General Motors posts profits for the first time in years. Image from Wikimedia Commons.

After GM and Chrysler went to the government asking for a bailout, and got one, General Motors has posted a profit for the first quarter of 2010.  It is the first time the company has posted numbers in the black since 2007.  GM recently repaid a portion of the auto bailout it was lent and is thought to be on the path to profitability. Ford Motor Co. also posted recent gains, so it seems auto companies are getting back on track, though they still have plenty to repay from the emergency loans they received from taxpayers.

GM posts first quarter gains

For the first time since 2007, GM has posted a first quarter profit. According to the New York Times, GM garnered about $865 million in profits for first quarter 2010.  It posted revenues of $31.5 billion, and cash flow about $1 billion in the positive.  It’s an overall positive sign for the beleaguered car maker, who previously had to ask the government for more than $50 billion in assistance. One year ago, the company posted losses of $6 billion.

Payment on the loans begun

Weeks ago, GM made payments on a portion of the loans from the Treasury.  The actual loans to GM and to Chrysler were bundled loan packages, and they paid off one of the portions, years before it was due.  While this was touted as a victory by GM and also Chief Executive Ed Whitacre, it was only a payment of $8.2 billion to the governments of America and Canada.

Not out of the woods

Despite the return of GM profits, the company is still heavily in debt.  The loans it received from the U.S. and Canadian governments totaled more than $50 billion. GM has been making obvious positive strides but isn’t completely free yet. At present, the U.S. Treasury still owns more than 60 percent of GM, and those ownership stakes can only be bought by stock offering when the company goes public again. According to the same piece in the New York Times, they will potentially make a public offering by year’s end.

General Motors makes $6 billion payment

General Motors wired the final payment Tuesday night on $6.8 billion in installment loans from U.S. and Canadian governments. More than $1 billion went to the Canadian government, and $4.7 billion went to the U.S. Treasury. According to Reuters, the U.S. Treasury has confirmed that General Motors has paid its loan obligation a full five years before the maturity date of the loan.  The loans made to General Motors and Chrysler were part of the TARP program.

General Motors to begin mass production of Chevy Volt

Production has already commenced on the Chevy Volt, the plug in hybrid.  It is being manufactured at the Hamtramck plant near Detroit.  General Motors Chief Executive Ed Whitacre has also, according to CNN, announced they will invest $136 million into the Fairfax, Kansas and $121 million into the Hamtramck, Michigan plants for production of the next generation Malibu. The Fairfax plant also produces the Buick LeSabre, and the Hamtramck plant produces the Buick LaCerne and Cadillac DTS models, among others.

Not out of the woods just yet

The U.S. and Canadian governments are still majority shareholders of General Motors.  Currently, according to this article in The Guardian, the US and Canadian governments collectively hold 73 percent of GM stock, the U.S. holding 60 percent.  General Motors received about $50 billion from the U.S. Treasury in TARP funds, and the plan is that once GM is allowed to go public for stock purchases again, the taxpayers will get back something on their investment. Chrysler is still struggling, though it has begun to make positive steps.  The Wall Street Journal reports that Treasury Secretary Tim Geithner will be meeting with Whitacre soon.

So is it ok to buy GM again?

Many people were dissatisfied with the involvement of the Treasury, and also the fact that one of the largest manufacturers of domestic automobiles slipped so badly.  The car manufacturing industry is also one of the largest employers in the US, and thousands were laid off in the wake of the General Motors and Chrysler bankruptcy.  This is proof that GM is returning to not only solvency, but perhaps to profitability, and with the upcoming release of the Chevy Volt, Detroit may soon see the dawning of a new day.

(Photo Credit: http://www.flickr.com/photos/jm3/ / CC BY-SA 2.0)

Pay Czar Kenneth Feinberg will once more slash and burn the salaries of TARP CEOs. (Photo: Wikipedia)

Obama “Pay Czar” Kenneth Feinberg wields a mighty money ax, and that ax is coming down once more on executive salaries at bailed out companies, says Reuters. The five firms under consideration – AIG, General Motors, GMAC, Chrysler and Chrysler Financial – are still depending upon government assistance to remain afloat. Since the Obama administration has found that previous crackdowns haven’t sent talented workers “fleeing for the exits” as the companies feared, the Pay Czar has the power to make another cut. Overall for 2010, the Treasury cut cash pay 33 percent.

