Friday, October 1, 2010

Will Government Motors Be Sold To China?

I came across an interesting article which posits that the General Motors stock held by the US Government may be sold to the Chinese later this year.

After spending billions of dollars to bail out General Motors Co. last year, the US government is eager to unload its 61% stake of the now profitable automaker. That unloading could happen as soon as November, when GM’s anticipated IPO is launched to the general public.

One company showing increased interest in the pending IPO is GM business partner, and Chinese company, SAIC Motor Corp. According to the Wall Street Journal, SAIC has been central to GM’s success in China and is expected to continue to play a major role in future success. In fact, GM’s sales in China rose 19% for the past year, ending in August. That’s contrary to a struggling US and European market.

The sticky issue is the potential political backlash caused by selling an American icon, which was rescued from failure by the American taxpayers, to a non-American company. When the general public is allowed to purchase stock, buying is not limited to domestic investors. Anyone from foreign companies to sovereign wealth funds can purchase shares.

The political backlash will be media driven and unwarranted, which is why the IPO will not be released until after the mid-term elections. GM was purchased by the Treasury when its stock price was basically worthless, it is now profitable and should be sold to the highest bidder.

Regardless of who purchases the shares, the Treasury will not unload all of its stock at once. In response to the Treasury’s one time sale, the NY Times quoted GM CEO, Dan Akerson as saying, “Not going to happen…I think that’s unrealistic.” How long it takes for the government to divest the rest of its holdings will, in part, be determined by GM’s success, Mr. Akerson said. The company has posted back-to-back profitable quarters this year, but he said longer term performance was critical to any stock sales by the government.

Even the thought of the Chinese controlling GM is disturbing... not only from an American economic standpoint but of a strategic standpoint..

One blogger points out that

Fueling the Pentagon’s fears over Obama’s selling GM to China is that they are one of the US Military’s largest defense contractors holding over 150 contracts worth nearly $70 million, one of the most important being the US Navy contract for GM’s Honeoye Falls plant to design and build a hydrogen fuel cell to work on Navy vehicles underwater and just awarded to them yesterday.

The Pentagon’s fears of China are being echoed today by New Zealand [the World's largest dairy exporter who signed the West’s first free trade agreement with the Communists] whose government has begun warning of the Asian giants plans for buying up their dairy companies and gaining control over all of their Nations natural resources.

Your thoughts?


Eric Holcombe said...

More evidence of our loan shark calling in their marks.

We "fought for our freedom" in Iraq so we could give China oil field leases. Tried to sell them Hummer ("our" car company - thanks Bob Corker) which they turned down. So why not sell them "our" car company (after they sell "our" company to "us" through an IPO). I don't think they are interested in fake paper anymore.

Anonymous said...

I was born in 1943. I don't remember WW II but I remember my uncles and dad and my aunts and mother talking about those who died and the suffering. And the thing that kept coming through was how prior to the war we sold raw materials and machinery to Japan. We supplied our enemy even when it became obvious that they were building up their military far beyond what was necessary for them to defend their country. Are we now going to do this for China?

musemater said...

This brings to mind the foresight of Kurt Vonnegut's 1990, "Hocus Pocus", which satirizes the USA having been taken over for unpaid debts with Japan (our debtors in the book) extracting their dues with Asian "efficiency" over all our businesses including the running of our prisons, schools, and governments. It is a dry sharp fiction of absurd humor looking more and more plausible every day!

Who aged 40 and above ever thought it could come to this state of affairs? Who under 40 even knows what American Independence is/was other than the few millions homeschooled and their parents? It's hard getting through 100+ years of public education indoctrination that the government loves us and cares for us. But we have a strong salting of independent thinkers who may be able to overcome the malaise of the 99%. If???? God only knows and we'll mark the road to anyone who wants to find the way. :)

Anonymous said...

The link to the article you cite doesn't appear to work. Would you be so kind as to provide the source?

Judy Aron said...

Sorry - the link has been fixed - thanks for letting me know about the problem.

musemater said...

Judy, you may have read this from Houston Chronicle, China Stakes Claim to S. Texas Oil, Gas
"State-owned Chinese energy giant CNOOC is buying a multibillion-dollar stake in 600,000 acres of South Texas oil and gas fields, potentially testing the political waters for further expansion into U.S. energy reserves." Original Link: If that link fails here's my copy of article: