Obama’s China Bailout – 70% of GM Cars now Made In Communist China

August 13, 2012 07:08

I wonder how millions of unemployed Americans feel about their bailout money that is now invested in China. The President is right that GM is number one again – in China.


By Ileana Johnsonn Paugh


Our President said, “When the American industry was on the brink of collapse, more than one million jobs at stake, Governor Romney said, let’s let Detroit go bankrupt. I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back and GM is number one again. So now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry, I don’t want those jobs taking root in places like China.”


Nationalizing entire industries worked very poorly under dictatorships and communist centralized economies. In fact, they were so dysfunctional, despite grandiose economic five-year plans designed by the communist party apparatchiks who had no idea how to run a lemonade stand, they have all collapsed since 1989, with the exception of Cuba and North Korea, and we know how “well-off” their citizens are and how much individual freedom they have. Communist China had to modify its centralized economic control and adopt successful capitalist models. Managed economies are not the solution, capitalism and entrepreneurship are.


President Obama’s auto bailout cost taxpayers $60,000 per job saved. GM and Chrysler Fiat’s roaring sales are due to subsidized sales, indirect funding by the government, “sub-prime auto loans to inflate their car sales, selling automobiles to people who cannot afford them.” (Michael Savage, Savage Nation, August 9, 2012)


Taxpayers lost $20 to $23 billion in the auto bailout. The Obama Administration redistributed $26.5 more to the union than UAW would have received legally in the bankruptcy proceedings had the rule of law and contract been followed. “Thus the entire loss to the taxpayers from the auto bailout comes from the funds diverted to the UAW.” (Amy Payne, Heritage Foundation, June 13, 2012)


Mismanagement and high union labor costs, $70.51per hour in wages and benefits for GM and $75.86 per hour for Chrysler, contributed heavily to the bankruptcies that necessitated the bailout in the first place.


Secured creditors and investors should have had prior claim, in accordance with the law. Unsecured creditors should have received proportional payouts from the bankruptcy. A special trust fund protected UAW, while other creditors received fractions of what they were owed. UAW received billions and partial ownership, and Fiat, a foreign corporation, received part-ownership of Chrysler. UAW workers continued to receive huge compensations when compared to the much lower compensation of $47 per hour for Nissan and Toyota workers. Stephen Rattner, President Obama’s car czar said, “We should have asked UAW to do a bit more. We did not ask any UAW member to take a cut in their pay.”


According to Amy Payne, the auto bailout was not a bailout of GM and Chrysler but a bailout of the auto union by American taxpayers who make on the average $30 per hour in wages and benefits. (Auto Bailout Was Really Just a UAW Bailout, Heritage Foundation, June 13, 2012)


The issue is more complex. GM did not just become Government Motors, it became China Motors. After $80 billion of taxpayers’ dollars “saved” GM and Chrysler, GM opened a plant in Wuling, China. Research and development for car design was moved to China. Dan Akerson, CEO of GM said in Shanghai, China, in February 2011:


“Seven out of ten automobiles were made outside of the United States. We have 11 joint ventures in China with SAIC and FAW. We operate 11 assembly plants in China, four power train plants in eight cities across the country. We have more than 2,700 dealerships and sales outlets nationwide. We regard our eleven joint ventures as 11 keys to success. Not just in China but globally. Our commitment to working in China, with China, for China remains strong and focused in the future. We are now building out the advanced technology center which will bring our research and development that is centered largely in the U.S.; we are going to diversify that more into China because we think this market is so critically important to the success of our company. GM is a company well established for the future in China.” (May 4, 2012, video clip narrated by Vince Wade, http://www.youtube.com/watch?v=Lvl5Gan69Wo) [video embedded below]


Cadillac logo on communist banner

I wonder how millions of unemployed Americans feel about their bailout money that is now invested in China with SAIC, the Shanghai Automotive Industry Corporation which is run by the communist government of China who owns and controls most of the manufacturing and with the FAW, another Chinese government owned manufacturer. If Americans truly own GM, should the cars, jobs, and investments not be made in the United States? Why build China from the ground up while our American economy and infrastructure crumbles and turns to “has been” and dust?


Chinese communist propaganda film sponsored by GM

Cadillac, a division of GM, sponsored “Birth of a Party,” a propaganda film about the Chinese Communist Party. Chinese leaders love to drive Cadillacs, the ultimate status symbol car. The banner advertising the movie had the hammer and sickle next to the famous Cadillac logo. (http://www.youtube.com/watch?v=Lvl5Gan69Wo)


There is no democracy or free trade in China. The Chinese have demanded American technology with every deal signed since 1990, in exchange for promises of big profits from China’s 1.3 billion people. According to the U.S. Chamber of Commerce, GM’s one billion dollar bid from China was won in exchange for “GM’s willingness to transfer a good deal of state-of-the-art technology.” (Vince Wade)


State-owned corporations of the communist government of China are buying key segments of the U.S economy as well, energy resources, and key industrial plants. The Wall Street Journal reported the purchase of Nexteer Automotive of Saginaw, Michigan, the largest employer in the area, by Pacific Century Motors and an industrial authority for the city of Beijing. Ownership was transferred six months later to AVIC, the Aviation Industry Corporation of China. (Vince Wade)


We now have 257 Chinese Free Trade Zones, presumably to produce goods that will be sold in the U.S. Do we not have enough unemployed Americans and newly-minted college graduates without job prospects who could produce goods and services here in the U.S.? Do we need to insource jobs to imported Chinese workers into the Free Trade Zones, and outsource every manufacturing job and many service industries to China and India?


