In May, I asked you to look behind GM’s curtain. The rosy reports coming out of General Motor’s (GM) were lies stacked upon half-truths and, since the people of the United States are unwitting 61 percent owners of the automotive behemoth, we ought to dig into the realities that lie beneath. The truth is that GM hadn’t really repaid any loans to the government (repaying a government loan with a government-funded escrow account is more like paying off one credit card with another). Also, any talk of a GM profit quietly omitted the fact that the profitable company was a new corporation formed out of thin air, and the original GM—renamed Motors Liquidation Company—was [and still is] mired in bankruptcy.
Now, Chrysler is trying to get in on the lies and half-truth game by announcing its own quarterly profit. The story is basically the same one we’ve heard before. The company now known as Chrysler Group LLC is another new corporation formed out of thin air, and the Chrysler LLC that existed before is now called Old Carco LLC. Old Carco, like Motors Liquidation Company, is still in bankruptcy. If we are honest shareholders—and you and I own about 10 percent of Chrysler—we should consider both Chrysler Group LLC and Old Carco LLC when computing whether bailing out this failed corporation is ‘working.’
Keep digging into the funny math that politicians will be feeding us over the next several months as we approach the November elections. You’re going to hear a lot of stuff about how all this mad government spending has averted a crisis, and how great the bailed-out banks and car companies are doing. Most of it is untrue and you, the taxpayer and voter, need to do some honest research before coming to conclusions. The truth is that the Bush/Obama bailouts have been a giant, pointless waste of money that did nothing but balloon the federal deficit.