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OK, I have looked all over the place to try and find exact figures as to what the government spent on the auto bailout, and what they were repaid.
These are the numbers, as near as I can tell.
Chrysler filed Chapter 11 reorganization bankruptcy.
They wrote off 70% of their debts, including shareholder shares. (although I can't find the exact dollar amount)
The government loaned Chrysler a total of $12.5 billion, and Fiat repaid a total of $10.6 billion for a net loss of $1.9 billion.
That's the easy one.
GM also filed bankruptcy. The reported dollar amount of the bankruptcy was $45 billion.
The government loaned money to GM several different times.
The government loaned a total of $11.6 billion into GMAC. GMAC was then sold to an equity firm for $1.6 billion.
GM itself receiver $8.1 billion in case as a loan, and then an additional $42 billion as an equity share.
This is a total of $61.9 Billion from the government to GM.
As noted above, the GMAC netted a price of $1.5 billion. GM did repay the $8.1 billion loan, although they did so out of the additional government funds they received.However, for our purposes, they did repay the loan. GM also received an additional $42 billion (or so) in exchange for an equity share in the new GM. The government received what amounted to roughly 865 million shares.
The government sold 365 million shares of stock @$33 in the IPO. This recouped slightly over $12 Billion to the government.
Today, the government still owns 500 million shares of GM stock.
So, the government (after GM wrote off $45 billion in their bankruptcy) received the following from the government:
$11.6 billion to support GMAC
$8.1 billion in the form of a loan
$42 billion in exchange for GM stock.
This is a total of $61.7 billion.
GM paid back:
$1.5 billion from the sale of GMAC
$8.1 repaying the loan
$12 billion from the sale of stock by the government at the IPO.
This is a total of $21.6 billion paid back so far.
So, right now, as far as I can tell, the government is about $40 billion in the hole for GM.
They own 500 million shares in GM. Today's stock price is $21,83. This means that the US government owns an equity share in GM in the amount of just under $11 billion.
My question is this:
Where is the rest of our money??? As far as I can tell, we're about $30 billion in the hole. This is in addition to the $1.9 billion loss from the Chrysler sale.
There is little chance that the stock price at GM will recover to the point where the government will recoup its (our) losses. The government is still into GM for about $40 billion, as broken down above, and with 500 million shares, the stock price would have to get to about $80/share for us (the taxpayers) to recoup our losses thus far.
It's unlikely that their stock will hit that high, but even if it did, people have complained about Romney saying that we should sell off the stock and get out of the auto business, as that massive stock dump might hurt the company. So we can't keep the stock in GM, and we can't sell it.
What can we do?
We dumped a ton of money into GM and Chrysler, and maybe it was worthwhile from saving jobs ..... but then again, maybe Fiat would have bought Chrysler anyway ... and maybe someone else would have bought GM. I happen to believe that someone would have bought GM, and that we wouldn't be in this massively overextended position with the taxpayer's money.
So .... my question is ,.... was this all worthwhile? Was it worth all of the taxpayer money that has been dumped into GM, and that we'll never see repaid? Further, how hard is it to "save" a company when you can just write a blank check, especially after dumping all of the debt in a bankruptcy?
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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We dumped a ton of money into GM and Chrysler, and maybe it was worthwhile from saving jobs ..... but then again, maybe Fiat would have bought Chrysler anyway ... and maybe someone else would have bought GM. I happen to believe that someone would have bought GM, and that we wouldn't be in this massively overextended position with the taxpayer's money.
Maybe someone would have bought GM, but then again maybe that company would have taken a bunch of jobs with them to Mexico. There would have been no way to control that. Then you have even higher unemployment and more people needing more safety net spending and paying less taxes. I would actually be interested in seeing estimates of how many jobs would have gone if GM failed, and how that would have impacted government deficits before making up my mind (costs of bailout versus benefit).
I don't think this should be a habit of our government, but when the economy is falling off a cliff, sometimes you have to do stuff you wouldn't normally do.
My real beef is with the bank bailouts/overnight funding from the Fed/toxic asset purchases. The banks have been made whole again, and I don't have a problem with that per se. They are a vital link in our capital allocation system. But they have not been operating correctly for the last 30+ years. They should have faced the same restructuring as GM. People in management should have gotten fired, debt should have been restructured in a controlled manner, and changes should have been made to corporate governance to fix the perverse incentives that got us into this mess.