Pay Czar’s office says 84 percent still with firms, despite pay cuts

In fact, Feinberg told the media that “There is a striking number of holdovers.” So far, that’s all the evidence the Treasury needs to justify striking this delicate balance and enable more money to come back to American taxpayers. The firms must be able to function, but taxpayers’ overnight loans must also be repaid. If a firm received “exception assistance” from the $700 billion in TARP funds, that firm must make sacrifices to repay America’s taxpayer base.

People don’t like to hear about AIG execs receiving multi-million-dollar bonuses

Yet that’s what happened, even after taxpayers had given up TARP monies to keep them afloat. Now that Pay Czar Feinberg is making wider cuts, the hope is that more Wall Street firms will follow the example. It could be the only way to begin restoring public confidence in a financial sector that openly played unnecessarily risky games with other people’s money. Reuters reports that Bank of America and Citigroup have repaid all or some of the TARP money they took, but too many offenders are still on the hook.

No cash bonuses, no long-term restricted stock, no golden parachutes

Those have all been eliminated in those companies under Pay Czar Feinberg’s watch. That frees up $45 million for AIG to repay their obligation to the American people. Salaries will also remain frozen at AIG with only “one exception” until they meet their obligation, says Feinberg. GMAC’s CEO has no cash salary now, only long-term stock. Chrysler’s CEO has a similar deal. Salaries there and at General Motors have been tightly monitored and kept down.

Let us reflect back on your greed

Companies that repay their TARP obligation would technically slip out of Pay Czar Feinberg’s regulation. Perhaps this is why he is looking to expand his legal authority. Reuters says he has contacted 419 TARP firms – including those who are technically off the hook – and asked them to “look back” at their past salary history. If pay was “excessive” between October 2008 (when TARP funds were first distributed) and February 2009 (when legislation affected pay levels at TARP firms), Pay Czar Feinberg wants there to be renegotiation. Specifically, pay above $500,000 for 2008 that is “not in the public interest” will apparently be routed back to American taxpayers in a yet to be determined percentage. Companies can either cooperate voluntarily or be forced by the Pay Czar to comply and give up news of their transgression to the public.

That’s quite an aggressive retroactive plan, isn’t it?

It will be interesting to see how many TARP companies fall in line. It is difficult to imagine the American public having any sympathy for them at this point. The recession has run too long and struck too deep in the country’s consciousness for more excuses. Taxpayers are not a personal loan company for these wasteful behemoths. Pay Czar Kenneth Feinberg may be the czar America needs; he may be the czar that Glenn Beck will regret weeping over.

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Jeep Patriot image from Flickr.

The Insurance Institute for Highway Safety has come out with its annual list of Top Safety Picks. Eight SUVs and 19 cars have been given Top Safety Pick awards for 2010. People who want to make sure they’re getting the safest cars before filling out a personal loan application for a car loan should definitely check out this list.

The Insurance Institute for Highway Safety named six vehicles made by Ford, which makes Volvos, Top Safety Picks. Subaru and Volkswagen each had five vehicles named on the list. The Institute picked four Chrysler vehicles.

The Insurance Institute for Highway Safety

For 50 years, Insurance Institute for Highway Safety has operated for the purpose of reducing automobile accidents and injuries. The Institute is a non-profit organization that gets its funding from insurance companies. Each year, four tests are conducted to determine the Top Safety Picks:

1. Frontal offset impact test
2. Side impact test
3. Rear crash protection and head restraint ratings
4. Roof strength test

The Insurance Institute for Highway Safety also rates child booster seats for cars and other consumer products. Of course, the Insurance Institute for Highway Safety has been accused in the past of serving the interests of the insurance companies rather than the public, which is why vehicle testing is highly regulated. It has also come under scrutiny for being unfairly hard on motorcycles, but who are we kidding? Motorcycles are not known for their safety features.

