There used to be a quaint concept called “bankruptcy court” for things like this. I guess not, in the age of Obama. Like other recent events, there’s a word for things like this. It starts with an “f.” For the slow among you, it’s not that “f-word.” Its the one that ends with “ism.”
18 thoughts on “How Is This Not Nationalizing GM?”
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Bankruptcy court would be fine for GM. Low quality products, poor product design, poor product innovation.
Low energy prices allowed Detroit to make trucks into passenger vehicles and bizarre financing from wall street allowed financing of SUV’s that cost more then houses.
Now, that said, bankruptcy for GM would be good, if CITI, JPM, Wells, BofA, Goldman were to also go into bankruptcy.
It’s how they rig it to where the union takes over the company. Did you see where the union gets 39% of the company while the bondholders of 4 x the debt get only 10%?
bankruptcy for GM would be good, if CITI, JPM, Wells, BofA, Goldman were to also go into bankruptcy.
Why would you imagine that I would be opposed to that, moron commenter “jack lee”?
Unless, of course, they could continue without government bailouts…
Evidently JL doesn’t drive a Chevy. My company truck is a 2500 4×4. It’s a great truck. Low energy prices didn’t “allow” GM to do anything. They met the demand from consumers. Go take a course in economics but not where you took history.
What do you have against Wells Fargo? You keep lumping them with Citi and BofA. WF WANTS to pay back the TARP money and they are better off than many others.
Rand – it is nationalizing GM. (Does that make you happy now?)
Actually, the government has a decent history of nationalizing, fixing and de-nationalizing stuff. See here.
Hint – Ayn Rand’s favorite-ist industry in the world, railroads, were nationalized twice and then de-nationalized at a profit.
Hint – Ayn Rand’s favorite-ist industry in the world, railroads, were nationalized twice and then de-nationalized at a profit.
Profit to whom?
Did the USRA return a profit?
Ahh, I see Chris. First, the govrnment wrecks the business with impossible regulations and takes it over THEN removes them to allow it to make money. So explain the Post Office, Amtrak and the gazillion other government run transportaton projects that can’t turn a profit. Of course the examples you cite had business people running the business after changes were made. Who are the business people in the Obama administration?
I believe the word you hint at is “fascism”.
I agree with your assessment. The word makes many people uncomfortable. The word did NOT make FDR or his cronies uncomfortable. That era also featured such stellar practices as eugenics and lobotomies.
What might all that have in common? The principal problem aristocrats have had was the power rivalry of the merchants. The rise of economies of scale in the industrial era gave the aristocrats their tool for bringing the merchants to heel.
And FDR was, amongst many other things, an aristocrat.
You want proof? Proof is only available in mathematics. Every other field has only evidence.
Chris, that is quite the disingenuous article. First, the bailouts refered to in the article are much smaller in scale, and of course, done in the distant past by different people. No offense, but Obama has trouble hiring talent.
Second, we aren’t given the full picture. Sure, a company was saved and some amount of “income” in the form of loan fees was made. We don’t know whether actual income was made, because the author conveniently ignores the time value of money and inflation. It’s foolish to call it a “profit” when all you pay attention to is some loan fees. During the times of several of these projects, there was considerable inflation.
Third, we’re only looking at the “successes” not the failures. Amtrak is a good example of a failure. The oligopolies present in a lot of defense contracts are more examples (bailouts hinder new competition from forming in the defense industry). Amtrak alone probably sucks up all the profits made from the various examples mentioned in that article. How are we insured that the Obama administration is making Conrails and not Amtraks?
Fourth, it’s worth noting that the article above states in the main example that Conrail also received considerable deregulation coupled with the second round of bailouts. It’s unlikely that any of the current recipients are going to receive deregulation (particularly labor union deregulation) as part of their bailout package.
Finally, I think it’s foolish to assume that government is going to succeed here merely because government has on occasion not failed badly in the past. The current bailouts are far greater in magnitude than previous efforts. The motives of the current administration seem far less practical and pragmatic than the previous administrations mentioned in the article.
I merely point out that not all government bailouts are disasterous, and that some of them have fixed companies and made the taxpayers money.
Whether GM will be Conrail or Amtrack I don’t know yet. Nobody does, in part because the deal hasn’t even been executed yet.
some of them have fixed companies and made the taxpayers money.
If only the government would take back the taxpayers money with a profit, but apparently Obama won’t do that until he gets a majority share and seats his cronies as board members.
As Rand said, if indeed this companies are poorly run and headed to bankruptcy, then that is why we have a bankruptcy processs.
Hmmm, PBS was talking about how GM is destined to go through bankruptcy. They failed to mentioned that this is going to be a gov’t assisted bankruptcy — nuance.
Before the bailouts there was all the doom and gloom talk about how terrible it will be for GM to go through bankruptcy. The sky will fall as a result of closing brands, plants, and dealerships. A few 10’s of billions of dollars later and now the media is spinning bankruptcy as being a good thing for GM and how it will come out so much stronger on the other side.
The gov’t could have just bought all GM’S back stock to begin with and passed out keys to people Oprah style. You know, just write Barry O a letter explaining how badly you need a car and then wait for your golden ticket to one of his town hall rallies. “Everyone in the audience gets a new CAAAUUUURRRR” [/Oprah voice]
Just thinking that if life were a musical this one would be called [i]Willy ‘Bama and the Bailout Factory[/i]
Grandpa Joe Biden:
I got a golden bailout
I got a golden bailout in my plan
[spoken]
It’s ours Rand!
[sung]
I’ve got a golden O up in the sky
Karl Rove:
It couldn’t be done
Grandpa Joe Biden:
But it can be done
Grandpa Joe Biden and Willy ‘Bama:
‘Cause I’ve got a golden bailout
You’ve got a golden chance to work my way
And with a golden bailout, it’s a golden tax day
And now the UAW is the majority owner of Chrysler. Not the employees mind you, but the union…
“A source familiar with the matter said if the restructuring of the storied American automaker is completed according to the tentative deal, the union would have a 55 percent stake in the company, the Italian automaker Fiat would eventually hold a 35 percent stake, and the government likely would have a 10 percent stake in the company.”
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/28/AR2009042801241.html?hpid=topnews
In the span of 24 hours the government has handed the UAW significant ownership stakes in 2 of the 3 US automakers.
These actions have to spark a shareholder lawsuit dont they? Arent the shareholders getting screwed in these deals?
Okay, who’s posting rational, sensible content under jack lee’s moniker?
Or has the real jack lee simply not noticed that pretty much everyone here has been anti-bailout regardless of the industry?
I merely point out that not all government bailouts are disasterous, and that some of them have fixed companies and made the taxpayers money.
And I pointed out that that’s not a useful observation to make. As I see it, you (and the article) mere say that sometimes the US government gets lucky and doesn’t lose too much money on a bailout.
Currently, we’re bailing out a lot of companies at once. That’s not a single throw of the die unlike the examples sited in your article. It’s throwing a huge pile of dice and hoping almost all of them roll well. My view is that while some of this mess will resolve in the near future, we’re likely to have fallout that lingers for decades afterwards, just like Amtrak.