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Answer; Between the bank bail out and saving 800,000 jobs, no depression is the payment.
800,000 middle income jobs, plus the 200,000 added by the auto industy all of which employees are paying taxes annually is payment.
The money poured into the current economy by all of these employees is payment.
And this payment continues annually as these businesses continue.
The choices were simple. Either bail out the banks and auto industy, or destroy the middle class and have our country go into a deep depression. BTW- FDIC insures that the government would not let the banks fail and that was not set up by Obama.
but don't worry, the GOP is trying to break all unions everywhere state by state now. So soon, no matter how hard people are trying to avoid it, we will enter into a depression. Because since less and less people will have disposable income to buy new products, big business will strangle its own throat with its own greed so there won't be a large enough consumer base to support their businesses.
It's becoming the American way. And so many people support that way, I will in all likelihood enjoy listenning to those very same people complain and say woe is me when it happens.
I'm a country boy. I am a very good gardener, hunter, fisherman and can live off the land very well. My dad grew up in the depression and I saw this coming since the 90's. Precious metals investments and survival skills taught to me by my dad help me to know it will effect me far less than most.
It just saddens me that so many are so willing to take from our elderly and make their life so very hard and poorer with their own greed and see nothing wrong with that. To try to cut their Social Security and Medicare and endanger their life that way. To me, that's a very sad state of affairs. Yet so many "Christians" seem to support that concept. All I can say is they must have forgotten how to ask themselves WWJD, because I know that wouldn't be the answer.
Intoducing for The Cleveland Browns, Quarterback Deshawn "The Predator" Watson. He will also be the one to choose your next head coach.
#gmstrong
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I agree that there would probably have been jobs lost ..... however, GM employs 77,000 people in the US. Chrysler employs 52,000 people in the US.
That's "not enough jobs" for the market to create in one month for us to stay ahead of new entrants into the job market. Even if we had lost every one of those jobs, it would have been single a tick on the unemployment clock. There are about 12.7 million unemployed people in the US currently..... who are counted. They would total about 1% of the total number of people who are unemployed in this country right now. There are also the "hidden unemployed", who have given up looking for work, never started looking for work, or who are working under the table.
I don't understand why such a small piece of the public employment picture got such a huge piece of help, while others were allowed to lose their jobs by the thousands. (except for political purposes) There are about 155 million people who are employed in this country right now.(dividing back up) 130,000 is a pretty small piece of the puzzle.
While I disagreed with the bank bailout, I understand why they did it. The capital markets were shocked into inactivity, and capital preservation took precedence over capital investment. However, given that a lot of toxic investments in real estate were in government controlled vehicles, like Fannie, Freddie, VA, and HUD loans, the financial institutions only had to worry about their reinvestment, not if they made the loans. However, the government taking equity positions in banks also makes me really nervous. Fortunately many of the banks have repaid the TARP funds, and the government is out.
Regardless, we are stuck with GM, if what I recall is correct, and the government has to wait until they can get our money out via stock sale .... because $60-80/share just isn't going to happen any time soon. GM stock has actually lost 1/3 of its value from its IPO. It sits at less than $22 as of yesterday. It's become an albatross .... and one that the government can't divest itself of without taking a bath in the process ...... and even if the stock did somehow miraculously jump up to the magical $60-80/share price, there would be those who would argue against the government dumping all of their stock. It looks to me like a never ending mess.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I agree that there would probably have been jobs lost ..... however, GM employs 77,000 people in the US. Chrysler employs 52,000 people in the US.
That's "not enough jobs" for the market to create in one month for us to stay ahead of new entrants into the job market. Even if we had lost every one of those jobs, it would have been single a tick on the unemployment clock.
I don't have the numbers but for every person employed directly by GM or Chrysler I bet there are 100 more who work for dealerships that sell those vehicles, parts manufacturers and distributors, etc who rely on those auto brands for a living, even though they don't get a paycheck that says "GM" on it.
yebat' Putin
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but don't worry, the GOP is trying to break all unions everywhere state by state now. So soon, no matter how hard people are trying to avoid it, we will enter into a depression. Because since less and less people will have disposable income to buy new products,
Right, because people who aren't in unions don't have disposable income. 
