Evolving Excellence

Contextual Comparison

By Kevin Meyer

I love reading The Wall Street Journal on the iPad.  More than any other newspaper or magazine, the WSJ got it right in terms of functionality and readability.  And the format sometimes leads to the ability to derive comparisons between articles that add context - or at least ridicule.

Or in the case of this morning's edition, ridicule a deux.

Now if I did this right, you'll be able to see the full view of this particular WSJ iPad screen by clicking on the image.  Two sets of stories I'd like you to see:

1) "Big Gains in November Auto Sales"... and further down there's "GM Moves to Reduce Inventory."  Yep, we've told you about this many times.  GM counts a "sale" as when a vehicle leaves the factory and is "sold" to a dealer... not necessarily when it is sold to an end customer.  Hence the initial apparent conundrum of gains in sales with gains in unsold vehicles.  Hmmm...

2) "Singapore Airlines' Troubled Investment" which discusses the problems with the 49% stake in Virgin Atlantic it bought a while back... and right beneath it "Virgin Atlantic Would Fill a Hole for Delta" describing Delta thinking about buying a 49% stake in... Virgin Atlantic.  Perhaps Delta should talk to Singapore Airlines?  Hmmm...

Obviously there's more to all four stories, and it's not as simple as just the headline.

Or is it?

Toyota Follows the Detroit Three

By Kevin Meyer

A hallmark characteristic of GM, Ford, and Chrysler was and for the most part still is their propensity to try to bash suppliers into submission on pricing.  Forget partnering with suppliers, the primary tactic was to threaten in order to obtain the lowest short-term price. This inevitably led to a reduction in quality and overall supplier performance. In contrast there was Toyota which had a reputation of working with suppliers to obtain mutual benefit.

"Had" is perhaps the operative word.  For it seems even Toyota is succumbing to competitive pressure and is changing... and not for the good.  From SupplierBusiness:

Toyota to suppliers – reduce prices or face being replaced.  Toyota’s stark message to its supply base is a sign that relations between suppliers and OEMs are becoming increasingly strained.  In a sign of the increasingly adversarial relationships currently being seen between OEMs and suppliers, Toyota is reportedly now telling parts suppliers in Japan to drastically reduce prices or face being replaced by overseas rivals.

The conditions reportedly came at an August meeting in Nagoya between Toyota and members of its 219 strong ‘Kyoho-kai’ of domestic suppliers, a group that includes Denso and Aisin Seiki.

Times they are a'changing.  Unfortunately.  Toyota's rapid growth led to a leadership that is not fully steeped in the Toyota culture.  This is what created the missteps during the recent quality crisis - a focus on shifting blame and fighting evidence which harmed their reputation.  Many of us had thought they had learned a lesson and had gone back to their roots to focus once more on creating value for the customer and quality.  Perhaps not.

Toyota has close ties with its Japanese suppliers and has traditionally been loath to threaten them with such action. The company shares cost savings with suppliers, guarantees business and holds stakes in the biggest members of its parts-makers group. The rapid expansion of its supply base overseas is seen as being partly responsible for the quality issues that have affected the company’s reputation in recent years.

Toyota has also suggested that Japan-based suppliers should procure more of their parts from overseas as one way to reduce their prices, according to reports from the discussions. The company has asked some parts-makers to cut prices by as much as half, according to one report.

Bashing suppliers on pricing and encourage outsourcing and chasing low cost labor.  Watch out, Toyota.  Remember your core values and principles.

The Old GM is the New GM is the Old GM

By Kevin Meyer

Forget for a moment all the financial convolutions the GM bailout foisted upon the taxpayers, and the accounting machinations they're going through to show a profit.  Forget that they are in effect using U.S. taxpayer dollars to invest in China - although perhaps that's a more direct route than interest on the growing U.S. debt in effect being an investment in China.

Companies succeed when they focus on creating value for the customer... which only then creates value for the shareholders and stakeholders, and only then creates value for management.  The old GM forgot that - if they ever knew it in the first place, and tried to skip those initial couple of steps.  If you forget it all begins with the customer, you crumble.

The new taxpayer-enabled GM claimed they were different.  Some pretty nice designs were created, some pretty pathetic ones discontinued.  But somehow the internal philosophy of the company apparently hasn't changed.

General Motors Co is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.

