Barack Obama – Vulture Capitalist!

by Richard H. Frank

Since Barack Obama cannot run on his record of accomplishments as President, he and his minions have chosen to attack Mitt Romney for his record as a venture capitalist while running Bain Capital.  This tactic is in furtherance of dividing our nation into the haves and have-nots or the 99% against the 1%.  Unfortunately, the average American voter has no concept as to how venture capital works in the free market and thus swallows the lies and distortion spread by Obama during his re-election bid “hook, line and sinker.”

Joe Biden credits Obama and his administration as single-handedly saving the American auto industry with the $80 billion bailout of General Motors and Chrysler in 2009.  Examining the facts with regard to General Motors paints a drastically different picture, however, and in fact shows Obama using many of the tools available to venture capitalists in the GM bailout.

In order to set the stage for the events leading up to the Government-forced bankruptcy, it is helpful to understand some facts concerning the world’s once largest corporation.

During the 20th Century General Motors Corporation grew to become the world’s largest successful corporation with 91 manufacturing and assembly plants in the U.S. alone. During the 1980s foreign competition, armed with low-cost labor and in many instances Government subsidies, began to erode GM’s market share which fell steadily from approximately 50% to the low 20% by the end of the century.  Efforts by management to curtail costs and reverse the downward trend in market share were met with fierce opposition by labor unions and contractual commitments that hindered increased productivity and cost reduction.

Notwithstanding this opposition GM either sold or closed 43 of  its U.S. facilities between 1981 and 2008 reducing its operating  locations by 30% while still operating  under oppressive legacy costs acquired under previous contract commitments.

By 2008 GM was faced with receiving Government loan guarantees or bankruptcy.  Hence, along came Barack Obama and his Government takeover structured to reward labor unions at the expense of creditors, shareholders and bondholders.  Under Obama’s Automotive Czar, the Government pumped $50 billion of the taxpayer’s money into the ailing corporation and immediately announced the eventual closing of 14 additional U. S. plants and three parts and service centers resulting in the loss of 20,000 jobs.  This action further reduced the number of U. S. facilities by 23% although without the necessity to recognize any previous contractual commitments while operating in the Government-arranged auto bankruptcy.

The consideration given to labor unions was a share in the new General Motors and a seat on the Corporation’s Board of Directors.  Up to this point it would appear that Obama and venture capitalists had a lot in common as to how they approached saving a company.

1.  They both infused large sums of money while actions to curtail costs were devised.

2.  They closed obsolete and unprofitable locations.

3. They fired excess labor and management personnel from closed facilities and reduced remaining workforces as required to increase productivity and achieve consolidation of operations.  The major differences, however, between the Government bailout and the acquisition by venture capitalists are stark in comparison:

  • Venture capitalists use their own money.  The government uses our money from tax revenues and/or borrowing from China to continue to keep GM afloat.
  • Venture capitalists are required to follow  bankruptcy law and honor creditor claims according to statute.  The Government ignored the law and entered into arrangements that benefited organized labor over creditors, shareholders and financial institutions; hence the term “crony capitalism” has been coined to define the bailout.
  • Venture capitalists invest to create value and profit by making enterprises successful.  Barack Obama spends our money to do whatever he and his administration deem politically expedient to support their agenda without regard to creating value.

In the years following the bailout of GM, what have we learned?

Dan Ackerson, Chairman of the “New General Motors” reported in a speech that 70% of GM vehicles are produced outside of the U.S.  I guess that equates to a large portion of the $50 billion bailout going to create jobs outside the U.S.  Does Obama count those jobs as either being saved or created?

While 14 plants and three parts and service centers were closed in the U.S. as part of the Government bailout, 11 assembly plants and 4 powertrain plants have been opened by GM in joint ventures in China, along with 2700 dealerships.  Where did the money come from to make these investments?  Certainly not from operating profits from the “New General Motors.”  More of our tax dollars to creat jobs in China with SAIE and FAN?

Ackerson also stated in 2011 that a new “Advanced Technology Center” was being built to assure the company’s success in China.  More alarming is the transfer of advanced technology from the U.S. to China under the joint venture arrangement between GM and the Communist Chinese Government.

Saginaw Steering Gear was acquired by Pacific Century Motors and became Nexteer.  Under the Obama Administration oversight ownership of Nexteer was quietly transferred to AVIC, a Chinese Communist Government association.  Another example of Obama’s crony capitalism.

As the campaign rhetoric heats up over the coming months and Obama mounts his vicious attack on Mitt Romney and Bain Capital for destroying jobs in the quest for profits and moving jobs overseas, keep the story of the “New GM” in mind and it will expose Obama for the hypocrite he and his administration really are.

Barack Obama’s Vanishing Economic Recovery!

By: Richard H. Frank

This morning, June 9, 2011 marked the 9th consecutive week where new first time claims for unemployment exceeded 400,000. This fact is in spite of the President claiming that the economy is in recovery and his policies are responsible for the creation of between 2.5 and 3.0 million new jobs. I may not have a Harvard education but am better than the average bear when it comes to arithmetic. If we have had 400,000 new claims per week for the last nine consecutive weeks that equates to 3.6 million Americans that have lost their jobs. The last time I looked 3.6 is larger than 2.5 and 3.0 which means we have gone backwards in job creation under the policies of Obamanomics.

According to the President we should not be concerned as this is just a “blip” that is probably due to seasonal adjustments that will disappear over the coming weeks. He is certain we are not entering a double dip recession and that this small anomaly is only temporary in nature. Temporary for Obama means three or four years based on his prediction that unemployment would not exceed 8% if we adopted his irresponsible stimulus spending program with shovel ready projects geared to produce 500,000 new jobs per month according to Joe Biden.

Just how long will it be before the mainstream media begins to report the truth about the failed policies of this Administration? Energy costs continue to skyrocket, home real estate values deteriorate with each passing month and the misery index resulting from creeping inflation are devastating for senior citizens and low-income families.

In the meantime Congress sits on its hands and refuses to do the bidding of the electorate. I am not sure this nation can recover from the damage done by the Obama Administration during four years pursuing  his socialist agenda. Earlier this week the President said he wakes each morning and his first thoughts are how to create jobs and spur economic growth for America. Apparently those thoughts are fleeting as he then decides where he will travel  for the 2012 election and when his next tee time is scheduled to take place.

The Obama summer of recovery of 2010 vanished before it began and all signs for 2011 point to further deterioration. Now is the time for change we can truly believe in and not the change Barack Obama has imposed upon this once proud nation.  I anticipate summer will be spent by many people in this country growing their own fruit and vegetables and not putting those expensive beef steaks and hamburgers on the grill!