States with less unionization seem to be doing pretty well actually.
yebat' Putin
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Hell, the government closed about 2400 dealerships (out of about 5700) anyway. Chrysler closed up about 700 out of 3200. (I am going from memory here, but that should be close) A lot of people I know lost jobs, and one guy who had become a casual friend, Bob Frederick, lost his dealership entirely, despite being one of the larger dealers around, and despite just having invested millions in a new facility.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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Do we (the US Government) own any stock in Chrysler? I"m not sure of that.
I do know we own a good portion of GM.
So some of the money we loaned out wasn't a loan so much as an ownership stake.
I'm assuming since I saw an ad on TV about Romney saying that if elected he'd sell the Governments interest in GM which to me indicates that it has some worth and some of the money we put in can be recovered.
My understanding is that the money actually loaned to GM was indeed paid back. But our financial interest in them is intact and can be sold. (Again, I say that because of the ad Romney put out saying he's sell our stock)
Honestly, when you talk in terms of 60 billion, in terms of our total debt, that's really not a lot of money.. (wow,, can you imagine thinking that 60 billion isn't a lot of money....,Boggles the mind)
As for exact numbers,, Man I wish you luck finding those. You'll get some, but I"m not sure you can count on them being 100% accurate.. everything seems so hidden and disquised..
#GMSTRONG
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Damanshot
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you should re-read the opening thread. the questions you seem to raise are embedded in there (though there is alot of stuff there).
bottom-line on the ownership: we paid $42bil for the ownership stake, sold off some for $12bil and the current value of the rest is $11bil. there is a decent chance that the last number rises and it better or it's a pretty big loss overall.
even with the loss though, there are alot of other factors that go into whether it was a good idea or not.
#gmstrong
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It's not only that ..... but where is the money?
GM dumped some $45 billion in debts in their bankruptcy, has some $40 billion in government money currently somewhere ....... but where is all of this money? They dumped all of their debt ...... got an extra $40 or so billion dollars ...... ($8 billion of which went to repay the initial TARP funds) so there should still be a ton of money in the GM coffers.
Given that the US government is still one of the largest investors, and as a taxpayer and citizen, (and thus, part owner) I want to know where all of that money went.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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As a part of the supply chain, I'm pretty sure I'd be making pizzas still if it weren't for the bailouts. The official headcount at my shop was about a third of what it is today when the crash of '09 hit. Granted, I think there's more important things this country should (sigh... idealistically should, at least) be at work producing than more cars, but it beats the alternative on a personal level.
Politicians are puppets, y'all. Let's get Geppetto!
Formerly 4yikes2yoshi0
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45 Billion in Debt dropped.. and if they were left to run aground as many wanted, that number would have been way worse.. Not to mention that the retirees would have been totally left hanging out to dry.
without the bailouts, there would be no GM or Chrysler today., I don't know how many people are employed because of those two companies, but that's a number that would probably be unemployed today.
And that doesn't even count vendors to those companies.
#GMSTRONG
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"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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But...but...but King O saved the economy by pissing away 85 billion dollars (in forgiven debt and actual dollars) into a poorly-run, union-destroyed, formerly-private company. :rolleyes
Shhhhhhhhhhhhh...don't shed light on the disgusting campaign commercial where he lies straight to your face and shamelessly takes credit for UBL's demise.
If anyone in the Miami Valley votes for King O based on his "jobs" record - especially in the automotive industry - then they should be tested for sanity. Take a drive around Dayton to all the former GM manufacturing sites. They've been scrapped to the ground...with the trophy site about to be broken into pieces...those jobs GONE AND WITH NO CHANCE TO RETURN.
Our government - local, state, & National - all too often think that money will solve the problem...especially someone else's money. So they throw money at the problem with little planning and with the mindset that when THAT money runs out...we will just throw some more at it.
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But...but...but King O saved the economy by pissing away 85 billion dollars (in forgiven debt and actual dollars) into a poorly-run, union-destroyed, formerly-private company. :rolleyes
Shhhhhhhhhhhhh...don't shed light on the disgusting campaign commercial where he lies straight to your face and shamelessly takes credit for UBL's demise.