The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles.

"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."

Technically GM is probably correct.  But if you are a customer and see GM trying to weasel out of any commitment to quality and responsibility, how would you feel?  Is that creating value - in terms of confidence among other things?  Of course not.

Nice job GM.  Old GM.

Still Your Father's Chevrolet

By Kevin Meyer

Plus ça change, plus c'est la même chose. 

It doesn't take much to tell this tale... consider the first news item:

GM said it sold 178,896 cars and trucks in the U.S. last month [January 2011], up from 146,825 vehicles in the year-ago period, a rise of 21.8%.

Now consider the second.

Month-end [January 2011] dealer inventory in the United States stood at about 510,000 units... about 124,000 higher than January 2010.

Which obviously leads to the third.

GM increased spending on marketing promotions by $498, or 16 percent, to an estimated $3,663 per sold vehicle, according to researcher Autodata Corp.

And ultimately...

As the only component of consumer credit that is surging, non-revolving loans, indicates that virtually all car purchases are made based on the old formula of "no money down." And with the government backstopping both the car maker and the lender banks, we would be very interested in discovering just how bad the delinquency rate in non-revolving car debt is over the past year, especially as it relates to GM.

Sound familiar?  Chasing top line sales by "selling" cars to the dealers, then being forced to provide incentives to those dealers to move the excess inventory, and then waking up one day wondering where the profits went.

The more things change, the more they stay the same.

Volkswagen Follows the Lead of GM and Toyota

By Kevin Meyer

We've discussed Volkswagen before - both the possibility that their focus on long term excellence will vault them into the top tier of auto manufacturers but with the danger that their strategy may become focused on volume instead of value.

Well, unfortunately the focus on volume may be winning.

Volkswagen AG has one of the brashest goals in the auto industry—to dethrone Toyota Motor Corp. as the world's largest auto maker.

To become the world's largest car maker by 2018, Mr. Winterkorn and his management team have set themselves a lofty goal of selling 800,000 VWs a year in the U.S. by then, and another 200,000 cars from its luxury moniker Audi. VW executives have said they aim to become profitable in the U.S. by 2012 or 2013, selling 400,000 VW-brand cars annually by then, after racking up losses in the U.S. of close to $1 billion in some recent years.

It's an audacious—and some analysts say, impossible—target.

So where have we heard that before... the siren call of volume and being the "biggest?"

Ah yes, GM. 

The auto company has been guided to the lip of a cliff in part by following the flawed line of thought that it needs to be No. 1 in market share -- as if there were some eternal prize for the car company that sells the most cars or being the girl with the most cake. And the business media generally play along, reporting sales rankings as if they were the end-all and be-all.

Valuing such a showy if meaningless sign of strength might seem important if you're working in the traditionally macho world of the newsroom, and it also resonates in the equally testosterone-filled boardroom, particularly for boardrooms in Detroit.

But being No. 1 doesn't matter one whit.

Yep, that worked out pretty well.  That post was written in 2007, and the company proceeded to dive off the cliff, rescued by some politicians that believe capitalism doesn't also require failure or punishment for sheer idiocy.

But where else have we heard about the crazy focus on the top line?  Yep, none other than Toyota.  The company that used to define excellence and customer value somehow forgot... and learned a very painful lesson.  After decades of methodical growth based on demand generated via increased customer value, their focus shifted toward sheer size.

This is beyond a mere lapse in judgment - a human mistakethat anyone could have made.  This is nothing short of wholesale abandonment of their founding principles.  This ain't Kiichiro Toyoda's car company any more.  "Since questions were first raised about possible safety defects, we have been pushing Toyota to take measures to protect consumers," LaHood said.  The company we have so long admired would not have had to be pushed by the government into doing right by its customers.

Nothing short of shameful.

Core values of quality and customer service were lost on the top executives, problems were ignored or even swept under the rug, trends weren't identified.  The company will probably recover... eventually.  But the company has paid a huge price - both financial and in terms of reputation.

So Volkswagen... you want to be the biggest, eh?  Good luck with that.

GM Creates $30 Billion - Like a Genie!

