eneral Motors, long considered by some as a hopeless dinosaur, seems to be embarking on an historic comeback. It launched an Initial Public Offering of new stock for the first time in 18 months and on the first day of trading, shares were up nearly 7 percent.
Proceeds from the IPO will be used to help GM pay back the federal government for the $49.5 billion that it was given as it was losing billions of dollars, facing tremendous health care and pension debt and seemed to be stuck with boring, loser products.
Yet with the federal money, GM seems to be turning itself around remarkably quickly. It has made $4.07 billion so far this year. Other highlights include the introduction of its electric Volt car and continued sales of winning products such as the Chevie Equinox and the Buick LaCrosse.
So, what is this, a happy news story?
Not if you read “Boomergeddon” it isn’t. According to author James A. Bacon, who launched his doom-and-gloom book only this August, GM is a Exhibit A of failed U.S. corporate management, overly powerful labor unions and an Obama Administration that can be easily pushed around.
To quote Mr. Bacon:
“Under Obama, some $49 billion in TARP money went to keep General Motors alive, while billions more went to Chyrsler. The stimulus inata showered billions more upon favor seekers with any remote connection to conservation and renewable energy: wind turbines, solar cells, clean coal technologies, carbon dioxide sequestration, smart grids and high-speed rail. Apply for a grant, pitch a good story and win some money.”
I particularly like that last, loaded sentence. “Pitch a good story.” “Win some money.”
There may be some problems with the GM IPO. Holders of earlier stock get nothing. But it still looks like Obama made a good bet with GM. It may be news to Mr. Bacon, but this icon of American industrial power might not be dead just yet. If Jim is so wrong on GM, could he also be wrong on the federal deficit and debt?
Maybe there’s no “Geddon” with the “Boomer.”
Peter Galuszka