If nearly perfect Tigers S Armando Galarraga is deserving of a new 2010 Corvette from General Motors, where do I sign up to demand a Chevy Aveo5 be gifted to Jonathan Niese or R.A. Dickey? Ordinarily, I’d have no say in the matter, but as the New York TImes’ Nick Bunkley reminded me yesterday, I’m amongst the 300 million “poential second-guessers” / taxpayer owners of GM.
“Until G.M. has repaid the taxpayers in full for the money they have borrowed, every action that G.M. takes should advance them in that direction, said Kurt Bardella, a spokesman for Representative Darrell Issa, a Republican of California who is a visible G.M. second-guesser.
Last month, Mr. Issa was among a multitude of critics who took issue with another G.M. marketing effort ” the running of self-congratulatory advertisements about having repaid a government loan. (Taxpayers still own $2.1 billion in preferred stock of G.M. and 61 percent of its common equity.)
œThe leadership thought it (awarding Galarraga the car) was an excellent opportunity, Chevrolet spokesman Klaus-Peter Martin said. œWe looked into the cost-benefit ratio and decided to go for it.
Mr. Bardella, the spokesman for the congressman, said he hoped that was true and noted that many people would be watching.
œIf you were to ask the majority of taxpayers ” outside of the city of Detroit, probably ” if they thought that giving a $50,000 car away for free was a good use of money, I™m sure that most people would say no, he said. œIf it creates the perception of good will and a solvent company and encourages people to buy their cars, then great. Is it something they should do every day? Probably not.
GM has already paid back the loan with interest….So we the tax payers didnt give this young man a car.
the U.S. Treasury holds a 61 percent stake in General Motors.
Going a bit over-the-top, imo
GM gave him a car and it is a good story
No reason to over-dramatize the damn event
“No reason to over-dramatize the damn event”
Tell that to anyone laid off by GM.
“GM has already paid back the loan with interest….So we the tax payers didnt give this young man a car.”
For those of you who question the value of television advertising: Behold!! The commenter breezed right by the bit about the self aggrandizing tv commercials (in the excerpted portion of the article, no less!) on his way to parroting the very myth that the commercials dress up as reality.
Hey, redzone. There are more than a few public companies in which I can offer you a 60% stake right now on the cheap. In fact, should you turn this opportunity down, there won’t be much left of them. If, however, you take advantage of this generous offer, the company can go about giving away freebies, and buying high value television ad time to convince the world it’s still relevant, thus making that the case!
I can also set you up with a sweet deal on a bridge.
GM managed to turn a 60K Corvette into a advertising event worth 9 million dollars. Bravo! and keep up the good work. If you want to complain about something, how about the fact Armando is keeping the car. Why not donate it to a charitable cause?
how many Corvettes have you turned down recently? wait, let me guess, zero?
A politician complaining about a gift. Now that’s funny.
There’s an article over at Autoblog.com that says GM paid $53K (in the form of the Corvette) and got an estimated $9 Million in free advertising in the form of press coverage. I’d say they made a pretty good deal on that.
Also, no, GM did not pay back all the money that was given them. GM paid back the loan but we, the taxpayers of the United States still own a huge stake in GM in the form of preferred shares. And if you believe the folks at Planet Money on NPR, we will probably never get back what was paid for those shares.
This guy Issa is from California. We don’t NEED any further proof of his stupidity. GM, whose home office is still in Detroit, gets massive kudos for their action, and if they got $9M in advertising for doing it, so much the better.
See, unlike California, we here in Michigan actually support our businesses. California, of course, supports spotted owls, marijuana growers and the all powerful California Air Resources Board. Mr. Issa is looking for votes, nothing more, and anyone who thinks he actually CARES about whether GM succeeds or not is kidding themselves.
But anyway, good luck with all that, and thanks for all the fish.
itsrero has it right. That car is worth about $53K new, it costs GM a bit less to build it (so maybe a bit of opportunity cost on a lost sale), but that much won’t buy you a TV spot in any mid-sized city in the US (and that’s just to be able to play the ad on TV and doesn’t include the cost to produce it). It’s estimated that GM got about $9M worth of media coverage for it. I’d say that’s being very smart about spending money.
To all you who keep harping on that the US Government owns a 61% stake in GM and GM needs to pay them back, let me give you a very brief lesson in Business.
