Failing to Dodge a Bullet

Back last June, President Obama informed America that his administration has created hundreds of thousands of jobs and that the private sector is doing fine.

A great storyteller (liar) of our time, while the administration has created thousands of jobs, more folks have quit looking as the number of employed citizens has spiraled downward under his watch.

Although, for the moment, our economy seems to have stabilized with the help (?) of over 5 trillion in stimulus, there is no doubt, with increasingly handcuffing regulation and suffocating taxation, the private sector is not doing fine.  With apologies to Ted Nugent, who was in town Sunday night, the Obama economic policies have us in a stranglehold.

For the most recent case in point, I direct you to the announcement yesterday in Detroit that Fiat owned Dodge will cease participation in NASCAR at season end, some 12 years after their triumphant return to the sport.

After absorbing all the seemingly legitimate reasoning behind he decision, one thing is clear: this is not good news for the auto industry, Dodge and certainly NASCAR, where even the most casual observer is noticing the large number of empty seats around the Sprint Cup Series circuit. While participation of the major auto manufacturers in NASCAR is a small part of the overall business, it is a significant association. 

The manufacturers gained from participating on many levels, including engine research and development, a testing ground for innovative products and of course, advertising. Win on Sunday, show on Monday was a catch phrase back in the day, but with NASCAR going to the car of tomorrow, the personalities of the makes lost presence. While that is changing in 2013 in a effort to recapture the similar stock look, it is too late for Dodge.

It was unfortunately George W. Bush that began the process to bailout the car companies, a move that coupled with Obama taking advantage of the engagement, has severe repercussions affecting all those associated with the auto makers, and us taxpayers, to this day.  The actions taken by the Obama administration upon taking office, created significant issues, some bordering on criminality, plaguing efforts at achieving profitability.

The GM bailout is particularly troubling, with bondholder positions being placed behind union interests, dealership owners being targeted due to political association, the jettisoning of the iconic Pontiac brand and the government utilizing its ownership position to advance green energy vehicle initiatives. With the government in control, the old GMAC financial arm, a top player in the mortgage meltdown, has emerged renamed and is back to the old tricks with subprime used car loans,  a highly risky roll of the dice, this time with taxpayer money.

While Obama claims he saved the car companies, GM requires a stock price in the low 50's to make itself whole.  GM closed today at 20.38 per share, and the true costs of the bailout is staggering, In addition, the criminality associated with this takeover is now beginning to unravel.  Ford did not accept money, but Chrysler also was partially bailed out and has since been sold to Fiat.

The car companies were not saved.  The preferred route for them would have been a structured bankruptcy.  Obama has wasted untold trillions of dollars, and after this huge expenditure, the automakers are still having major trouble.  Similar to the housing industry, the industry needs the job market to improve significantly for these sectors to return to health.

For a company like Dodge to exit the friendly confines of NASCAR, take it as the harbinger it is, one signaling an unhealthy economy which is major trouble.