By Kevin Meyer

Traditional accounting does have its wackiness, and now our beloved GM is taking full advantage.  One of the crazier concepts and a toughie to get your head around as you transition from the real world to running a business beholdened to band-aid after band-aid of accounting and tax regulations, is the concept of "goodwill."  Here's the Wikipedia definiton:

Goodwill in financial statements arises when a company is purchased for more than the fair value of the identifiable assets of the company. The difference between the purchase price and the sum of the fair value of the net assets is by definition the value of the "goodwill" of the purchased company. The acquiring company must recognize goodwill as an asset in its financial statements and present it as a separate line item on the balance sheet, according to the current purchase accounting method. In this sense, goodwill serves as the balancing sum that allows one firm to provide accounting information regarding its purchase of another firm for a price substantially different from its book value.

At face value most people can see the logic.  A company like Coca Cola is worth more than just projected profits and assets like bottling plants.  There's value in people saying "I'll have a Coke" - real value from the perspective of the customer.  But trying to wrap quantitative accounting around subjective concepts then leads to lots of fun convolutions.  Perhaps you could call it value from the perspective of accountants.

GM is doing just that, and Jonathan Weil at Bloomberg calls them on their distortions - and the difficulty it may create in the future.

It will be a long time before General Motors Co. can shake the stigma of being called Government Motors. Here’s another nickname for the bailed-out automaker: Goodwill Motors.

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?

Now think about the impact of that supposed $30B in goodwill on the real and perceived value of the company.

By comparison, GM said its total equity was $23.9 billion. So without the goodwill, which isn’t saleable, the company’s equity would be negative. This is hardly a sign of robust financial strength.

GM listed its goodwill at zero a year earlier. It’s as if a $30.2 billion asset suddenly materialized out of thin air. In the upside-down world that is GM’s balance sheet, that’s exactly what happened.

Indeed, the company’s goodwill supposedly is worth more than its property, plant and equipment, which GM listed at $18.1 billion. Another twist: GM said its goodwill would have been worth less had its creditworthiness been better. Talk about a head- scratcher.

That last statement is what could create big problems in the future.  Here's the brief summary of GM's calculation - go to the article to dive into more detail.

The company said it wouldn’t have registered any goodwill under fresh-start reporting if it had booked all its identifiable assets and liabilities at their fair market values. However, GM recorded some of its liabilities at amounts that exceeded fair value, primarily related to employee benefits. The company said the decision was in accordance with U.S. accounting standards on the subject. The difference between those liabilities’ carrying amounts and fair values gave rise to goodwill. The bigger the difference, the more goodwill GM booked. In other instances, GM said it recorded certain tax assets at less than their fair value, which also resulted in goodwill.

Ahhh... if only all of us could do that!  So the danger?

Here’s where it gets really funky. If GM’s creditworthiness improves, this would reduce the difference between the liabilities’ fair values and carrying amounts. Put another way, GM said, the goodwill balance implied by that spread would decline. That could make GM’s goodwill vulnerable to writedowns in future periods, which would reduce earnings.

A similar effect would ensue on the asset side if GM’s long-term profit forecasts improved. Under that scenario, GM could recognize higher tax assets and bring their carrying amount closer to fair value, narrowing the spread between them.

So, to sum up, the stronger and more creditworthy GM becomes, the less its goodwill assets may be worth in the future. An intuitive outcome, this is not.

And not exactly the original intent of having goodwill on a balance sheet.

At this point, GM’s balance sheet remains loaded with fluff, as the goodwill illustrates. GM said its August deliveries were down 25 percent from a year earlier, so it’s not as if business is booming. Moreover, GM disclosed that it still has material weaknesses in its internal controls, which is a fancy way of saying it doesn’t have the necessary systems in place to ensure its financial reporting is accurate.

This being the political season, the Obama administration has made clear that it wants GM to complete the IPO this year, so the president can claim a policy success. It’s bad enough GM needed a taxpayer bailout. What would be worse is taking the company public again prematurely.

The real world conflicting with political expediency?  Really?

What's Volkswagen Up To?

By Kevin Meyer

Half a year ago Bill made an interesting prediction on the future of Volkswagen that made several of us wonder what he might have been smoking.  But once again, he may have been prescient.

I have been known to make a fairly radical prognostication from time to time and I will make one now - within few years Volkswagen will be increasing their lead over the rest, gobbling up Toyota and Ford market share, and they will emerge as the dominant auto maker of the next decade by a wide margin.

