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Thread: US Lost Ten Billion Dollars on GM Bailout

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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Born Free View Post
    So, as the companies are broken up and purchase by other these suppliers are still in business.
    That's assuming the companies can handle a) not getting paid on what they owe, during the bankruptcy period and b) the almost certain loss of business that would result from an unaided bankruptcy.

    Why else would Ford have asked for the government to bail out two huge competitors? Why didn't they tell GM to get bent, push for a normal bankruptcy, and buy a bunch of GM assets and brands? It's because they knew they'd be dragged down as well.


    The cars that are needed will be made as before but under new ownership.
    Right. Like Toyota, or Honda, or Hyundai, or Fiat, or....


    No. They should have been allowed to go bankrupt. Big Daddy has not business picking winners and losers. Period.
    The government does have a legitimate interest in making sure the biggest manufacturing industry in the US doesn't go down the tubes. In fact, I'd say that allowing a huge chunk of the US economy to implode because of a conservative talking point is downright irresponsible.

    Besides, the government wasn't "picking winners." They didn't pass laws mandating purchases of GM, they didn't discriminate against Ford. They weren't doing anything that Japan didn't do for Toyota or Honda, or South Korea did for Hyundai and Samsung. All they did was keep GM and Chrysler in business.


    You make assumptions that have no basis of fact.
    It's a fact that the credit markets were frozen, that GM and Chrysler's biggest competitors were not screaming about an unfair government buyout, that no one had expressed much interest in buying up GM or Chrysler. And I'm very confident that if Chinese companies wanted to buy Pontiac, Americans would be screaming.

    Even the Economist, which initially said that the bailout was a huge mistake, changed its mind by 2010: General Motors: Government Motors no more | The Economist


    Where did all the bond holder debt go? It's gone....
    1) The point was that the bankruptcy did not eliminate all of GM's debts, and they are not profitable solely because of the debt reduction.
    2) Bondholders got 150 million shares, and options on another 273 million shares at $10-18 each.
    3) They were not going to be made whole, no matter what.


    And who's fault is that? Ford had no problem. Again you pick winners and losers.
    There's no question that GM and Chrysler primarily caused its own problems, and the recession brought it to a hed. The point is that in this circumstance, letting them go bankrupt was not the solution.


    One thing you continue to ignore is the need for these protects are still in demand...
    That's sort of like saying "when a ship sinks, people still need to float. They can just use the life rafts."

    The economy is not perfectly frictionless, especially at a time when the country was mired in recession, credit markets were frozen, people were buying fewer cars and already worried about the economy. People have emotional reactions to things like "GM going bankrupt." There also would have been tertiary effects from people being thrown out of work. At this point, there is little question that however imperfect the bailout was, it was undoubtedly better than twiddling our thumbs while American manufacturing went down the tubes.

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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by upsideguy View Post
    Do you remember the investment environment of 2008/09... I sure do, we closed on the sale of our company just as the markets were falling. There was almost no risk capital available q3 '08 to q3 '09. There was not sufficient capital to finance a GM bankruptcy.

    Look, the GM/Chrysler/AIG/Bank bailouts, which may have been the last bi-partisan work of Washington (short of naming a post office in Montana) of our generation worked. Can't you concede one item of success?



    is
    A success because it was bi-partisan? I think we would already be in robust recovery if real bankruptcies had been allowed. At some point before the price fell to zero a buyer for GM would have been found.
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  3. #173
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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Visbek View Post
    That's assuming the companies can handle a) not getting paid on what they owe, during the bankruptcy period and b) the almost certain loss of business that would result from an unaided bankruptcy.

    Why else would Ford have asked for the government to bail out two huge competitors? Why didn't they tell GM to get bent, push for a normal bankruptcy, and buy a bunch of GM assets and brands? It's because they knew they'd be dragged down as well.



    Right. Like Toyota, or Honda, or Hyundai, or Fiat, or....



    The government does have a legitimate interest in making sure the biggest manufacturing industry in the US doesn't go down the tubes. In fact, I'd say that allowing a huge chunk of the US economy to implode because of a conservative talking point is downright irresponsible.

    Besides, the government wasn't "picking winners." They didn't pass laws mandating purchases of GM, they didn't discriminate against Ford. They weren't doing anything that Japan didn't do for Toyota or Honda, or South Korea did for Hyundai and Samsung. All they did was keep GM and Chrysler in business.



    It's a fact that the credit markets were frozen, that GM and Chrysler's biggest competitors were not screaming about an unfair government buyout, that no one had expressed much interest in buying up GM or Chrysler. And I'm very confident that if Chinese companies wanted to buy Pontiac, Americans would be screaming.

    Even the Economist, which initially said that the bailout was a huge mistake, changed its mind by 2010: General Motors: Government Motors no more | The Economist



    1) The point was that the bankruptcy did not eliminate all of GM's debts, and they are not profitable solely because of the debt reduction.
    2) Bondholders got 150 million shares, and options on another 273 million shares at $10-18 each.
    3) They were not going to be made whole, no matter what.



    There's no question that GM and Chrysler primarily caused its own problems, and the recession brought it to a hed. The point is that in this circumstance, letting them go bankrupt was not the solution.



    That's sort of like saying "when a ship sinks, people still need to float. They can just use the life rafts."