New safety requirements

The New York Times noted that there were some major changes in the Insurance Institute for Highway Safety’s list. For instance, last year 94 vehicles were named on the Top Safety Picks list, and this year there were only 27. Furthermore, Toyota and it subsidiaries last year earned a total of 11 Top Safety Picks awards, and this year the company, which includes the Lexus and Scion brands, got none at all.

In order to make the Insurance Institute for Highway Safety’s Top Safety Picks list this year, vehicles had to get a rating of “good” on the roof strength test, which measures rollover protection, was required in order to make the list. “Good” is the highest rating. This change caused Toyota vehicles to be shut out, the length of the list to be reduced dramatically and the Honda Accord to be left off the list after it made the 2008 and 2009 lists.

Auto industry impact

Naturally, safety ratings play a big part for many consumers when they are considering vehicle purchases. After a couple of tumultuous years in the auto industry, the stellar safety ratings for Ford should help the company stay afloat while we ride out the rest of the recession.

Chrysler should be particularly encouraged by its four wins after it had to file for bankruptcy protection this year. Sales of the four vehicles that made the list should help stabilize the company. Those four vehicles are:

• Chrysler Sebring 4-door with electronic stability control
• Dodge Avenger with electronic stability control
• Dodge Journey
• Jeep Patriot with side torso air bags

Check out the full list of vehicles that made the Insurance Institute for Highway Safety’s list in the New York Times’ Wheels column.

Billboards may become a thing of the past (photo by openphoto.net)

Small business owners are looking to installment loans to make it through the rough economy. With industry giants like GM and Chrysler falling into bankruptcy, it’s easy to see how smaller businesses are in precarious financial situations. Part of the problem is cyclical. As business owner Terry Grant, owner of a small chain of dry cleaners in Orlando, Florida, stated, “It’s hard because to get more business we have to advertise; but to advertise we need more business.” Many businesses have the same problem and are looking for ways to afford the advertising needed to reach more customers.

Advertising is being cut from budgets

Unfortunately, every business is suffering and advertising outlets of the past, like magazines, newspapers and radio stations, are also suffering. They are trying their best to give customers small perks in efforts to keep their business. Meg Schaeffer, manager of the sales department of WBRT Radio said, “It’s hard because we want to keep people buying our ad-time, but the first thing people cut in times of trouble is marketing. We are trying to throw in perks and bonuses, but only our most loyal customers are still here.”

Advertising is changing

One popular way to advertise is online. Many small business owners are turning to free advertising online with social marketing and blogging. Nancy Everett, owner of a graphics design firm in Seattle, Washington, stated, “We need free marketing and online tools are the best…all it takes is time and you can create an online buzz about your product quickly and easily.” There are some simple ways of using the internet to build a brand and they are becoming more and more popular as internet usage expands.

Social marketing works

Using Myspace, Twitter, Linkedin and Facebook to market is the simplest way of getting a name out. Each of these social marketing sites boasts millions of users who check in daily to communicate, market, and build their businesses. The key is consistency. Everett confirmed this, adding, “I dedicate two hours every other day of my work week to social marketing and networking. Whether it’s tweeting people or uploading new pictures to Myspace, I make sure that there is activity on my online presence….and I always communicate with those who talk to me.”

Consistent communication is the key

That’s another key for business owners who use online marketing—consistent communication with potential buyers. Many owners realize the importance of using any communication wisely and following up. Everett added, “Even if it’s just to say ‘Thanks’, it’s all about relationships and building them… you don’t know if that one ‘thank you’ will lead to a new contract or job.” By making the most of an online presence, businesses can use funds procured through installment loans, bank loans and grants for running the business, rather than supporting a heavy advertising budget.

Blogging is user-friendly and it attracts business

Blogging is one of the most effective ways of maintaining a user-friendly and pleasant website for a business. Some tips to blogging are:

1.  Always provide fresh content. Marcus Gentry, marketing professor at Pepperdine, stated, “You want to make the customer glad they went to your website. Outdated content won’t help that cause. You need to post something as often as possible to engage your viewers.”