His rationale was simple: a commitment to long term excellence and strategic objectives even at the expense of short term returns - a concept rarely found in large especially public companies.

"Starting next year, VW will introduce a so-called "long term bonus" plan, in which managers will be rewarded according to customer and employee satisfaction, as well as their achievements in sales and the company's rate of return. In addition, VW will no longer offer stock options."  This according to Deutsche-Welle a few days ago.  The article goes on to state that bonuses will be based on results in those areas over four years, rather than yearly or even quarterly stock values.  Said VW Director of Human Resources Horst Neumann, "We want there to be a close relationship between bonuses and strategic objectives."

Fancy that - tying executive compensation to long term accomplishment of strategic objectives, including customer and employee satisfaction instead of having it driven solely on the basis of how much money can flow into an investor's pocket in the next couple of months.

In one fell swoop, Volkswagen will be changing the scope of their management thinking, and taking it to a level most cannot fathom.

So today we hear about some of Volkswagen's strategy in an article discussing the challenges still facing GM.

Like awarding one little league team five outs per inning and six strikes per batter, then doing a victory dance because they have a good inning, President Obama applauded the "success" of his GM bailout in a visit to Detroit last week. As much as GM benefited from being able to shed debts and other expensive obligations in a government-financed bankruptcy, the real test will be whether GM can go forward and adapt successfully to a relentlessly competitive market.

GM still has to contend with the United Auto Workers (UAW), a government-orchestrated labor monopoly that its foreign competitors carefully avoid.  It still has to contend with fuel-economy rules purposely tweaked by Congress to prevent GM from sourcing small car production offshore in non-UAW factories. It also still has to contend with the ambitions of powerful competitors seeking to survive and expand in the U.S market—the latest being Volkswagen.

So what is VW up to?

Chief Martin Winterkorn has trumpeted a goal of becoming the world's largest car maker by volume—an aim suddenly plausible for two reasons. VW gets most of its sales in Germany, China and Brazil, where generous scrappage and stimulus subsidies helped Volkswagen continue to grow even through the subprime abyss.

That's an interesting one - a focus on "being the biggest" was a major factor behind the downfall of GM, and later the stumbles by Toyota.  Biggest in terms of sales - which is not necessarily volume - is meaningless.  It's value, translated into bottom line, that means something.  Is VW pushing to be the "largest" just for the sake of being the largest, or are they predicting they'll be the largest by capitalizing on a solid fundamental strategy?

Secondly, VW is a famous has-been in the U.S, still the world's most important market, with high brand-recognition, meager sales, and nowhere to go but up. Thus, while GM and Toyota have been closing and consolidating U.S. plants, Volkswagen is pressing ahead with a $1 billion new factory to open in Chattanooga next year.

Volkswagen learned at least one thing during its plummet from the heights as the dominant U.S. import brand in the 1960s. It was the first to build a large, wholly-owned U.S. assembly plant. That now-defunct plant, in Pennsylvania, was UAW-staffed and had been open only six months when it faced its first strike in 1979. Taking a leaf from its successors, which includes everybody from Mercedes to [BMW, Honda, Toyota, Hyundai] Kia, VW's new plant in Tennessee will be nonunion.

While competitors strive for a "world car" approach, VW is focusing on more market-specific designs aimed especially at mainstream U.S. tastes. An early down payment is the new Jetta, significantly bigger and boatier than its predecessor, and priced about $1,700 less.

Again, an interesting distinction.  Common-design "world cars" can create some efficiencies in terms of design, testing, and manufacturing flexibility - but once again the game is really about delivering value to the customer.  Design and functionality value does seem to be converging among different global demographics - smaller vehicles with higher efficiency - but differences remain.  Where is the value point?

VW's big bet is on the table. For all of Mr. Obama's happy talk in Detroit, the car wars aren't over. The relentless pressure of overcapacity is not cured.

That final statement is critical - is VW working toward a long-term value growth strategy, or are they being sucked into the siren call of being the "largest"... whether it's profitable or not?  Time will tell.

GM and Ford - Another Check on our Undesired Investment

By Kevin Meyer

A couple of news items lately prompted me to take a look at my undesired investment, as a taxpayer, in General Motors.  With a couple of very specific exceptions I've gone to "all cash" over the last few months in response to several looming problems on the horizon that I think add significant near-term risk to the overall market.  So any investment, even undesired and for which I can do nothing about, should be scrutinized.