President Obama’s $3 billion centralized “cash for clunkers” program artificially and temporarily stimulated new car sales while destroying 690,000 good used cars that could have been sold on used car lots to people who were not willing, or able to buy a new car.


To make matters worse, the Obama Administration is planning to increase the new car mileage standards from 35.5 miles per gallon to 54.5 miles per gallon which will cause further pain for Americans. According to the National Highway Traffic Safety Administration (NHTSA) the new mileage requirement will add $3,000 to $4,800 to the average price of new vehicles until 2025.  The National Auto Dealers Association (NADA) said that 6-11 million low-income drivers will not be able to afford new cars through 2025. Because of the new “corporate average fleet economy” (CAFÉ) standards, cars will have to be made smaller, less safe, resulting in more potential fatalities with each crash. The Smart Car may be smart in theory.


The idea behind the new standards was driven by the “green” environmentalist agenda who proposed to eliminate the use of fossil fuels and replace them with renewables because fossil fuel burning destroys the planet, and we are running out of oil and gas reserves. That is of course, not the case, the Obama Administration tried to purposefully increase our dependence on foreign oil by imposing moratoriums on drilling in the gulf, refusing the approval of the Keystone XL pipeline, and denying permits for the exploration of domestic shale oil on federal lands. Furthermore, he promised to bankrupt the coal industry and make electricity prices skyrocket.


The President is right that GM is number one again – in China. Nationalizing the auto industry was not necessary. Extending the same business model to all American industries is not a good idea in capitalism, it WILL “drive jobs away, taking root in China” and elsewhere.


Dr. Ileana Johnson Paugh ( Romanian Conservative) is a freelance writer (usACTIONnews.com, Canada Free Press, Romanian Conservative), author, radio commentator, and speaker. Her books, “Echoes of Communism, short essays describe health care, education, poverty, religion, social engineering, and confiscation of property and her newest book, “Liberty on Life Support,” essays on American exceptionalism, education, immigration, and the economy, are available at Amazon in paperback and Kindle. Visit her website, ileanajohnson.com.

Dr. Johnson can be reached at: ileana1959@gmail.com


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  • Mr Obama HAD absolutely nothing to with the bailout of gm or Chrysler. The gop congress is the bad guy. After the gop got done with that both gm and Chrysler went overseas putting tens of thousands of Americans out of work. ONLY FORD has the guts keep their vehicles in America. GM is now SAIC totally. Fiat will move Chrysler to Italy before long…………

  • Well, I know I’m probably in the wrong location. Although, I was interested in finding out had any previous experience with this company?I’m trying to find out some more information about there services. It seems there name is Interstate Auto Buyers, 16644 W Bernardo Dr #452 San Diego, CA 92127 – (619) 780-2223

  • The China Times has a story on GM investing $7 billion in China, that’s taxpayer money being used to create jobs in China not the US.

    Recently GM announced another $2.5 Billion to build a state of the art vehicle test facility in China. That’s all well and good if it were GM’s money, but it’s not, they haven’t repaid their loan and they’re positioning themselves to be an offshore corporation.

    Obama’s failure to follow regular bankruptcy procedures and forcing the company to partner with the Union may have been popular with Union workers today, but it means benefit costs now reaching $70 an hour will prevent GM in America from being competitive with other manufactures. They kicked the can down the road and are celebrating like its been rescued, it’s not, but the blame surely will be when reality hits.

  • McDonald planned to open 200 new restaurants in China. Did McDonald ship America jobs to China? These Chinese made GM can only be sold in China, which is currently world’s largest auto market. GM sells more cars to the Chinese than to the Americans. Some people can somehow call this a failure? GM’s China operation is the envy of the world. The Germans and the Japanese can only dream about it. The fact that GM is dominating the China auto market is now considered a shame? What world do you guys live?

    • McDonalds didn’t take taxpayers money to invest in China did they?
      But I’m sure you already knew that when you posted.

      I’m sure every company would envy GM for being handed other peoples money to invest in foreign markets. It’s easy to beat the competition when you have no overhead.

  • SandyfromChesterfield

    Ford is going to change the F150 bed out of aluminum. Wonder how that will make it safer?

  • I think it’s important to note that Mitt Romney has been very light and over polite in calling out Obama; however, he knows what’s going on, and is trying to ensure that he doesn’t come off as an extremist to some of the more ignorant people who get all of their “news” from Obama’s “Truth Committee”. (google “Obama scrubs Internet”)

    Also, the last video in this article wrongly accuses Mitt Romney via some of his large donors. To clarify, those two donors of Mitt Romney are normal investors who made money off of fluctuations in the market. Who would continue to hold stock in a company until it goes bankrupt? Investors do not necessarily represent “captains of a sinking ship”. They invest to provide people and various companies with returns on their pension investments and insurances.

    Shorting is what I expect this video’s author was talking about. Shorting in the stock market is not the same as shorting in the housing market. You borrow shares instead of money, and then pay back those shares at a later time. If the stock is going to go up, you “long” which is purchasing stock. These investors who contributed to Mitt Romney had nothing to do with GM decision-making – just investing in long or short positions like many other investors trying to ensure decent retirements for businesses that hire them.

    Let’s get Obama out of the White House! Make your vote count. Vote for Mitt Romney in 2012 because he’s the only one who can make that drastically needed change happen.

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