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US Lost Ten Billion Dollars on GM Bailout

ReformCollege said:
Except would GM have actually dissolved? I highly doubt that, what is more likely is those sweetheart labor deals wouldn't have been so sweetly protected.
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Without government money being involved GM would not likely have survived. With a lot of government guarantees it probably would have but the government still could have lost a lot of money
 
Lord Tammerlain said:
Without government money being involved GM would not likely have survived. With a lot of government guarantees it probably would have but the government still could have lost a lot of money
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Could have is a lot better than did...
 
Lord Tammerlain said:
Without government money being involved GM would not likely have survived. With a lot of government guarantees it probably would have but the government still could have lost a lot of money
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Even so, why didn't they at least wait until it declared bankruptcy to bail it out? Oh wait, those pesky unions again......

The union deals should have been restructured. Do I think the unions caused all of GM's problems? Probably not. But if they are going to continue and continue to renegotiate and demand wage hikes and benefit hikes during the good times because "the workers make the company" then I think they deserve blame when the company goes under.
 
Lord Tammerlain said:
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
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The other car companies would have picked up the slack. That being said, I recall the government forcing several Chrysler dealerships to close.
 
Lord Tammerlain said:
Without government money being involved GM would not likely have survived. With a lot of government guarantees it probably would have but the government still could have lost a lot of money
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Do you support the bank bailouts, too?
 
Visbek said:
And yes, that is actually a role for government on occasion -- especially when "doing nothing" would plunge the nation into a depression. In particular, many Asian governments provide extensive financial support to local companies; it's one reason why they often out-compete US companies.

A normal bankruptcy was not an option, period. No one in the private sector was willing to bail out the auto companies. If GM alone had gone under, it would have decimated one of the largest manufacturing industries in the US.

Creditors would still have gotten screwed in a normal bankruptcy. And the unions made concessions for years before the bankruptcy, and made some additional ones during the bailout.

GM has also posted profits for the last 15 quarters; it's a more nimble company; it shed a bunch of dead-weight brands. Like it or not, the bailout has succeeded.
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Understand all that, however I was responding to post #85.

But to you're comments, you have no idea that "doing nothing" would plunge the nation into anything. There are many that say exactly that and I'm one of them. There are so many things that could have happened to GM, to say it would plunge the nation has no basis of fact. Further we're not talking about Asian governments. Last, can you post up a few times the Big Daddy has purchased stock in a structured banckruptcy.

A normal bankruptcy was an option. period. There was no need to bail out the unions or the company, the company would have been broken up and sold off to companies that would take over the manufacturing plants with a new brand name. GM had plenty of market share and factories in place to sell.

Creditors would not have gotten screwed as much in a normal bankruptcy. Bond holder in a bankruptcy take a hit but don't lose everything as Obama structured it to save the Unions. In a normal bankruptcy the unions would share in the hit. In this case they did not.

Last GM has also posted profits for the last 15 quarters, do you know why, a big clue. Their bond debt is gone. The bond holders are no more. Now do you get, how they can now show a profit. Before the Obama/GM bankruptcy GM's debt was too large to make a profit.

And lets not forget the tax payer lost over 10 billion bailing out GM. Yes that is 10 Billion of some of my taxes went to bail out GM, actually my tax dollars went to bailout the unions. Period.
 
Lord Tammerlain said:
Again, it would still have been a bailout

Taxpayer dollars being used to prop up a failed company with no guarantee of being paid back. It could have cost the government (ie taxpayer) $11 billion dollars or more, or less depending on the size of the loan
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Let me guess, GM was, "too big to fail"?
 
Jack Hays said:
On the contrary, the two fit together very snugly.
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Born Free said: "the bond holders would get something on their dollar", but you said "Moody's is linked to investors. Of course they want to avoid bankruptcy. Just protecting the BHO gang's financiers."

You can't have it both ways.
 
pbrauer said:
Born Free said: "the bond holders would get something on their dollar", but you said "Moody's is linked to investors. Of course they want to avoid bankruptcy. Just protecting the BHO gang's financiers."

You can't have it both ways.
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They are the same thing.
 
apdst said:
Do you support the bank bailouts, too?
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The way they were done, no I don't

The AIG bailout, yes because the shareholders lost a significant amount of money from it, along with job loses Citi, the same. For the other institutions, the loss of shareholder wealth and ownership was not reduced as much as it should have been.

