Taxpayers to lose tens of billions on GM “investment”
December 22, 2012 at 10:55 am in News by Dustin Siggins 70 Comments
Since the Bush/Obama bailouts of General Motors in 2008 and 2009, respectively, the government has been badgered by fiscal conservatives and business-minded people to divest of its shares in General Motors. Unfortunately, as Rick Newman writes at US News, losses to the taxpayers could near $40 billion even as divestment begins taking place.
Back in June, a paper by Heritage Foundation Senior Labor Policy Fellow James Sherk found losses to the taxpayer were entirely due to special treatment given to the United Auto Workers (UAW). According to Sherk in an e-mailed statement on Dec. 20, “Virtually none of these losses were necessary to keep GM operating; they came from subsidizing union compensation. The taxpayers spent over $12 billion to give the United Auto Workers far better terms than bankruptcy law calls for. Had the government not given the UAW preferential treatment it could have kept GM running without losing money.”
At the end of the day, the auto bailout has at least three major flaws with it that highlight why bailouts are at best risky policy, and too often horrible policy. Consider:
1. As Sherk pointed out in his paper, and as he told me in an interview shortly after the paper came out, traditional bankruptcy procedures were not followed by the Obama Administration. When the government is in charge, rules often don’t matter, and in this case the UAW got special treatment that put it above investors.
2. When then-CEO Ed Whitacre said GM had paid back its government loans in 2010, it was quickly found out this was a lie. Yet Whitacre was not held responsible for this manipulation of taxpayer trust, including his appearance in this April 2010 ad.
Again, when government is involved in this way in the private sector, one has to look under every rock to make certain all facts are being presented.
3. Taxpayer losses are unacceptable when it comes to bailouts. First, the free market does the best job of deciding which companies survive. Second, should government wish to bail out special interests – whether it be through subsidies, straight-up bailouts, tariffs, etc. – it should do its duty to taxpayers and make certain losses are not realized.
According to Newman, losses on the GM “investment” will be around $30 billion in this first round of divestments. In the end, losses could be billions more. Which means while millions of Americans struggle to find jobs and provide for their families, the federal government’s friends at General Motors are sitting pretty.
When Obama took from the GM and Chrysler bondholders during 2008-2009 strong arm tactics he robbed widows, grandmothers and teachers of some of their retirement savings.
This was never a bailout of G.M.. From the beginning, it was a taxpayer subsidy for the UAW and it’s corrupt leadership. The money is lost and will never be recovered. And continuing demands of that and other labor unions absolutely guarantee ultimate failure of General Motors. The question is only … when?
There are two glaring mistakes with the auto bail outs.First:the federal gvnt sucks at picking winners and losers and they chose the biggest loser here.Second:they allowed the UAW to spend the bailout money as they saw fit with which they promptly topped union pension funds off leaving my familie’s retirement fund holding a doo-doo bag.Thanks barry hussien!I hope your plane falls in the pacific on your way to your $5mil”holiday”break,also at my expense.
A tumble down the planes disembarking steps would be cheaper and the pilots and others aboard could carry on with their lives.I still hope Obummer has a change of heart and his blindness is removed so he himself can admit what he believed was wrong like Paul did in biblical times.
Are you kidding? Obama is not blind. This is not a blunder. Obama knows exactly what he is doing. Bankrupt the general government. This is his goal and has been since befor he ran for senator.
Yes, many of us have long known that Obama is a paid Chinese agent. After Obama drives us back to eating roots and grass the will sell the entire country to China for $39.95 plus tax.
Mitt was right about this we should have let them fail. With only 1 American car company left the Chinese could have bought the empty plants cheap and put people to work building their cars.
Jerry, I thought everyone knew, the most likely alternative to the government’s “bailout” would have been reorganization under Chapter 11. Lots of other big U.S. corporations have used Chapter 11 to get themselves on the road back to financial health.