    The economy is not perfectly frictionless, especially at a time when the country was mired in recession, credit markets were frozen, people were buying fewer cars and already worried about the economy. People have emotional reactions to things like "GM going bankrupt." There also would have been tertiary effects from people being thrown out of work. At this point, there is little question that however imperfect the bailout was, it was undoubtedly better than twiddling our thumbs while American manufacturing went down the tubes.
    Translated you believe there are US companies to big to fail. Really
    Liberals - Punish the Successful, Reward the Unsuccessful
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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Born Free View Post
    Translated you believe there are US companies to big to fail. Really
    Yeah, that conservative talking point doesn't work either.

    If the problem is that the companies are "too big," what are our options? We can't just let them fail, without causing massive collateral damage to the economy. What else can we do? Break up the companies? At what size? Based on the number of employees? The number of vendors? Annual revenues? Would anyone have suggested, prior to 2005, that GM was "too big?" Is Ford currently "too big?" How do we know which companies actually pose a threat, before it's too late? Who gets to choose which apparently healthy companies get sliced and diced?

    Even if we could look into a crystal ball and resolve all these issues, we're back to your other talking point -- that of government "picking winners."

    Another problem is that a constellation of smaller companies doesn't actually solve the issue; all it does is obscure it, and make it harder to fix the damage. For example, the S&L crisis of the 90s wasn't caused by the collapse of a single company, but by almost 750 companies doing the same things, and suffering the same types of collapses. Care to guess how much it cost the taxpayer to clean that one up? $341 billion in 1996 -- or $500 billion, in 2013 dollars.

    TARP basically bailed out a relative handful of companies. Net cost to the taxpayer? $12 billion. And $10 billion of that was GM. So you tell me, which was a more effective bank bailout?

    In addition, uttering a slogan doesn't change the fact that if GM and Chrysler didn't get a bailout, the US auto industry would've been totally ****ed.

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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Visbek View Post
    Yeah, that conservative talking point doesn't work either.

    If the problem is that the companies are "too big," what are our options? We can't just let them fail, without causing massive collateral damage to the economy. What else can we do? Break up the companies? At what size? Based on the number of employees? The number of vendors? Annual revenues? Would anyone have suggested, prior to 2005, that GM was "too big?" Is Ford currently "too big?" How do we know which companies actually pose a threat, before it's too late? Who gets to choose which apparently healthy companies get sliced and diced?

    Even if we could look into a crystal ball and resolve all these issues, we're back to your other talking point -- that of government "picking winners."

    Another problem is that a constellation of smaller companies doesn't actually solve the issue; all it does is obscure it, and make it harder to fix the damage. For example, the S&L crisis of the 90s wasn't caused by the collapse of a single company, but by almost 750 companies doing the same things, and suffering the same types of collapses. Care to guess how much it cost the taxpayer to clean that one up? $341 billion in 1996 -- or $500 billion, in 2013 dollars.

    TARP basically bailed out a relative handful of companies. Net cost to the taxpayer? $12 billion. And $10 billion of that was GM. So you tell me, which was a more effective bank bailout?

    In addition, uttering a slogan doesn't change the fact that if GM and Chrysler didn't get a bailout, the US auto industry would've been totally ****ed.
    That's what bankruptcy is for. There would have been buyers at some price, and auto manufacturing would have continued.
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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Visbek View Post
    Yeah, that conservative talking point doesn't work either.

    If the problem is that the companies are "too big," what are our options? We can't just let them fail, without causing massive collateral damage to the economy. What else can we do? Break up the companies? At what size? Based on the number of employees? The number of vendors? Annual revenues? Would anyone have suggested, prior to 2005, that GM was "too big?" Is Ford currently "too big?" How do we know which companies actually pose a threat, before it's too late? Who gets to choose which apparently healthy companies get sliced and diced?

    Even if we could look into a crystal ball and resolve all these issues, we're back to your other talking point -- that of government "picking winners."

    Another problem is that a constellation of smaller companies doesn't actually solve the issue; all it does is obscure it, and make it harder to fix the damage. For example, the S&L crisis of the 90s wasn't caused by the collapse of a single company, but by almost 750 companies doing the same things, and suffering the same types of collapses. Care to guess how much it cost the taxpayer to clean that one up? $341 billion in 1996 -- or $500 billion, in 2013 dollars.

    TARP basically bailed out a relative handful of companies. Net cost to the taxpayer? $12 billion. And $10 billion of that was GM. So you tell me, which was a more effective bank bailout?

    In addition, uttering a slogan doesn't change the fact that if GM and Chrysler didn't get a bailout, the US auto industry would've been totally ****ed.
    Give it up. You believe some companies are to big to fail. I on the other hand firmly believe there is no company too big to fail. All your bantering will never change my mind. I further believe in the markets to adjust themselves, meaning there are some that are successful and some fail, that is how FREE MARKETS work.
    Liberals - Punish the Successful, Reward the Unsuccessful
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    Re: US Lost Ten Billion Dollars on GM Bailout

    Quote Originally Posted by Lord Tammerlain View Post
    Considering the probably costs of letting GM close, 11 billion is not bad

    The cost would be, increased medicare and Medicaid bills, welfare and UI payments not just to GM workers and retirees, but to dealership and suppliers as well
    Probably some fuzzy math to consider too. What what have been the unemployment compensation payouts and lost income tax revenue of unemployed auto workers, car dealership employees around the country and local media people who would have been laid off since car dealerships are among the biggest advertisers in local newspapers, local tv and local radio in America?
    Having opinions all over the map is a good sign of a person capable of autonomous thinking. Felix -2011

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