If anyone in the Miami Valley votes for King O based on his "jobs" record - especially in the automotive industry - then they should be tested for sanity. Take a drive around Dayton to all the former GM manufacturing sites. They've been scrapped to the ground...with the trophy site about to be broken into pieces...those jobs GONE AND WITH NO CHANCE TO RETURN.
Our government - local, state, & National - all too often think that money will solve the problem...especially someone else's money. So they throw money at the problem with little planning and with the mindset that when THAT money runs out...we will just throw some more at it.
Most of those jobs in Dayton were going away long before obama became president. I had an office down there, we did business with GM 12 years ago and we were told then that most of those plants would close within a decade. It was destined to happen,, I do think the downturn sped the closings. But it was going to happen anyway.
#GMSTRONG
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Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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I agree that there would probably have been jobs lost ..... however, GM employs 77,000 people in the US. Chrysler employs 52,000 people in the US.
Here's one report that you can judge for yourself. From the quick glance I took it looks like they used economic models generated on historical, empirical data. I'm no economist though, so I don't really know if the methods used are acceptable.
http://www.cargroup.org/?module=Publications&event=View&pubID=13
The net is that they compared the rapid restructuring and government intervention (what happened) to a more traditional, slower, messier bankruptcy that ended in liquidation. The difference between those scenarios is 1.4 million American jobs corresponding to about $100 billion in personal income (these aren't just auto jobs, but also supply chain jobs as well as other auto connected jobs and secondary jobs dependent on those auto connected jobs). Based on that number, the bailouts saved the federal government about $38 billion in government transfer payments (welfare, unemployment) and lost tax revenues.
There are other reports out there that I haven't looked at yet (they are referenced in the link). From their titles, this report seems to be relatively conservative; one other report estimated 3 million jobs saved. Another report estimated that failure of the Big Three would ultimately cost the public 4X as much as the bridge loans in lost taxes and transfer payments. The report I linked to has the advantage of using known data from 2009-2010.
It seems like a choice between bad and worse; there was no magic bullet. The option the federal government chose could probably be characterized as "least bad."
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The option the federal government chose could probably be characterized as "least bad."
Sounds like our options during elections. 
We don't have to agree with each other, to respect each others opinion.
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The option the federal government chose could probably be characterized as "least bad."
Sounds like our options during elections.
Yeah,, no kidding.. Looking at Obama and Romney is like watching Dumb and Dumber play out in real life..
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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But...but...but King O saved the economy by pissing away 85 billion dollars (in forgiven debt and actual dollars) into a poorly-run, union-destroyed, formerly-private company. :rolleyes
Shhhhhhhhhhhhh...don't shed light on the disgusting campaign commercial where he lies straight to your face and shamelessly takes credit for UBL's demise.
If anyone in the Miami Valley votes for King O based on his "jobs" record - especially in the automotive industry - then they should be tested for sanity. Take a drive around Dayton to all the former GM manufacturing sites. They've been scrapped to the ground...with the trophy site about to be broken into pieces...those jobs GONE AND WITH NO CHANCE TO RETURN.
Our government - local, state, & National - all too often think that money will solve the problem...especially someone else's money. So they throw money at the problem with little planning and with the mindset that when THAT money runs out...we will just throw some more at it.
Most of those jobs in Dayton were going away long before obama became president. I had an office down there, we did business with GM 12 years ago and we were told then that most of those plants would close within a decade. It was destined to happen,, I do think the downturn sped the closings. But it was going to happen anyway.
But King O has SAVED the auto industry...just watch his election campaign commercial.
He did nothing to bring the auto industry back in Dayton...not a darned thing...not one penny of the 85 BILLION dollars that has been pissed away was aimed here.
He has/had the Moraine Truck & Bus Plant sitting idle being a great modern facility...now it's about to be parsed into many separate parcels/spaces...those manufacturing jobs never to return.
He could have helped Dayton...instead...he came to the First Four basketball games at UD Arena...right across the highway from yet-another, Dayton-area GM auto manufacturing facility that has been scrapped to the concrete foundation.
He could have revitalized the Moraine Plant...he chose not to.
Regarding this quote:
"...we were told then that most of those plants would close within a decade. It was destined to happen."
Do you know why it was "destined to happen"? I do. It's in the opening paragraph above.
He put the nail in the coffin for the auto industry in the Miami Valley.
