they self finance without being a bank.  If GMAC would offer loans to anyone for any purchase, then that would be a different matter.

Even The Heritage Foundation says that bailing out the Big 3 is a bad idea and illegal:

“Even if the Administration were inclined to do so, it simply lacks the power under the statute passed by Congress to tap TARP funds to prop up auto manufacturers.  This makes sense:  why else would have Congress spent the past month taking testimony from auto executives and then crafting politically contentious bailout legislation if the whole thing was unnecessary, because it had already passed the bailout back in October?

The Administration must reject calls for it to trample the law, and accomplish an end-run around our represented democracy, by moving forward with a bailout.  Giving in would be both unprincipled and, ultimately, illegal.

Worst of all, it would be counterproductive.  Reorganization in bankruptcy continues to represent the best chance for General Motors and Chrysler to survive and prosper.

THE CONSTITUTION

The Wall Street Journal reports that banks and bankruptcy experts were all in a huff over a line in the Monday draft of the bill providing that the government gets its money “senior and prior to all obligations, liabilities, and debts of any such holding company or company that controls a majority stake in the eligible automobile manufacturer.”

This might be a violation of the Fifth Amendment, which guarantees just compensation for taking private property, bankruptcy and constitutional law experts told the Journal:

“It really sounds like a clear violation of the taking cause in the Constitution, to put the government ahead of all the other lenders.  To go this route is a treacherous path riddled with all sorts of constitutional issues,” said Don Workman, head of the restructuring practice at the law firm of Baker Hostetler.

On the other hand, Congress might argue that the bailout is actually keeping the car companies out of bankruptcy, and if the taxpayers are ponying up, then they should get some guarantees.

OBAMA’S OPINION

Obama has also said in the past that even if Congress does not bailout the Big 3, he will push for federal help once he is sworn in.

RANT ON AGAIN

Why do we even have Congress, a President and such if no one listens?  And ultimately, if what the highest in power wants, that person gets?  That is Democracy?

Part One

Maybe just maybe Mr. Gettelfinger the reason the GOP Senate said no was because they don’t want to pile debt on top of debt.  And maybe just maybe the reason they said no was because they don’t agree that a certain part of our population in the United States should get “special” treatment.  I am referring to not the pay the workers receive, but their benefits, which include health care for retirees.  Why should one industry be given special treatment when so many others have nothing right now, not even a job.  The UAW should be willing to make temporary sacrifices, such as cutting health care benefits to a minimum, in order for reduce costs until the Big 3 can get on their feet again.  But as usual, the UAW thinks they should have their cake and eat it too while the rest of the nation eats dirt.

And where is all the money going to come from to buy these cars?  Currently all U.S. automakers are seeing the worst sales slump in 26 years.  GM today announced, after the fact of learning they weren’t going to get a bailout, that they were going to temporarily close 20 production plants.  But don’t worry, those who are laid off will get their unemployment benefits, and additional money from the Big 3 to compensate to make sure they get 95% of their weekly income.  Oh, and they still have insurance benefits this whole time.  So basically GM is saying okay, let unemployment support them, yes we still have to pay then according to our UAW contract to make sure they make 95% of their normal income, but hey, it’s less money for us to pay! So, that’s a nice Christmas present for all the UAW workers impacted by the temporary close…….  Did you get a paid month off of work for Christmas?

No one has the money to make a new purchase of a new vehicle.  So millions of new cars are going to be sitting in lots doing nothing but gathering dust all because you think your workers deserve special treatment.  So tell me, where’s the profit in this bailout for me?  Remember, the new mentality is about “sharing the wealth”, so where’s my share in all of this?  Will I get a car at cost?  Will I get a full warranty on everything on that new car for the next 10 years?  Because I as a tax payer will be paying for YOUR bailout, especially if you can’t pay it back, for the next 20 years!  High risk with no high payback is bad business.  Isn’t that how Wall Street collapsed?  Isn’t that how the real estate industry collapsed?  By giving high risk loans to those who they knew couldn’t afford it.