Obama knew this. He didn’t want to allow it because unrealistic union benefit plans, especially pension plans, are frequently made more realistic by the bankruptcy Court.
Wages are also sometimes cut. The UAW didn’t want a Chapter 11 bankruptcy for GM.
Craig,
Read up on recent history please.
Reorganization takes some money. The reason you are in bankruptcy is you are out of money or close to it. In late 2008 the credit industry froze. Nobody was giving out billons of dollars to loan or invest. There was nobody these except the Federal Government
Jerry,
I don’t believe what you say about the impossibility of a restructured GM obtaining loans.
GM wasn’t a good candidate for investment because it had become impossibly inefficient. With a good Chapter 11 restructuring, it would have very likely looked good to some investors.
As a backup measure, the government could have offered loan guarantees to investors AFTER the bankruptcy proceedings, and only if private equity was still not available.
What they did instead with the “bailout” was fail to force GM to restructure, ensuring another crises in the near future.
Craig,
We obviously understand economics and history differently.
In any case it saved millions of job, just like in the case of AIG, BofA. If it helps in understanding this think of it as civil unrest: for a bar fight the local police come in. For a wackly cult group with 100 members with guns you might need the state police. For 10,000 armed invaders you call the Federal Army and Air Force.
I understand that some people hate anything big and want to go back to what worked 300 years ago when we all dirt poor farmers living in small villiages raising sheep. Sadly the world has changed. Like any evolutionary event those who can’t adapt tend to die out.
Obviously, the management at GM were incapable of managing a company of that size. A glaring example of companies the size of GM being able to manage adequately is Ford. GM was incapable of managing itself, therefore it should have been reduced to a size consistent with its ability to manage itself. If it wanted to remain the same size, then it needed to do things like Ford did.
The only reason the Democrats pushed the federal government and our money into the fiasco was to save the union pension plans. If you noticed, the non-union pension plans like those for Delphi got thrown under the bus.
The sole motivation of the Democrat bailout for GM was to save the unions. Everyone else was tossed aside.
This is why Republicans lost the Presidential election last month. You guys continue to try and fight battles that were fought 4 years ago! Rather than taking credit for saving millions of auto industry jobs we had idiots on the right who had the stupid idea to attack Obama for “saving jobs”. Yea, lets bash the auto industry that employs millions of voters (most of whom had NOTHING to do with the banking collapse of ’08). Stupid! And the UAW is dying anyway! Of the 26 or so “transplant” factories built in this country the past few decades ZERO employ UAW workers. The UAW has separated from it’s Canadian branch. UAW membership continues to decline and their revenues continue to drop as new UAW workers make less. And I understand they are now cashing out pension plans to finance operations.
Yea, saving GM may have cost a few billion (out of the $14 Trillion or so spent by the Federal Government the past 4 years), but now that Obama got re-elected we lost the chance to kill Obamacare, and this huge borrowing and spending that continues, and we’re are looking at $$ TRILLIONS this Obama fool will cost us! You guys happy now? And do you guys remember the total economic melt down of 2008? The reason GM and the others needed help was because of people lack of access to credit to buy new cars. And there was no bankruptcy “reorganization” of GM and Chrysler without the U.S. government. Sorry, like it or not, banks were in such dire shape in 2008 that none were stepping up to provide the “debtor-in-possession” financing for the reorganization of the companies. You guys do realize that don’t you?
The banks were not loaning money, especially to bankrupt companies. PERIOD. And if you think people would buy cars from a bankrupt car company you are all DREAMING. You guys need a dose of REALITY. I mean it, get real. The Center for Automotive Research (CAR) in Ann Arbor, Mich., estimated the “loss of 3 million jobs over three years if GM and Chrysler were allowed to go belly-up, with only about 240,000 jobs being at the auto manufacturers themselves. The rest were the attendant industries that interconnect with autos. The loss of personal income by the end of 2011 would have been $400 billion, and the costs to the U.S. Treasury would have been $156 billion, according to CAR.”
