I know you're not supposed to look a gift horse in the mouth. But, I just can't help myself from asking, “Who's buying all that General Motors stock?”
I've heard how thankful I should be as an American taxpayer and how our national investment is paying off so well. And I am feeling good about all the pensioners whose retirement accounts will can soon return to historic levels of solvency.
But, lest I be caught in the web of what might just be a Ponzi scheme of investment hell, I wonder about who is availing themselves of GM's IPO.
I admit that I was among those who questioned President Obama's thinking when I heard that GM was deemed “too big to fail.”
My question turned to disbelief when I heard that too big to fail meant we the people were to become GM owners as part of a stimulus bailout program designed to save the auto maker and America from economic ruin.
If former President Bush is to go down in history as a boob over weapons of mass destruction, Obama faces a similar fate regarding how he may look in our historical a rearview mirror on the topic of too big to fail.
My disbelief turned to shock when I read that GM swore under oath to my government that a key play in its turnaround would be shuttering thousands of dealerships. GM was certain part of its problem was the wasteful cost of too many dealerships.
My shock turned to anger when I realized that little was really changing at GM, save the appearance of a transformation in their management when little was happening save a sacrificial but generous retirement of their senior figurehead, Rick Wagoner.
Now I admit I like a lot of what GM designs. Cost aside, GM builds some of the most attractive and fun to drive vehicles sold in North America.
But, I cannot for the life of me see anything that remotely looks sustainable going on in the profitability of GM.
True, it is trying to sell fewer fleet cars, focus on the residual values of their retail vehicles and monitor quality better than ever.
But can anyone prove to Wall Street or the average Joe investor that the new GM has more than the short-term advantage of a one-time get out of jail free card garnered through a quick-dip bankruptcy? Aren't they simply basking in the glow of having all their debts erased and all their assets still in hand?
Becoming investment grade traditionally requires a much more permanent, sustainable and reliable strategy. Were once-and-done really sufficient to support investment, all a company need do is put rocket fuel in the tank of an investment shell and hope dollars pour in before the thing explodes under the strain of fast competition.
GM has prospered from the protection of a bankruptcy shield and government sword. Neither of these is likely to be sustainable and neither speaks to a product or marketing strategy that will yield long-term profitability.
Which brings me to my perhaps ill-advised but central question: “Who's buying all that GM stock?”
I ask because it occurs to me that there's a whole lot of political credibility riding on whether the GM bailout ultimately pays off.
Obama stands to make a political fortune out of getting this right. So if all that is really going on is that a few back room deals have been struck to create a short- lived illusion that a government bet paid off smartly.
Let's not forget that Bernie Madoff was a hero for decades before the smoke cleared to reveal he was stealing from Peter to pay Paul.
It's very easy for big boys to buy big chunks of stock for a lot of money in order to goose the market into believing the price is rising. Then, they quickly sell at a short-term profit to those convinced of a long-term proposition.
Once I figure out who is buying all that GM stock, I hope to start reading more about how the GM gang is achieving profitability.
Peter Brandow is a veteran dealer in Pennsylvania and New Jersey.
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