And since no one is buying new cars, where are the Big 3 going to get the funds to pay back this loan?  And what about them coming back asking for more money?  The Big 3 are going to end up being just like AIG, asking for more and more and more money, turning into a super black hole sucking the life out of our taxpayer funded accounts.

And why are the big wigs being bailed out?  Banks, investment firms, insurance companies and now possibly the Big 3.  And I’m going to take a Socialist attitude here since that seems to be the “new way”.  When is it time to help those who pay for all this?  Where’s my bailout?  How about not having to pay federal taxes for an entire year?  If the government has all this money to spread around, then why can’t we get a break? 

Why doesn’t the Big 3 have to go through what everyone else is?  Filing for bankruptcy reorganization and start over again.  In bankruptcy court, the process allows the auto industry to negotiate with creditors, stakeholders and unions.  The auto industry spent nearly $50 million lobbying Congress in the first nine months of this year while unions spent hundreds of millions to put Democrats in Washington.

And maybe, if maybe twenty years ago, there had been a national healthcare system put in place, like every other major country of the world, then the UAW and the Big 3 wouldn’t have this contract for health care benefits.  This is the ONLY point so far that I agree with that Obama should do.

Ultimately, the Big 3 bailout is nothing more than dividing the classes further and a continuation of destroying our economy. 

Part Two

So obviously another law is going to be broken on a bill that the taxpayers never wanted to pass.  But this seems to be the new rage among many these days.  Now you might think, well this is nothing new, all politicians are crooks.  Well, being a crook is one thing, breaking Federal law and ignoring the Constitution is another matter. 

• Bush wants TARP funds to bailout the Big 3, which is illegal.
• Hillary Clinton has been appointed Secretary of State in Obama’s new Administration, although according to the Constitution she can not take the position legally. [Here also.]
• Obama wants a mandatory “America Serves” program, a violation of the 13th Amendment.
• We are two states away from rewriting the Constitution.
• Oh and lets not forget that the Democrats in Congress want to seize your 401K which could be considered a violation of the 5th Amendment of eminent domain.

Oh, and one other small newline.  Obama is planning on raising taxes and sending the money to Kuwait.

And I could always bring up the Obama birth certificate issue……..

ADDITIONAL SOURCES:

• “White House may tap Wall Street funds for autos”, MSNBC, 12DEC08
• “United Auto Workers Lash Out at GOP Senators Over Bailout Collapse”, FOX News, 12DEC08

Rick Wagoner of GM told members of Congress that the company is burning through ash, asking for $10-$12 billion for GM.  “We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.  One person close to GM in Detroit said that the company needed around $11 billion within three months just to stay afloat.

All three used private jets to make the trip, but lets focus on GM, shall we?  Wagoner used his G4 private jet, one of eight jets in the GM fleet that continues to ferry executives around the world.  Wagoner’s private jet trip to Washington cost his company an estimated $20,000 roundtrip.  After the hearing, Wagoner declined to answer questions about his travel.  GM (along with Ford) say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.

But part of the money that GM wants is for health-care coverage by UAW retirees, especially for those who are too young for Medicare.  GM, along with Ford and Chrysler, want to make sure the retirees have the luxury of health insurance, and their pension, at the US taxpayers cost.  One GM retiree states that he receives $3,000 a month in pension and health-care insurance for life.  When he retired from GM, he was making $33 an hour as a welder/repairman and he received a pension and a $35,000 buyout after working for GM for 34 years.

[I guess you an I are the ones who GM expects to pay the bill for their contract with the UAW, although you and I aren’t the ones who agreed to it.  We are not the ones who promised to pay wages to a “bank” or workers we no longer need.]

Also, GM just opened a $300 million plant in Russia earlier this month and is expected to produce 70,000 cars annually.