And I REALLY don’t like defending the “bailout” (something President McCain would have also done too) but I would love to see how much the automotive industry has paid in taxes and contributed to the US economy over the last 100 years. Or even the last 20 years! GM also helped the county win World War II too. But, I know, we just need to continually slam GM and it’s (now) great products whatever it does. And look, Ford is a great company too, but they were able to actually borrow a lot of money privately before the end of 2008 and the “economic meltdown”. BUT Ford still, in fact, DID receive $5.9 BILLION if government loans in 2009! AND Ford CEO Alan Mulally had also asked Congress for a “credit line” of up to $9 billion in case the economy worsened. Remember??? Or are these more facts you guys conveniently “forget” about what really happened?? The ENTIRE industry (and up to 3 million U.S. jobs) was on the ropes.
You might also find this article about your pristine Ford interesting, “Ford, BMW, Toyota Took Secret Government Money”: “According to the data, from October 2008 through June 2009 the fed bought $45.1 billion in commercial paper from the credit arms of four automakers – Ford, BMW, Chrysler and Toyota – along with GMAC (the former General Motors credit arm). Of those, Ford sold the most, with $15.9 billion.”
http://jalopnik.com/5704575/
How come I never hear you guys complain about all the oil company “subsidies” and “special accounting rules” that cost us tax payers tens of billions of dollars (annually), and that never even need to be paid back? No, and out of the hundreds of billions of dollars of waste, fraud and abuse in the Federal budget, the only thing you guy can talk about is “GM”. Absolutely Crazy.
You guys totally DON’T UNDERSTAND what happened in 2008 OR the politics of this. And THAT is why we got Obama again. If we ever expect to win key states like Ohio and some others again, we on the right better have learned to pick out battles, and the lesson that you don’t bash the people you want to vote for you. In the mean time, enjoy the next four years with this fool Obama you just helped re-elect.
This is for you guys too. Enjoy;
http://home.earthlink.net/~webspace-01/FOC/Forward_Over_The_Cliff.500s.jdw1125.jpg
Jeff-
Thanks for making some good points Jeffrey, although I still see it as a vote buying exercise. Since when does the fed gov’t get to decide who survives, and in what form, in private business?
Jeffrey,
I don’t know why we keep posting about the past instead of planning for the future.
Fear of the future I guess.
Fear of the “progressive” future, Jerry, yes, very much fear, because we know the past history of “progressive” governments.
Perhaps you could describe what America will be like when the “progressives” are finished changing it?
Craig,
I didn’t use the “progressive”, I just said the future.
Psychologically people who feel insecure
fear the future and cling to what used to be.You see this in old people a lot….death is comming. So they sit around talking about events from 50 years ago and the old days.
We see this poliically with things like the Gold Standard… wanting to go back to what worked 100 years ago to feel safe but ignoring why it stopped working 70 years ago.
I think we are afraid and so spend lots of discussion on the past like Obummers birth certificate, Impeachment as stuff that is going nowhere, instead of talking about how to breath life into grassroots local groups.
If anyone really wants to experience “fear” they should visit each local group in your state on TPP and see how many have had a meaningfull post in the last 6 months. In most states it’s less that half. If this was a business and half your stores were no longer functional: no employees, no product, no customers, you sell the building or at least take you name off the door.
On some of these dead groups I even tried to put out a joke to see if anyone would even respond…..nothing. Wake up people …if half the GM dealers in the country had empty showrooms would you buy a GM car?
Jerry, didn’t they simply close half the GM dealerships? That makes them pretty empty.
Craig,
In a Capitalist system when you have stores that aren’t making money to close them: GM, Blockbuster, CiiGroup. Now the Socialists would keep them open at a loss.
