Now, if we begin making Yugos, the circle will begin to close

I just could not resist this. It's from The Economic Populist -- lifted directly. I've resisted doing this before -- but this is too juicy.

Eisenhower's Charlie Wilson (not the Afghanistan guy) once said (supposedly) "What's good for GM is good for America." --- well, here we go.

GM Hummer Division to be Sold to Chinese Defense Contractor?


GM is talks with a Chinese firm to sell off its Humvee division with financing from a private equity firm.

A Chinese company is said to be in advanced talks with General motors over the $100million (£69.4million) takeover of Hummer - the fuel-thirsty, four-wheel-drive vehicle modelled on the US military's Humvee.

News of the unnamed bidder's interest came days after it emerged that another big Western carmaker, Volvo, may be sold to the Chinese.

Ford is in talks to sell Volvo to Chinese tycoon Li Shufu's Geely carmaking business. insiders say a private-equity firm is also involved in the proposed Hummer deal but would not reveal its identity.

The buyer is likely Dongfeng Motor Company, a Chinese defense contractor.

Like car companies globally, Dongefeng is faced with slowing sales, and in the commercial vehicles sector where Dongfeng is concentrated, the story is even worse.

However, its overall vehicle sales fell 19 percent in January to 72,483 units, as sales of commercial vehicles slumped about 60 percent to fewer than 10,000 units, the source added.

Industry analysts blamed Dongfeng's weak commercial vehicle sales, mostly medium to heavy duty trucks, on a slowing economy as well as stricter emission standards imposed in July last year.

Why, then is any Chinese car company in talks to take over Hummer?

Why is DongFeng likely the buyer?

Because of the Dongeng EQ 2050, which looks like this:

That's right, Dongfeng makes Hummer knock offs. And who's buying these knockoffs?

The People's Liberation Army, aka. the Chinese military.

According to Sinodefence.com, the chassis and several parts of the engine come from GM, would the PLA want to rely on foreign companies to supply its potentially main vehicle? Probably not. Im not sure how realiable this information is, seeing as the US and Europe (and most of the capitalist world) has a ban on exporting weapons technology to China for use within weapon systems.

The Dongfeng humvee has a V8 AMG Diesel engine, with 200BHP and a price tag of 250k RMB I’m sure the PLA boys will have a great time playing with this bad boy. The body has only basic protection from small arms fire but looks like it could be upgraded, as could the whole body, to carry missiles, or gun mounts etc. Check out the pictures in the more info section.

Anyway, there are two companies in China that are producing Humvee copies, and both are undergoing road testing with the PLA.

That's right, GM is likely selling its Humvee division complete with the machines needed to produce the engines and chassis to a company that wants to supply the Chinese military with the model. (And it's not just the Chinese military buying them, Dongfeng has been selling military vehicles to the Sudanese government, where they are used in Darfur.)

Did they seriously think that no one would notice?

As easy as it is to scream and yell at GM management about this, the truth is that when a company goes bankrupt they sell assets to people who will buy them. And if that's a Chinese automaker that may or may not be acting as a front for the PLA in order to subvert laws prohibiting the export of military material to China, so be it. That's the way things work when you put making money over the national interest.

And at least in part, blame for this falls on the Congress for keeping Detroit hanging buy a string. And, GM seems to be aware that threatening to go into bankruptcy can compel action.

While filing for bankruptcy may be the best way for GM to cut costs and revitalize, if the company chooses that option it may include politically unpalatable moves to sell off assets and cut more jobs.

Both are unfolding right now.

The UAW just walked out of talks where the company took a hard position on retiree health care. Remember that many, if not most UAW retirees are veterans, so if they lose coverage they're going to be going to the VA to get medical treatment.

And, it's only a matter of time before the buyer of Humvee is revealed. Imagine the public response when we all learn that while Wall Street can't find money to loan to GM to keep the company afloat, they can find funds to ship off dual-use manufacturing assets to China. Where they will likely be used to modernize the Chinese military at a time when stoking nationalism is a powerful way for the CCP to redirect anger generated by the economic collapse unraveling in that country at the United States. Not to mention that ramped up military production puts people to work.

We live in a dangerous world, and in these hard times, our government needs to take steps to ensure that the means to cause us harm do not fall into the hands of nations who bear us ill will.

The easiest means to this end is nationalization, complete with a dedicated fund to take public possession of technology, manufacturing assets, and the firms owning them that may be of military use to hostile states. And in the case of the auto industry, the most feasible means to accomplish this is the outright nationalization of the US auto industry