2.  Stay connected to visitors by asking for input, feedback and opinions. One of the best ways of captivating an audience is to ask for their opinions. Business owners should incorporate a “comment” section on their website that gives visitors an outlet.

3.  Owners should use blogs as a way to reach search engines. Blogs can keep a website popular because of the constant addition of content with keywords. There are plug-ins available to create keyword friendly URLs and business owners should find them and use them wisely.

Try social marketing – it’s free!

These are all great ways for business owners to find free advertising and marketing possibilities. In times like these when businesses need installment loans or bank loans and may even have to liquidate assets to stay alive, it’s good to know that marketing does not have to come to a standstill. Marketing and advertising are what will bring new customers in and, hopefully, generate more income.

Apply Below for your Installment Loans!

(Photo: autos.blackvoices.com)

Were you able to take advantage of Cash For Clunkers when it breezed through town? That’s what it seemed like: a breeze that came to call for but a moment. Once that moment was gone, the government put the entire thing on hold. Things like that happen when you burn through $1 billion in less than two weeks – particularly when the plan was for that money to last four to five months. Now the president feels the auto industry needs the cash advances and short term loans Cash For Clunkers provides to keep them going.

Want to know what’s on the Cash For Clunkers car list?

At the moment, it really doesn’t matter, does it? There’s a great deal of question as to whether the program will be approved by the Senate for another $2 billion, even though opponents of Obama’s original plan like Sen. Dianne Feinstein are now in support of the $2 billion expansion. The president is going to attempt to rally senate support this week, but there is a strong possibility that another $2 billion in taxpayer dollars going toward putting more cars on the road (instead of improving mass transportation) won’t fly.

No guarantees after this Friday

In a recent Los Angeles Times story at http://www.latimes.com/classified/automotive/highway1/la-hy-auto-sales4-2009aug04,0,4883093.story, White House Press Secretary Robert Gibbs was quoted as saying that Cash For Clunkers would be guaranteed through the weekend of August 8-9, but only a positive vote in the Senate would extend the program beyond that.

“If the Senate hasn’t acted by this Friday, I would not give people the same assurances of going into a dealership this weekend,” Gibbs said.

Yet there are those who are positive that the Senate will pass the additional funding. Transportation Secretary Ray LaHood said to MSNBC, “We’re encouraging senators to listen to their car dealers and the people they represent. If they do that, it will pass the Senate.”

Oh really? Listen to the people?

And what is it you think they’re going to ask for? Why, indefinite extension of the program – that’s what. People love free money, yet the catch here is that it’s taxpayer money. So it isn’t free money, is it? Let’s go crazy, folks! That’ll save this economy – fiscal irresponsibility.

And Chrysler was doubling the discounts

Chris Woodyard writes in his “Drive On” column for the USA Today that while Chrysler had been matching the government’s $4,500 Cash For Clunkers car list incentive, that program is headed for the station. It was simply too effective.

Yet it differed from the Cash For Clunkers car list program in that you didn’t even need to trade in a car to get Chrysler’s $4,500 incentive. “It cut through the clutter,” said spokeswoman Kathy Graham. And it caused Chrysler vehicles to fly off the lots, including the PT Cruiser, whose sales beat last years at this time by more than 24 percent.

Here’s Chrysler’s new deal

The double incentive will remain in effect for the PT Cruiser and bigger SUVs and trucks. However, the matching will no longer apply to “some of the bigger clunker incentive replacements,” says Graham.

In those cases, Chrysler will provide  $3,500 for a Dodge Avenger or Chrysler Sebring sedan. It will put up $3,000 for Dodge Nitro SUVs and Jeep Liberty. The Dodge Caliber will net $2,500 in incentive discounts. Jeep Wrangler, Dodge Sprinter, Dodge Challenger and SRT vehicles were never part of Chrysler’s incentive program.

Cash For Clunkers? That money should be going to healthcare!

That’s right. One shot was enough. If more taxpayer money is going to be thrown around, it should be thrown at universal healthcare. People cannot be trusted to escape from their own greed; let’s not make it an official mandate by making the Cash For Clunkers car list program a perpetual monument to our love of debt. If short term loans or cash advances can help now and again with a down payment, that’s fine. Apply below!

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