Jeff,
Thanks for enlightening me on why Republicans lost the election last month. Your argument for protecting the auto industry and its millions of voters is persuasive. Following that logic, we shouldn’t forget the 48 million innocent voters Representative Pelosi pitched for with food stamps and the millions of voters on unemployment insurance.
http://www.youtube.com/watch?v=q2B9JGwhHAQ
Now we have to do is figure out how to pay for it all. ;s
GM is on it’s way to another crises. The “bailout” engineered by the government didn’t address the serious problems at GM, as a Chapter 11 bankruptcy would have.
Tune in again soon Jeffrey and tell us what a great thing the “bailout” was.
Craig, the bailout helped the entire auto industry including Ford, Hyundai, Subaru, and numerous others because it saved the lower tier auto part suppliers from going out of business.
Check out the interview with Shahid Khan, the new owner of the Jacksonville Jaguars, his company makes steel bumpers for all US built trucks, and states the same thing. However, he is from Pakistan so some may not believe him.
So there is another interview with non-foreigner Ford CEO Alan Mulallay, and he states the same.
Hellfire,
A Chapter 11 bankruptcy would not have necessarily involved even a brief stoppage of GM operations. No problem for suppliers at all.
My view on Ford and other auto manufacturers favoring the “bailout” rather than a Chapter 11 bankruptcy is this- Ford did not want GM to become more competitive. A Chapter 11 bankruptcy would very likely have freed GM from some of the contract and pension obligations that make it uncompetitive, while Ford would still be stuck with it’s own burden of UAW contracts. Ford was simply looking after it’s own interests, trying to keep GM uncompetitive, probably realizing that another GM crises is now not far off.
Craig,
Could you supply a source on this?
So, that’s why you think the Republicans lost the election….
Let’s review some FACTS.
Romney was going to win before Chris Christi sabotaged the election by publicly chastising Romney then in the very next motion sucking up to Obama. This created a 5-point swing as observed in all the polls. After this 5-point swing the ultimate outcome was 50-48. Without Christi sabotaging the election, Obama gets at best 47 percent of the vote. Look at history to learn what 47 percent of the vote means.
Even considering what you say is true, that didn’t cause the 5-point swing that occurred immediately after Christi sabotaged the election. The 5-point swing caused Romney to lose. If you want to actually discuss what caused the election to be lost, discuss what caused that 5-point swing observed in all the polls.
DB,
The high end analytics groups had Obama winning since mid-October. In the last debate Mitt almost endoresed Obama for President.
“High-end analytics groups”…
How do they relate the 5-point swing in all the polls culminating in a 50-49 outcome?
I don’t look at any one poll. I look at all the polls. All the polls showed a 5-point swing. The result of that 5-point swing was 50-49.
It should be obvious that without that 5-point swing Obama loses. So much for those so-called “high-end analytics groups”. They obviously can’t do simple arithmetic.
The discussion should be about what caused that 5-point swing immediately before the election that ultimately allowed Obama to get 50 percent of the vote.
I have an opinion based on coincidence of occurrence of facts. I’m hoping that everyone acknowledges the fact that Chris Christi did, in fact, publicly chastise Romney, telling him he didn’t have time to meet some politician because he was too busy handling the emergency in his command center. And, I’m hoping that everyone acknowledges the fact that Christi then abandoned his command center to meet Obama and prance around with him all day. And, I’m hoping that everyone acknowledge the fact that nothing was done that day for anyone needing assistance on that day, which is why Christi said he couldn’t meet with any politicians because he was needed in his command center to assist the provisioning of immediately needed assistance.
This action had an affect on the voters. To be exact, it had an affect on 5 percent of the voters. All polls show a 5 percent swing after that fact. That 5- point swing culminated in Obama getting 50 percent of the vote. Without that 5-point swing, Obama gets at best 47 percent. 47 percent equates to a significant loss.
So, what caused that obvious 5-point swing?
The 5-point swing that culminated in Obama getting 50 percent didn’t happen until after Christi publicly insults Romney and endorses Obama. That’s all but impossible to not acknowledge.