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I don't even like Obama as President, but to claim HE didn't save Dayton is really stretching it. You think he really had much to say about what plants were scrapped?
We don't have to agree with each other, to respect each others opinion.
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Actual Obama quote of the day, talking about jobs: "The private sector is doing fine."
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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But King O has SAVED the auto industry...just watch his election campaign commercial.
I wouldn't matter to you if he did.., you'd just find something else to beat on him for.,
He had nothing to do with the auto industry in Dayton.. that was a foregone conclusion way back in the Clinton days.. So what did Clinton do about it. What did Bush do about it.. 
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He did nothing to bring the auto industry back in Dayton...not a darned thing...not one penny of the 85 BILLION dollars that has been pissed away was aimed here.
You are absolutly right.. he did nothing,, because the auto companies (primarly GM) didn't want to do anything with it either
But what the heck,, the receivers didn't hang onto the ball but let's blame McCoy..oh, wait, that's a different discussion.... 
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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I still want to know where that extra $40 or so billion went?
Is it in an emergency fund somewhere? Did it wind up lining someone's pockets? What?
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I read the report. It clearly states that they are essentially guessing, and that their forecasts are inherently inaccurate. The scenario with a lack of taxpayer funds supplied is a complete unknown. What DID happen is quite clear, what MIGHT have happened without taxpayer money provided is painted as complete disaster. Are there no other investors who might have bought up the remaining plants?
You make reference to the Big Three. Ford, however, avoided government bailout because they did not need it. A well-run and efficient company was forced to watch as their competitors were rewarded for incompetence and foolish business decisions, while Ford, with good management and sensible business decisions, got absolutely nothing.
Rewarding stupidity and non-productivity is simply not a good long-term solution. Poorly-run, mismanaged companies now have no strong incentive to change their policies, as they can simply reach into the taxpayer's pocket to pay for their mistakes. There are no negative consequences for failure.
A poorly-run business SHOULD fail. That is the method by which companies learn to NOT do foolish things. Such as create unsupportable long-term obligations in union contracts. This is what brought GM down. There is absolutely no reason for them to refrain from doing this again. In fact, since we the taxpayer will be on the hook to absorb the cost, they have a positive incentive to do the very same thing again.
Back in 1985, you could still see an ad in my home town for a buggy-whip company, long since out-of-business. They made quality products and by all accounts were efficiently managed, but the company failed. They SHOULD have failed, their product was no longer desired by the public. Their assets, skills, and buildings were put to other uses, due to the dictates of the open market. That is the way business is supposed to work. Make good decisions or get out of the way.
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I still want to know where that extra $40 or so billion went?
Is it in an emergency fund somewhere? Did it wind up lining someone's pockets? What?
I'm not sure either. I do remember that there was a set aside for Ford in case they needed it but apparently, they didn't.
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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I'm not even talking about Ford .... I'm just talking about the $45 billion or so that went to GM.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I still want to know where that extra $40 or so billion went?
It went back into the economy ... via television ads trying to recall Wisconsin's governor.
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I still want to know where that extra $40 or so billion went?
It went back into the economy ... via television ads trying to recall Wisconsin's governor.
Aha, that explains it. 
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I know many say Ford was always on the up and up, but it really isn't true http://jalopnik.com/5912749/ford-takes-back-the-blue-ovalThey didn't take as much as gm but much more than chrysler. Note that this money wasn't through the Fed, but they had to put up alot of collateral to do it. The part that really makes them smart in my opinion was hiring Mulally to run things, he's been an outright angel for Ford. I'm a GM fanboy through and through but Ford has alot of awesome cars, their interior styling is above and beyond any other NA manufacturer and their exterior styling is well done. Top that off with a great engine like the Ecoboost line. I say all that just to make sure im not shilling anti-Ford rhetoric, just to say that each big three took out major loans in the 2000s.
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How is that not "on the up-and-up"? They took out a legitimate loan, with collateral and payment terms.
Not a gift from the taxpayer's pocket with indefinite terms.
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As Nelson said, it was a loan from a bank, not a gift from the government. Every business takes out loans - the caveat being they need to pay them back. With a loan from the government there doesn't seem to be a need to do that.
Ford was the only one of the Big 3 that did not take taxpayer money.