GM received money in two ways, a loan and by giving the Government a stake in the company (this is known as a equity stake). The loan was just that, a loan, which GM has repaid. The money that was paid to GM in exchange for equity IS NOT A LOAN and does not ever, ever, ever, need to be repaid. The Government BOUGHT a share of GM. The same way you and I would go out an buy a stock on the stock market. You give the company money in exchange for a piece of the company. If you buy Apple stock, Apple doesn’t have to pay you back for it. The Government is not entitled to anything from GM for the equity portion. The Government will make back money (possibly) when GM has their IPO and the Government can sell their shares on the open market. If they are able to sell them for more than they paid, then they make money, and vice versa.
Understand?
Apple is answerable to their shareholders, however. And in this instance General Motors — having proven they cannot run their company without being propped up by the American taxpayer — fully deserve to have their business practices (including marketing efforts designed to repair their reputation) closely monitored by the government, the public and media.
Agreed. But in this case the people who say that this was a bad business move are quite mistaken.
perhaps you should chime in at a blog that specifically called it a bad business move, then. Nowhere in the CSTB post was such an accusation made, and even in the NY Times piece, Rep. Issaa said “If it creates the perception of good will and a solvent company and encourages people to buy their cars, then great.” Pretty amazing to me the mere implication that GM is accountable to the everyday schulbs who own the fucking company results in a bunch of pavlovian defenses of the firm. Thread closed.
GC,
True, GM is answerable to its shareholders (currently the US Gov. and the UAW), but if the politicians don’t realize that under corporate law, they have no right to manage the day to day operations of the company. Shareholders (unless the articles of incorporation and the bylaws of a company state otherwise) only have the ability to elect the Board of Directors and vote on what are called “fundamental changes” (dissolution, amending the bylaws, mergers, and a sale of substantially all of the company’s assets). That is it. They cannot manage the day to day operations, and neither can the BoD (that is why the BoD hires the officers. So the Government, like it or not, has no say in the matter.
But the main thing is that Rep. Issa is being a twit. He is constantly interfering and giving his advice on GM’s operations. The article even has a quote from his spokesman:
“Until G.M. has repaid the taxpayers in full for the money they have borrowed, every action that G.M. takes should advance them in that direction,†said Kurt Bardella, a spokesman for Representative Darrell Issa
If Rep. Issa had even a tiny amount of brains he would understand that GM has paid back all the money, and that the Government bought a stake in GM (as I discussed earlier). Not only that, but the fact that this is being discussed all over the internet/tv/newspapers is giving GM more and more free advertising each time. I consider myself Republican, but I think Issa is a class A moron. The best thing for GM would be to hold their IPO as soon as possible and clueless congressmen off their back.
“GM is answerable to its shareholders (currently the US Gov. and the UAW), but if the politicians don’t realize that under corporate law, they have no right to manage the day to day operations of the company. ”
However, if another publicly traded company made a public gesture that raised the ire of it’s shareholders, day-to-day operations or not, do you really believe there’d not be some form of a challenge?
all you people need to get a life…good God…
this does not amount to a pimple on a gnats (yes, dimwits, it is spelled with a “g”) ass…
we have much bigger issues to worry about and some dumb ass in Congress wants to make an issue of this rather than worry about our boys being killed thousands of miles away or worrying about the ecological disaster in the gulf or better yet
worrying about the many people here in the states who are homeless and have no food or jobs…
get a life and gain perspective people…do any of you who are bitching about this volunteer? Do you give a dime of your money to charity? I doubt it and everyone of your hypocrites just like the assholes we elect and send to Washington….
there how is that for some hard truth?
Typical idiot politician. Washington throws around hundreds of millions of dollars like it was pocket change and then one of the idiot bureaucrats raises cain about a $50K car being given away, even though GM got millions of dollars of free press in the bargain. GM may not have done the best in running the company the last few years, but compared to the government, they are doing a hell of a job. Now go back to signing off on bills to buy $10K hammers and multi million dollar bridges to nowhere.
Mike, where is there any evidence that some “idiot bureaucrat” raised a stink about the car being given away? Did anyone actually read the times piece? Or are you knee-jerk, anti-government tinfoil dipshits merely responding to a headline you’ve seen on another blog?