I just want to point out one thing. Chrysler did receive some of that money. However, they were bought by Fiat. The new CEO, also the CEO of Fiat, then got rid of the Chrysler CEOs and board of directors. He then was able to restructure the company and it has started to make a profit. The new CEO then repaid the bailout money with interest.
May I interject? Mr. Obama bought his re-election with that money. The chain was- taxpayer, debt, the house, pelosi, the unions, the democratic party, the election.
Dick Morris spelled that out in 0_9. Unfortuntely, he was dead on. Now we have to figure out how to recontruct the level of intellect that was prevalenr in the newly formed Untited States, circa 1789. Our biggest problem is citizens who wat to be elites and live off the system without produceing aything. The howling mobs of Athens, demanding continuation of social goodies are no different that the howling teachers of Madison demanding that the ludicrous contracts their unionhad extricated from the state of Wisconsin be honored at the subservience of the common man.
On Jerrys comment maybe an evil rich white republican may have beat the chinese investors at auction, made effective changes in management and production and continued to employ those workers if they freely chose to stay.(unless that state is not a right to work state, in that case it should move to Wisconsin) The union was great it now wants to be the company store.
On Jeff Why are the unions paying immigrants min wage to hold up protest signs and wear their colors? Why do they oppose us evil racist white republican so and so”s on everything. Why do I see huge amounts of our dolars going to them almost visably a payback for support. Answer these questions and I will look over those other points. I’m proud of the participants in the tea party who are Democrats who want to give their children less debt. I also would like a viable third party that would concede if it were showed that it couldnt win like Ron paul did.by running as a republican.
Also I want to get rid of those computerized voter machines.A virus is invented the software people hire them to combat it and so on. You cant see the cheater or theif in action on a computer and I think thats what happened to give Obummer Penns. and Ohio.You have to get a guy to manually ajust a machine and that leaves a trail. During the 2000 election they were able to show a stuffed tray of chads but noone mentioned there is only one tray and overstuffs would effect more than one candidate if it did at all. I wish during the Bush v/ gore that the judge would have asked them to return the tray and attempt to vote for either or both. We cant even check this election exept some numbers are just obvious. Sadam husein did’nt get 100%
“The taxpayers spent over $12 billion to give the United Auto Workers far better terms than bankruptcy law calls for.” aka. Buying votes with tax payer dollars.
Don’t forget what they spent on the big banks and AIG.
Yep, the slush fund culture amongst the government connected class distorts the markets.
I haven’t forgotten Jerry. Crony capitalism is destroying our country.
Jeffrey, Fox News disputes most of what you claim. The people here get our news from Rush Limbaugh and Fox News.
But I do agree, a traditional bankruptcy would not have worked because there was no available capital. Banks were crapping in their pants.
Hellfire,
No telling what the Court would have found or decided in a Chapter 11 bankruptcy. Maybe they would have concluded it was hopeless and sent GM into Chapter 7. Maybe not.
Whatever would have happened, at least that would have followed the law and tried to protect property rights instead of trampling on them both.
They could have sold it to the Chinese. We could all learn Mandrin and start bowing a lot.
Craig, please read my other previous posts. It just wasn’t about just saving GM and Chrysler. We had to save the lower tier part manufacturers to save the entire industry. If Obama didn’t bail them out, we would all be crying about how stupid he was for not doing it!
Helfire, as I said before, Chapter 11 doesn’t involve ceasing day to day operations. I worked for a big company that went through Chapter 11 bankruptcy. Everybody just kept working during the process.
Craig, No one was buying cars. The economy was collapsing. GM and Chrysler needed money to stay in business. Cash infusion the banks or the JOB creator did not want to give. The US Nationalized the banks using capital infusions to save the economy. Not sure why we are only talking about the car industry.
Hellfire,
I was a bad place to be in. Bail out the banks and auto companies or let the whole country implode.
Jerry, I consider myself a conservative Christian but must admit Obama’s decision to bailout the automobile industry was good for America.
