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DETROIT (Reuters) – General Motors Corp. GM.N on Tuesday said it swung to a quarterly profit that trounced Wall Street estimates as it benefited from cost-cutting and growing sales overseas, sending its shares higher.
This is the headline announcing the Great Obama Success Story. The Dear Leader, through shear bravery and against all odds, saved the giant automaker and showed capitalism just how a nice dose of socialism will win the day. However, yesterday there seemed to be some holes poked in that theory, not that the lame-brained media will report this little problem with their numbers.
How GM Made $30 Billion Appear Out of Thin Air
By Jonathan Weil of Bloomberg News
It appears the automaker and puppet of the Obama administration and labor unions isn’t quite as fit as the sales pitch promises. The balance sheet isn’t quite as balanced as it looks.
“Sometimes the wackiest accounting results are the ones driven by the accounting rules themselves. Consider this: How could it be that one of GM’s most valuable assets, listed at $30.2 billion, is the intangible asset known as goodwill, when it’s been only a little more than a year since the company emerged from Chapter 11 bankruptcy protection?” Mr Weill of Bloomberg writes.
So, we have an immense success story that has managed to battle back retiring some of its liabilities and building up it asset base, through accounting tricks. (They must have gotten the CBO to run their numbers for them) It begins to build some doubt as to the veracity of this ‘profit’ they are reporting to have earned. Are these sales figures real? Is there an actual meeting of the numbers when figuring costs and net income? Suddenly, out of no where, GM is a giant, sucking black hole but spewing forth stars?
“Indeed, the company’s goodwill supposedly is worth more than its property, plant and equipment, which GM listed at $18.1 billion. The amount is about eight times the $3.5 billion GM is paying to buy AmeriCredit Corp., the subprime auto lender. Another twist: GM said its goodwill would have been worth less had its creditworthiness been better. Talk about a head- scratcher.” Well now, I have a corporation worth at least 3 billion dollars in goodwill. Any takers? And we don’t trust them. Aren’t we a bunch of meanies.