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I read the report. It clearly states that they are essentially guessing, and that their forecasts are inherently inaccurate. The scenario with a lack of taxpayer funds supplied is a complete unknown. What DID happen is quite clear, what MIGHT have happened without taxpayer money provided is painted as complete disaster. Are there no other investors who might have bought up the remaining plants?
The non-bailout scenario is an unknown, but I wouldn't go so far as to call it a complete unknown. They are guessing, but it is a guess educated by economic modeling and known outcomes of previous more traditional bankruptcies, not just a shake of the 8-ball. I don't know a lot about bankruptcy necessarily, but I can't imagine that a bankruptcy this large and complex would have gone as smoothly or quickly as the government intervention did. The other thing I can point out is that there were a range of educated guesses; this report was conservative. Others (links in the text) predicted even greater job loss in the millions. I don't think its stretching anything to imagine it would have been very bad if GM and Chrysler had failed.
IMO, the other investors likely would have been foreign automakers, a large number of which received their own bailouts to stay afloat.
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You make reference to the Big Three. Ford, however, avoided government bailout because they did not need it. A well-run and efficient company was forced to watch as their competitors were rewarded for incompetence and foolish business decisions, while Ford, with good management and sensible business decisions, got absolutely nothing.
An oversight on my part. Ford didn't take bailout money. But the interesting thing about that is that the Ford CEO himself lobbied for the bailouts out of a fear for the suppliers. Here is testimony from the Senate hearings:
"Despite the serious global economic downturn, Ford does not anticipate a liquidity crisis in 2009 – barring a bankruptcy by one of our domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.
In particular, the collapse of one or both of our domestic competitors would threaten Ford because we have 80 percent overlap in supplier networks and nearly 25 percent of Ford's top dealers also own GM and Chrysler franchises. The impact of a bankruptcy also reaches beyond Ford and the U.S. auto industry. It would cause further stress to our domestic banking industry and private retirement systems. Goldman Sachs estimates the impact at up to $1 trillion."
http://clipsandcomment.com/wp-content/uploads/2008/12/mulally0ford12408finalwrittentestimony.pdf
When Ford's CEO is bargaining to save his competitors, you would have to agree that that qualifies as desperate times. Ford did get something; they got to survive.
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Rewarding stupidity and non-productivity is simply not a good long-term solution. Poorly-run, mismanaged companies now have no strong incentive to change their policies, as they can simply reach into the taxpayer's pocket to pay for their mistakes. There are no negative consequences for failure.
A poorly-run business SHOULD fail. That is the method by which companies learn to NOT do foolish things. Such as create unsupportable long-term obligations in union contracts. This is what brought GM down. There is absolutely no reason for them to refrain from doing this again. In fact, since we the taxpayer will be on the hook to absorb the cost, they have a positive incentive to do the very same thing again.
In a normal time I would agree 100%. I'm not going to pretend that these companies had perfect business models and were just an innocent victim of reduced demand from the financial crisis (although that played a large role here).
However, you have to put these bailouts in context. Something everyone forgets is that at the time, automakers the world over were either requesting or receiving bailouts (Japan and China in the links below; I know European companies also secured bailout money from their governments). Had American companies been denied bailout money, they likely would have been bought up by firms that survived b/c they had received bailout money from their respective governments. Would that really have been in the interest of America, to allow an industry to fail for ideological purity, while foreign companies bought up the remnants of American car companies with their own bailout money? Someone was going to end up profiting after being bailed out; might as well have been the US-based companies that already owned the factories.
http://www.businessweek.com/globalbiz/content/mar2009/gb2009033_969062.htm
http://www.time.com/time/world/article/0,8599,1882172,00.html
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In fairness, the same administration economic "experts" who said that we had to save GM and Chrysler (which was actually saving the union, and screwing the investors, including IRAs and market funds) also said that the stimulus would keep unemployment from reaching 8% (back when it was actually below 8% ....) and many other predictions/projections that were way overestimated.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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In fairness, the same administration economic "experts" who said that we had to save GM and Chrysler (which was actually saving the union, and screwing the investors, including IRAs and market funds) also said that the stimulus would keep unemployment from reaching 8% (back when it was actually below 8% ....) and many other predictions/projections that were way overestimated.
YT...in August 2008, the unemployment rate was 6.0% (and climbing)...by Jan 9, 2009, the employment rate had already reached 8.0%.