I agree. Not the preferred solution, but the only sensible one at the time. If AIG, the auto companies and several of the huge banks had gone under we would have seen 20% unemployment and a second Great Depression. Unfortunately nobody learned much from the experience. We still have a too big to fail structure with the banks. And they will expect another bailout the next time it happens.
Jerry, unfortunately if the gov’t tries to break them up or create any legislation to prevent another fiasco, our side cries free markets, gov’t intervention and or socialism. The gov’t must treat AIG like any other insurance company. If they are selling credit default swaps, they must have the capital to pay off them all off. Not sure how this is socialism or gov’t intervention in the eyes of our party.
The U6, etc., numbers from the labor dept show real unemployment around 20% anyway. The administration plays games with the published numbers. The mass media is nothing but an Obama cheerleader so they fail to report anything that might make their hero look bad.
Unemployment comp “benefits” from the “social safety net” are funded by more and more gov’t borrowing. So the politicians dig the debt hole deeper at every turn.
I agree the concept of “to big to fail” is doing us harm. Instead we taxpayers should look at AIG, and the other bailed out big banks as “too big to succeed.” Perhaps they should be broken up as near-monopolies . . . cronyism distorts markets . . .
You forgot the other option Jerry, let poorly run and inefficient companies file for bankruptcy, perhaps be liquidated.
That seems a better option than propping up poorly run and inefficient companies so they can continue to be poorly run and inefficient, just now on a bigger scale, so the next set of problems they encounter will be even worse.
Eventually, this is leading to what’s happened in our banking industry- a handful of giant banks control the great majority of the market, they have no incentive to be efficient or innovative, and they KNOW the government will stand with them- it’s called crony capitalism.
Crony capitalism doesn’t work very well either, so it will probably lead to the “need” to simply nationalize big banks and corporations.
Say, isn’t that a “progressive” goal?
Craig,
Sure we could let every big company go broke. Were we can we should. But what do you do when they are too big to fail? Let the entire county, no the world sink into major depression? I not interested in living on Chinese food parcels and bread lines.
Where is the movement to break up the banks? That would be more useful than discussing impeachment
Jerry,
“Too big to fail” is why we have laws against monopolies.
These industries got to be “too big to fail” because of government intervention in the market.
All of the government “solutions” to the financial crises (which BTW was created by the government in the first place) have made the problem even worse. We now have fewer and bigger financial institutions controlling even higher percentages of the market.
All of our big companies are NOT in danger of failing, except from government intervention in the marketplace.
If the only solution you see is crony capitalism or complete nationalization of all our big companies, then the disaster you fear is here, and real., but it’s a government failure, not a free market failure.
Craig,
What you smoking as you seem to put words in my mouth.
You don’t seem to understand economics very well. A monolpy is when one or two companies control the market. We have 10 or more big banks. They compete. When they don’t and fix prices like UBS did with LIBOR they get caught and fined a few Billion dollars.
They are just too big for the American economy.
Where did the government hold Socialist guns to their head and force them to buy small banks? That would have been a real scandal! Did the evil government force BlockBuster to get too big for the market too?
wait until after the holidays when the smoke Obummers been blowing up on mirrors and buts clears and we find out what the numbers hes been shellgaming mean. the rize in temporrary workers will be found to be a result of fulltime employee layoffs or conversions to part time to get around mandated regulations on fulltime employees or to get beneath the number of employees that mandates apply to.
lots of layoffs but more hireing at part time by the same companies laying off. the large number of hires is already being touted in the media without the mention of the lower wages and reduced family income.I’ts the same as Obummer claiming credit for reducing America’s carbon footprint and reducing our dependence on foreign oil but not mentioning it was a natural result of weakening our economy so our demand went down for the comodity and not industrialy moving or personally privately spending our carbon footprint is indeed less.’ I’ll bankrupt it if they try to build one (a new coal powerplant) gulf drilling moratorium, EPA regulating the refineries,moratoriums on federal land, spotted owl crap again. I’ts much easier to just move offshore or overseas. If GM really wants to exist in the US as is its best hope is a new federal program they can call the Obama-car that yhey can supply voters with in the 2014 midterms. by then the shellgame will have fallen apart and our economy and citizenry will be hurting bad. GOD bless you all with eyes that can see. The emperor has a nose that grows like pinnochio’s.