But meanwhile, GM is kissing some serious butt in Brazil.  It is being reported, as of today, that GM has decided to invest $1 billion (USD) to expand business in Brazil, the local media reported Tuesday.  The money is coming from the $25 billion US taxpayers to “complete the renovation of the line of products up to 2012” which is part of the retooling to bring vehicles up to meet the more stringent air quality standards and part of the CAFE (corporate average fuel economy” standards.

But yet, GM”s chief executive in Brazil, Jaime Ardila has said that “We are not dependent on the U.S. in any way.”  And also according to Ardila, “It’s not part of corporate’s plans to file for bankruptcy, so we’re not going to speculate,” when asked if GM files for bankruptcy.  “GM [Brazil] is independent from an operational standpoint.  It develops its products locally, for a local market, and all of its suppliers are here.  Nothing is imported,” Andre Beer, former vice president of GM in Brazil, now a consultant in Sao Paulo, said.  GM Brasil is a separate legal entity from its parent in Detroit, they do not make anything for the United States market, yet they still received $1 billion in taxpayers money from GM US.

And in Brazil, automakers AREN’T getting bailed out, or even asking for government aid.  But the Brazilian government did give them $8 billion Brazilian reals ($3.47 billion USD) into the auto loan market through government banks.

Also at GM Brazil, 7,000 Brazilian workers are on mandatory paid leave.  “This probably won’t be the last paid leave announced by the company,” the director of Sao Jose do Campos’ metalworkers union, Vivaldo Moreira Araujo, said in a statement.  [So unlike here in the US the workers are not “laid off” but on PAID leave?  Am I missing something here?  Are you ready for the “twist”?]

With the CAFE (corporate average fuel economy) standards imposed by Congress, vehicles that are fuel-efficient that are imported from their overseas factories count as fuel-efficient.  In other words, the CAFE states there must be a certain percentage of vehicles that meet CAFE standards produced.  

To me, it sounds like GM is planning on using their Brazilian company to meet the CAFE standards for .  Yet in 2005 alone, American bought more cars than did China, India, Russia and Brazil, COMBINED.

So, GM gets money from the US taxpayers, from a “handout” to retool vehicles to meet more stringent US air quality standards, sends part of that money to Brazil and uses part of that money to help retain jobs in Brazil, but begs Congress for money?  Have I missed anything?  So let me make sure I have this right.  GM uses US taxpayers money, free money, that is suppose to be used for retooling for US vehicles to meet the more stringent air quality controls that take effect in 2012, but sends part of that money to GM Brazil, a company that is independent from GM Detroit, for retooling on South American vehicles……….  And remember Nancy Pelosi wants a lame-duck session of Congress to give the Big 3 taxpayers money yet Treasury Secretary Paulson has said “NO” to using part of the $700 billion bailout for the Big 3.  The Big 3 has already gotten $25 billion for retooling and now wants another $25 billion for “daily operational costs” which include giving money to those who are retired, and obviously sending it overseas to other countries.

GM needs to fall………… and learn to stand on their own two feet without help and learn to walk a new way instead of wanting something for nothing.

GM Brazil

Brazil is the largest GM subsidiary in South America and the third largest in the world according to their website.  In Sao Caetano do Sul, Brazil are the administration, technological center, engineering center and manufacturing facilities.  Vehicle assembly, plus engine and transmission manufacturing facilities are in Sao Jose dos Campos.  The Mogi das Cruzes Comples has manufacturing and parts distribution facilities.  In the state of Rio Grande do Sul, GM has a vehicle assembly facility in the city of Gravatai.  A parts distribution and warehouse are located in Sorocaba and a proving ground is in Indaiatuba, both in the state of Sao Paulo.  GMAC has headquarters in Sao Paulo and handles finance activities, including credit and leasing.

The company’s Brazilian headquarters in Sao Caetano do Sul employs 11,333 engineers and administrative staff out of a national total of 23,874.

SOURCES:

• ABC News
• Economic Times