As much as I don't like the term and how it is used in many cases but moral hazard was created by the bank bailouts in general and risk has increased because of it.

When a company needs to be bailed out by the government the shareholders need to suffer large loses (including vastly diluted ownership %) as to ensure they put pressure on management to run the company effectively and safely for the long term
 
apdst said:
Let me guess, GM was, "too big to fail"?
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Certainly not

The only reason I would have supported the GM bailout is because of the economic conditions at that time. If GM was to go bankrupt today, I would say they should not get any government money
 
Lord Tammerlain said:
Yes in NORMAL economic times it is a great time to do so. But in this case no companies were willing to step up and risk the money that would have been required to do so. Or those that would have been willing would not have gotten financing from the banks. With the exception of Chinese ones. I doubt SAIC would have been allowed to buy GM so it does not matter
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To buy the whole company maybe so. But the company would have been broken up and their would have been several buyers. You do know GM had factories all over the world, or in markets they wanted to be in. So there was plenty of economic opertunity for many buyers of parts of GM at a good price and a union force that would have had to make huge concessions.
 
Lord Tammerlain said:
Certainly not

The only reason I would have supported the GM bailout is because of the economic conditions at that time. If GM was to go bankrupt today, I would say they should not get any government money
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The economic conditions are no better now.
 
Lord Tammerlain said:
Certainly not

The only reason I would have supported the GM bailout is because of the economic conditions at that time. If GM was to go bankrupt today, I would say they should not get any government money
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So according to your logic because of the economic conditions at that time, the tax payer lost over 10 billion, for what??????
 
Born Free said:
To buy the whole company maybe so. But the company would have been broken up and their would have been several buyers. You do know GM had factories all over the world, or in markets they wanted to be in. So there was plenty of economic opertunity for many buyers of parts of GM at a good price and a union force that would have had to make huge concessions.
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The European operations were and are in a loss making situation. South America is ok for GM but not great. GM does very well in China with its main partner of SAIC, so its Chinese ops would have sold very easily.

Domestically the only part that could have been sold piece meal is the truck making operations. The car manufacturing parts would have been of no interest to any other auto company but the Chinese. That would present certain risks regarding IP rights and who would own what patents
 
apdst said:
The economic conditions are no better now.
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They certainly are

The banks are in alright conditions, and making money, the auto industry is making money, and sales have gone from 10 million to nearly 16.5 million expect for this year

Ford, GM and Chrysler are actually making money, while GM lost 39 billion in one year before the bailout
 
Born Free said:
So according to your logic because of the economic conditions at that time, the tax payer lost over 10 billion, for what??????
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Instead of even more money being spent on the Pbgc which would have required a bailout, the welfare checks the UI checks etc
 
rhinefire said:
Anyone here realize WE paid the 10 billion??
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sawyerloggingon said:
What a waste of money. This is a great example of squandering tax payer dollars and all we did really was to save union jobs with bloated contracts that will make GM fail again. If GM had been allowed to go bankrupt and these contracts could have been renegotiated so that the company stood a long term chance of surviving and us tax payers would not be 10 billion in the hole.
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OK, let's put this in perspective (as we know our friends on the right have no perspective).... Had we not bailed out GM (and Chrysler) the estimate loss of jobs from GM, Chrysler and their respective supply chains would have been more than 1,000,000 jobs. If each one of those collected $10,000 in unemployment benefits would be.... guess what $10B. That says nothing about the lost income tax revenue from these workers (assume they make, on average, 50K per year.... is another $10B per year, plus lost payroll taxes, assumption of pension costs by the PBGC.... and those are just the obvious direct costs... all in, for $10B, the US got to keep their auto industry and keep the economy from free falling. All in, it was an incredible investment (when compared to the alternatives...which were not very good)

In contrast, the very avoidable government shut down, which served no purpose, took $24B out of GDP... given the federal government gets 18% of GDP in the form of taxes, cost the federal government $4.3B. Then, laying off federal workers but paying them anyway cost the government $2B for services not rendered... meaning our elective government shutdown cost $6.3B.

http://www.nytimes.com/2013/11/08/u...e-puts-price-on-government-shutdown.html?_r=0

Sorry, being against the $10B bailout of the auto industry but for the $6.3B shut down of government is being against reason. Thinking that it all would have worked out another way? ------Clueless.
 
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Lord Tammerlain said:
The European operations were and are in a loss making situation. South America is ok for GM but not great. GM does very well in China with its main partner of SAIC, so its Chinese ops would have sold very easily.