First let's take a look at Ford, which decided not to take any government bailout and weather the storm on its own:

Ford Motor continued its successful turnaround as better-than-expected sales and profits easily outdistanced expectations and reversed the operating loss of a year ago.

The automaker earned $2.7 billion, or 68 cents a share, excluding special items. The consensus forecast of analysts surveyed by Thomson Reuters was for earnings of 40 cents a share, and Ford easily topped even the most bullish forecast of a 48 cent a share profit.

The results were the best quarterly results for Ford in six years and marked the fourth straight quarterly operating profit for the company, which had suffered more than than four years of steady losses before it returned to profitability in the second half of last year.

Ford was the only major U.S. automaker not to go through bankruptcy in 2009.  The company has been steadily gaining market share over the last year, with the introduction of critically-acclaimed new vehicles.

Even better results ahead. "We are ahead of where we thought we would be despite the still-challenging business conditions," said Ford President and CEO Alan Mulally in a statement. "We remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better financial results in 2011."

Not too shabby.  Amazing how a crisis and forced frugality can create excellence.

And now for General Motors, predominantly owned by us taxpayers.  Not a report on financial results, but on strategies the company is taking now that it has access to so much cash.  Eerily similar to how the government operates with its perceived unlimited access to taxpayer cash - or Chinese credit - depending on your perspective.

Extra cash is not always a good thing for a corporation. This may be the case with General Motors.

The theory is that managers should act in a disciplined manner in spending and operations. By limiting the amount of cash that a company has on hand, managers remain more focused and are less likely to take undue risks with their excess cash. This theory has been documented in a number of academic studies. Managers with too much cash to burn will burn too much cash.

G.M.’s announcement on Thursday that it was acquiring the subprime lender AmeriCredit for $3.5 billion may show that the automaker has stepped into this trap. G.M. is also paying a 24 percent premium to AmeriCredit’s closing stock price on the day before the deal was announced.

Once you take into account the government ownership element, even more issues and problems emerge. First, when G.M. owns a captive lender, it subsidizes the plants, labor unions and dealers. Captured finance means nonmarket financing for buyers when they receive a loan. Think zero percent financing. Lease financing for automobiles usually results in artificial residual pricing for the buyout price at the end of the lease. All of this helps empty dealer lots and keeps plants running. But it oversupplies cars. The problem of artificially oversupplying new cars (like new houses) is put off for another day. Second, the subsidy ensures that people who may not otherwise qualify to buy new cars do so. They overconsume and overspend as they shift their buying from used cars to new cars.

Silly me - I continue to delude myself that we can learn lessons from the past.  Even very recent lessons such as the dangers of subprime lending - not to mention over production and venturing outside of your core competencies.  Of course what can we expect of an owner that has just tried to regulate financial markets by purposely ignoring the two largest contributors to the financial collapse, Fannie Mae and Freddie Mac.

NUMMI is Revived - is Toyota?

By Kevin Meyer

25 years ago Toyota and GM entered into a joint venture to produce small cars together.  For GM it was an opportunity to learn about Toyota's production methods that created vehicles of far lower cost yet higher quality than GM.  At the same time Toyota wanted to learn if those production methods could be applied to a North American workforce and culture.  Toyota did learn from the experience and proceeded to open up many successful factories throughout the continent, although their executives did eventually lose their way in a focus on growth over customer value.  GM never really got it.  The joint venture, and factory, was closed earlier this year.

Along comes Tesla Motors, a company that has designed and is planning on manufacturing one of the most innovative lines of electric vehicles.  The cars have created tremendous buzz thanks to their technological and design innovation.  It's not every day that a car company has the luxury of an order backlog even before launch.

Over the last several months they have been shopping around for a factory, with the leading contender being a facility in Downey, California.  Not anymore.

Enter Toyota and the old NUMMI facility.

Governor Arnold Scharzenegger leaked earlier today that Tesla Motors will be partnering with Toyota to build a new electric vehicle. Now, chief executive Elon Musk confirms that this is true — but that Tesla will also be acquiring the recently-closed NUMMI automotive manufacturing plant in Fremont, Calif., potentially bringing back thousands of jobs lost when that facility closed last month.