The Great Recession and unemployment were already headed up as the stuff left behind by the previous Administration was handed off to this Administration. By May 1, 2009 the unemployment rate had reached 9.0% and still climbing, reaching it's peak of 10.0% in Oct 2009.
You ever stop to wonder what the loss of another million jobs would have meant for the American economy?... at a time when our country was already deep into the worst recession since the great depression?
Spending American taxpayer dollars to help American companies, saving American jobs in the process...
Was it worth it/worthwhile?...YEP
Reported to have saved a million American jobs or so...
Looking at the amount of wasteful spending our government engaged in prior to the US auto bailout and for whom the money was spent on...it puts an exclamation mark on my answer...Yes!, the auto bailout was worth it and worthwhile.
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In fairness, the same administration economic "experts" who said that we had to save GM and Chrysler (which was actually saving the union, and screwing the investors, including IRAs and market funds) also said that the stimulus would keep unemployment from reaching 8% (back when it was actually below 8% ....) and many other predictions/projections that were way overestimated.
What you described is little different than a more traditional bankruptcy. From what little I've read, a lot of time bondholders become stockholders and stockholders lose. That was likely going to happen no matter how this played out.
If we're being fair, hindsight is 20/20. The reason this number was off is because economic data at the time wasn't good enough to show us how gaping the hole in the economy was. Economic data is not real-time. It is constantly revised as companies report data later. It is why jobs data is revised a year later. No one could have known at the time of the stimulus exactly how bad it was. One architect of the stimulus, Christina Romer, actually put out a publication saying the stimulus would help create 3-4 million jobs (in hindsight, that is remarkably accurate). Her estimates were off on how bad it was.
http://otrans.3cdn.net/ee40602f9a7d8172b8_ozm6bt5oi.pdf
If someone says something based on the best data available, then later revisions to the data show that their estimate was off, does that make them an idiot or a liar? I can guarantee every single person has been in this situation. No one is omnipotent. That is really what you are asking here, that administration officials should have known data that didn't even exist yet.
This is what I have seen in most cases; as we assimilate newer economic data, none of it ever shows that the crisis was better than predicted, it has always come out as much worse. They thought at the time that $800 billion would mostly fill the hole in the economy, turns out they were filling a $3 trillion plus hole with $800 billion. They didn't overestimate job growth, they underestimated how bad it really was. Then again, they didn't have the data to correctly estimate how bad it was. Can you really fault them for that?
If this is the case, that most things were much worse than thought, then do you really think the auto situation would have ended up better than the estimations? I challenge you to find an actual economic report instructed by economic data that says so. I listed several (linked from the original report), and the one I listed painted the rosiest picture of what failure of the Big Three would have meant. And these reports aren't just from the White House; they come from various economists from all walks of life.
JMO, but you're grasping at straws here.
Last edited by tjs7; 06/09/12 07:53 AM.
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Quote:
Quote:
In fairness, the same administration economic "experts" who said that we had to save GM and Chrysler (which was actually saving the union, and screwing the investors, including IRAs and market funds) also said that the stimulus would keep unemployment from reaching 8% (back when it was actually below 8% ....) and many other predictions/projections that were way overestimated.
YT...in August 2008, the unemployment rate was 6.0% (and climbing)...by Jan 9, 2009, the employment rate had already reached 8.0%.
Wrong. Jan 2009 unemployment rate was 7.8%.
web page
Unemployment is currently at 8.2% plus many others unable to find work that are not being counted. How exactly do you call that "saving our economy?"
It's supposed to be hard! If it wasn't hard, everyone would do it. The hard... is what makes it great!
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Wrong. Jan 2009 unemployment rate was 7.8%.
web page
Unemployment is currently at 8.2% plus many others unable to find work that are not being counted. How exactly do you call that "saving our economy?"