Domestically the only part that could have been sold piece meal is the truck making operations. The car manufacturing parts would have been of no interest to any other auto company but the Chinese. That would present certain risks regarding IP rights and who would own what patents
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By going into a true bankruptcy the union labor cost would have been restructured, lowering cost, in Europe.

As for the Domestic market, you say the Chinese may have been interested. Yes. When you buy a company all your concerns with the IP rights and the patents would have been addressed at that time of sale. Further existing auto manufactures could be very interested in buying up some of GM's domestic plants to expand, as GM as we know it would be gone. So the existing manufactures have to pick up the slack and no better way than take over GM's plants.
 
upsideguy said:
OK, let's put this in perspective (as we know our friends on the right have no perspective).... Had we not bailed out GM (and Chrysler) the estimate loss of jobs from GM, Chrysler and their respective supply chains would have been more than 1,000,000 jobs. If each one of those collected $10,000 in unemployment benefits would be.... guess what $10B. That says nothing about the lost income tax revenue from these workers (assume they make, on average, 50K per year.... is another $10B per year, plus lost payroll taxes, assumption of pension costs by the PBGC.... and those are just the obvious direct costs... all in, for $10B, the US got to keep their auto industry and keep the economy from free falling. All in, it was an incredible investment (when compared to the alternatives...which were not very good)

In contrast, the very avoidable government shut down, which served no purpose, took $24B out of GDP... given the federal government gets 18% of GDP in the form of taxes, cost the federal government $4.3B. Then, laying off federal workers but paying them anyway cost the government $2B for services not rendered... meaning our elective government shutdown cost $6.3B.

http://www.nytimes.com/2013/11/08/u...e-puts-price-on-government-shutdown.html?_r=0

Sorry, being against the $10B bailout of the auto industry but for the $6.3B shut down of government is being against reason. Thinking that it all would have worked out another way? ------Clueless.
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What a ridiculous post. The shutdown is a complete red herring. No one here advocates it. The NYT's doomsday scenario is scare-tactic propaganda. Next.:peace
 
Jack Hays said:
What a ridiculous post. The shutdown is a complete red herring. No one here advocates it. The NYT's doomsday scenario is scare-tactic propaganda. Next.:peace
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Fact is, it was a spot on post... we got something for the $10B spent in Detroit. We got nothing for the $6.3B spent shutting down the government. They cost, in order of magnitude, surprisingly similar amounts. Yet, we had no where near the outrage over the government shutdown that we have over the GM bailouts.

and, ye of short memory, there were many people on this Board that advocated it and supported it.... and many, many more that were silent about it.
 
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upsideguy said:
OK, let's put this in perspective (as we know our friends on the right have no perspective).... Had we not bailed out GM (and Chrysler) the estimate loss of jobs from GM, Chrysler and their respective supply chains would have been more than 1,000,000 jobs. If each one of those collected $10,000 in unemployment benefits would be.... guess what $10B. That says nothing about the lost income tax revenue from these workers (assume they make, on average, 50K per year.... is another $10B per year, plus lost payroll taxes, assumption of pension costs by the PBGC.... and those are just the obvious direct costs... all in, for $10B, the US got to keep their auto industry and keep the economy from free falling. All in, it was an incredible investment (when compared to the alternatives...which were not very good)

In contrast, the very avoidable government shut down, which served no purpose, took $24B out of GDP... given the federal government gets 18% of GDP in the form of taxes, cost the federal government $4.3B. Then, laying off federal workers but paying them anyway cost the government $2B for services not rendered... meaning our elective government shutdown cost $6.3B.

http://www.nytimes.com/2013/11/08/u...e-puts-price-on-government-shutdown.html?_r=0

Sorry, being against the $10B bailout of the auto industry but for the $6.3B shut down of government is being against reason. Thinking that it all would have worked out another way? Clueless.
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A million employees?

Really?

At the time GM employed maybe 250k. There is no way in hell that parts of the operation wouldn't be picked up so the loss there might have been 100k jobs if things went really bad. They also had 6k dealerships. If the average dealership employed 100 people that would be 600k jobs but a lot of those dealerships would have simply switched brands so, again, the loss would be far less than "all".

On top of that if the whole thing burned to the ground we STILL wouldn't see all those people go on unemployment. Some would retire and most would move to another job. Inside of 2 months you'd likely have 80% of the employees that got bounced in a new job.
 
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