Acquiring NUMMI would appear to be a natural as you have an existing high efficiency facility with a large trained workforce only recently laid off.  But a partnership with Toyota?  Tesla vehicles are basically made by hand, and that would be an interesting application of Toyota-esque lean manufacturing.  Not impossible, just interesting.  But that's where someone had a bit of vision.

Tesla clearly realized that the Roadster and Model S weren’t going to cut it — not in a market where the Chevy Volt and Nissan Leaf are going to dominate at a lower price. Tesla would need its own sub-$30,000 car (which would sell for considerably less after likely rebates), in order to survive. But it couldn’t get its costs down on its own, so partnering with a major automaker seemed to be the best course of action. Toyota, which has had a decade’s headstart as the green car leader since the release of its hybrid Prius, was probably also shopping around for a bold, new play in the space to retain its throne.

The design of the car, which probably won’t be released today, will draw largely from an existing Toyota design, Musk says.

Tesla now has the ability to hit the true mass market to drive long-term growth, leveraging Toyota lean principles to create efficiency and value - assuming Toyota remembers how to focus on value over growth.  And Toyota has a potential interesting addition to its portfolio.

Last week Toyota beat estimates and announced surging profits, something of a surprise considering the mess they've had over the past year.  Now they are investing again.

Keep an eye on whether they focus on unnecessary growth or creating value for the customer in terms of desired new technologies, improving quality, and taking care of customers who have problems with their products.  That will show whether the company is really back.

GM Learns From the Government... Unfortunately

By Kevin Meyer

I guess we should have suspected it: GM didn't receive just a few billion in bailout funds from the government.  It also received some knowledge of funny accounting - accounting only the government is allowed to legally do.

Like many people I saw the ads over the past week touting how GM had paid back, with interest and several years early, the bailout loan from the people of the U.S. and Canada.  It sounded a bit fishy to me and apparently others, leading to this piece in The Wall Street Journal.

Is General Motors no longer Government Motors? That's the impression left by the company's announcement this week that is has fully repaid the $6.7 billion in loans it got last year from the U.S. and Canadian governments.  The company is "paying back—in full, with interest, years ahead of schedule—loans made to help fund the new GM," declared chairman and CEO Ed Whitacre. That certainly is the truth, but not the whole truth.

So what's the problem?  The government... uh... people... didn't just loan the company money, they took it over.  Big difference.

But its early loan repayment represents a little more than 10% of the money it got from both governments. Understanding why means peering under the hood of last year's government-sponsored bailout and bankruptcy.

So the U.S. and Canadian governments decided, more or less arbitrarily, to classify some $6.7 billion of its aid as debt and a ballpark estimate of $52 billion in equity. That $52 billion represents nearly 90% of the government money given to General Motors. None of that has been repaid.

Getting the remaining $52 billion back from GM will require an initial public offering, which means convincing the investing public to buy the 73% of the company's stock owned by the U.S. and Canadian governments. (The other 27% is owned by the United Auto Workers union and by bondholders in the old company.) It won't be easy for an IPO to raise $52 billion for the government shares. That's more than Ford Motor's current market capitalization, some $48 billion. And Ford, the only U.S. car company to avoid bankruptcy, already is profitable, which GM isn't. For GM to show sustained profits means doing business in a new way and breathing new life into long-moribund brands.

So that's where the story was last night - a simple "I forgot about the other $52 billion."  This morning it got even more interesting.

General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers "in full." But the claim isn't standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.

Yes, you read that right.

Iowa Sen. Chuck Grassley's charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP. Watchdog Neil Barofsky told Fox News, as well as the Senate Finance Committee, that General Motors used bailout money to pay back the federal government. "It appears to be nothing more than an elaborate TARP money shuffle," Grassley, the ranking Republican on the Senate Finance Committee, said in a letter Thursday to Treasury Secretary Timothy Geithner.

Barofsky said that while it's "somewhat good news," there's a big catch. "I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn't from earnings. ... It's actually from another pool of TARP money that they've already received," he said Wednesday. "I don't think we should exaggerate it too much. Remember that the source of this money is just other TARP money."

And who know's about shuffling funds from one account to another to avoid real accounting better than the government?  Social Security anyone?  Where's Al Gore and his lockbox when you need him?