It is saving our economy b/c if no action would have been taken, I'm fairly convinced that you have the Great Depression II. Look at the numbers behind the numbers. Household wealth in the US declined by 28% in just a few short years. In the world, it declined by something like 10-15% overall. This all happened because the US finance system created a fake housing market based on poor assumptions (that housing prices would never go down and no income no asset loans were are good idea) and trillions of dollars from around the world were invested in it.
http://pewresearch.org/databank/dailynumber/?NumberID=1323
That contraction in wealth is on par with the Great Depression and leads to unbridled fear in the markets. The difference is that in the 1930's, crappy government policy combined in a perfect storm. Governments didn't perform stimulus right away, contracted the money supply, had very little in the way of a safety net which let the unemployed twist in the wind, had no FDIC which caused a run on the banks, and enacted protectionist trade policies that led to breakdowns in international trade. All of these things reinforced the downward spiral of fear and ultimately stoked the flames of global conflict.
In contrast, most major economies this time around enacted stimulus, expanded the money supply, have a safety net, have FDIC-like institutions to prevent runs on depository institutions, and communicated with each other to make sure no severe protectionist trade policies were put into place. These very clearly stabilized the global system, preventing a catastrophic downturn.
A good analogy is the 1930's response was like blood letting a critical patient; the recent response was a more modern triage response for the critical patient.
With a misallocation of capital towards housing that large, there was no scenario under which we would be humming along with a sound economy right now. Its not easy politically to sell the "least bad" scenario, but it is what it is. IMO, when all the economic hand wringing is done in several years, we will realize we are lucky we didn't have a second Great Depression and the lessons from the 1930's are a major reason why.
Last edited by tjs7; 06/09/12 11:00 AM.
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We know that Obama said that without the stimulus bill, that unemployment would go above 8% ....... and of course, following the passage of the stimulus bill, unemployment hit 10%.
Then, of course, there is the famous Obama quote:
"If I don't have this done in 3 years, then there's gonna be a 1 term proposition."
He's right.
This country is in shambles. He has completely stalled the economy with his policies, from healthcare (from which his union buddies receiver waivers) to fiscal policies, to tax policies, to spending, to energy policy ..... all the way down the line he has done about as much as he possibly could to ensure that we do NOT recover from this recession.
I sincerely hope that Obama maintains his current campaign strategy though ..... because I think that it's a highly effective campaign ..... for Romney. It's kinda funny that Romney has not been highly publicized lately, yet he is now tied with or leading Obama in most polls.
Further, Democrats, powerful Democrats, are peeling away from Obama's policies and even from him in a way. Look at all of the Democrats lately who have come out and contradicted the President on economic issues lately. The funniest is Clinton, who has that "I'm just saying this .... think sexual relations" .... look in his eye when he apologized for somehow misstating his position on taxes and the economy. Bill Clinton has never slipped up in his life. He is, quite probably, one of the very best politicians of all time. He knows what he says, and he knows how to talk to people. He is very careful with his words when he speaks. He's not given to gaffes ..... especially not on major issues like taxes and the economy.
Just watch though ..... he's gonna have several more of these, where he'll "apologize" again for "mis-stating" his position ....... all while giving the public a little wink.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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YT...in August 2008, the unemployment rate was 6.0% (and climbing)...by Jan 9, 2009, the employment rate had already reached 8.0%.
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Wrong. Jan 2009 unemployment rate was 7.8%.
This is the problem with trying to discuss anything on this board...
...Squi...what was the unemployment rate on JANUARY 9TH, according to the graph?
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The unemployment rate was 7.8% in January 2009. The unemployment rate reached 10% by October 2009. They don't do daily unemployment rates. They just do monthly rates, and January 2009's rate was 7.8%. http://data.bls.gov/timeseries/LNS14000000
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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The unemployment rate was 7.8% in January 2009. The unemployment rate reached 10% by October 2009.
They don't do daily unemployment rates. They just do monthly rates, and January 2009's rate was 7.8%.
http://data.bls.gov/timeseries/LNS14000000
You guys realize that you are talking about 2 tenths of a percent don't you?
Anyway,, the point is undeniable, the slide in employment began before Obama was even elected, the economic downturn began before Obama was even elected..
I don't believe for one second that electing a republican would have instantly fixed all that has taken place in the last 3 years. I can't say it would have gotten as bad, but I can't say it wouldn't have either.
All this whistling in the wind is rather amusing, but bottom line is this, we are now faced with Obama or Romney.. Personally, I think we're gonna get nailed either way.
Neither one of them are worth a plug nickel. and if you wanna know what scares me most,, that's it.
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Forums DawgTalk Everything Else... The Auto Bailout Revisited:
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