Market Talk

I knew there was something screwy about that $6.7 billion loan GM said it paid off. They made a big show of it, announcing that they were going to announce it, then announcing it, then running a commercial announcing it again. I believe the story made the front page of the Journal, a sign that taxpayer money wasn’t wasted on a failing enterprise.

Ha! As the Times’ Gretchen Morgenson reports, GM paid off the loan with funds from a taxpayer-financed escrow account at the Treasury, not because people are out there snapping up Camaros (although I have to say, the new Camaro is the best-looking car to come out of Detroit in decades.) From Morgenson’s story:

Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

Neil M. Barofsky, the inspector general overseeing the troubled asset program, revealed this detail when he spoke before the Senate Finance Committee on April 20.

“So it’s good news in that they’re reducing their debt,” Mr. Barofsky said of G.M. But he went on to note that G.M. was using other taxpayer money to make the loan repayment, according to the transcript of his testimony.

Does that just beat it all? All that show, all that crowing, and all they were doing was shuffling some money around. And we still hold $2.1 billion in preferred shares and 61% of the common, the acquisition of which essentially was another bailout.

General Motors once upon a time had something like a 50% market share, maybe even more. Not the U.S. market – the world market. Today the company is a shell of itself, a pale shade of the glory days, the days of shark-fin tail lights and white-wall tires. And while I personally think some of the cars it makes are really nice, like the new Malibu and the Camaro, I just wonder if too much damage has been done for the company to ever really recover, and if somewhere down the line we’ll be confronted again with a choice of either bailing the company out again or letting it go the way of the Edsel.

Did GM have a near-death experience, or did it actually die and we’re just animating a corpse? Maybe all we bailed out was an image of that old GM, back when it ruled the world. But those days are gone for GM, and they’re not coming back. And if Americans don’t start facing up to the very real issues surrounding them, the glory days for the nation will pass just as surely.

If only they'd have extended the loan.

You’ve probably noticed the depressing frequency with which small businesses in your town have disappeared. Every so often, another storefront is suddenly empty, the windows papered over and dirt shadows on the walls where the old signs used to be.

Yes, my barber’s still packed on Saturday mornings, and an Italian deli in town just moved to a bigger store a block away, and even the local sporting-goods store is hanging in. But for each of those stories, there’s another business that’s already come and gone. And it’s clear that small businesses across the nation, a key to the economy, job growth and revival, remain pressured.

And, of course, that Italian deli moved into an abandoned storefront.

Incentives to spur small-business growth will be one of the “discussion forums” at this month’s “jobs summit,” the dog and pony show the White House is hosting to prove it’s committed to getting the nation’s unemployment rate down to a somewhat more incumbent-friendly level. (Here’s one “outside the box” idea, or maybe I should say, outside the beltway idea, for the summiteers: raise interest rates. That’s right, raise them.)

The big issue revolves around credit. On the one hand, banks don’t want to lend, certainly not with the drunken abandon they had before. But there also is less demand; businesses and consumers alike are cutting down debt, not taking on more of it. That is the heart of the problem.

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- The couple that crashed the White House in a publicity stunt is trying to sell their story. Shouldn’t they, like, be arrested or something? How is it possible they didn’t break a single law?

- Deteriorating assets on banks as well as consumers’ balance sheets is going to hamper any recovery, the Times’ Gretchen Morgenson says.

- It’s possible this is just political posturing, but if true, it’s very depressing: bin Laden was within our sights in 2001.

- So once again Black Friday turns out to be just some hype filled non-event.

- National Retail Federation says more people spent less this weekend.

- The UAE’s central bank intervenes to try and calm fears over Dubai.

- An update on the administration’s mortgage modification program. It reminds me of that scene in “Animal House” where Dean Wormer rips the Deltas in his office. “Mr. Blutarsky, zero point zero.”