Brotherjoe,
I don’t know about you but I’m happy to have the EPA keep mercury out of my drinking water. Do you want it in yours?
Jerry, the job creators wouldn’t poison our water over profit would they??? Besides, if we don’t allow them to poison our water, it will cost JOBS. Give the JOB creators everything they want!
Hellfire,
I’m sorry. You are right. We must accept the pollution of the job creators or they will feel really rejected and sad and go Gault on us. Each American family should be willing to accept a package each month of used pollution: PBCs, soot, mercury, sulpheric acid and be responsible for tending it so the job creators can sleep better.
Have you seen the movie Atlas Shrugged based on the Ayn Rand book? Rand was kind of looney. She thought that the evidence that smoking causes lung cancer was a Communist plot. So she smoked 2 packs a day till SHE got lung cancer. Then it was no longer a Communist plot. She screamed about Medicare and Social Security but was happy to accept it when her career failed and her books stopped selling.
Paul Ryan is one in the same. He collected Social Security Death Benefits at age 16 and used it to pay for college. His mother used gov’t grants to pay for school and attended a public college. That is why I don’t want him to be Speaker of the House because he reeks of hypocrisy.
At least Mitt and GW Bush came from REAL JOB creator families, the top .10% of the population.
Ayn Rand also lived through the Russian Revolution which added to her hatred of Socialism and Communism. But I agree – she did feed off the Government programs when it suited her.
Jerry,
The Common Law of Torts worked pretty well in preventing pollution before we had an EPA.
Not perfect, but neither is the EPA. Tort law would work much better now that it ever did in the past. Not only are there far more well off people, with the means to file complaints in court, but there are far more people with access to good information about pollution and polluters, and far more people who care about pollution.
Don’t forget the down side of the EPA. It’s headed by a political appointee and staffed with career bureaucrats. It’s often captured by the industries it’s supposed to regulate, and the government is all too willing to make exceptions for industries and companies that are it’s apolitical friends.
Allowing individuals to once again take polluters to court would eliminate these problems.
Craig,
Serious? Since you just seem to repeat Libertarian tracts by rote why are you here?
The Tea Party is not about to join them. I mean zero national election victories in 50 years vs. 50 in 4 years is not much of a contest.
Nixon created the EPA because your tort law did not work. Rivers in Ohio were catching fire due to the pollution in the water. The river near where I grew up had signs saying no swimming due to the pollution. Now it has swimming, fish, beavers and water birds.
I’ll take the EPA over Libertarian fantasy any day.
Hellfire,
I agree about Ryan. He is a spreadsheet wonk not a leader and mover of poliical events. Did you listen to any of his campaign event…OK but not a mover and shaker.
The maximum amount that can be lost on the “GM Bailout” is not $40Billion, only $26.5B is still outstanding. If all remaining shares sell for the recent GM buyback price, total loss to taxpayers will be $12.7B, or a little over $40 per American. That’s really more like $0-$4 for 90% of us, and is less than 5 days interest on our current federal debt, to bring some proportion to the picture.
Criticism of Obama’s motivation and union favoring actions is deserved and does NOT mean that GM should have been liquidated. GW Bush knew this. In fact, Mitt Romney wanted a structured bankruptcy not all that much different from what actually occurred. His only real disagreement with Obama was offer the union favoritism. Our Auto Industry itself was the victim of the UAW’s power, created by Democrat initiated laws going back at least to the FDR era and Democrat initiated auto regulations that opened arms to global competition and severely harmed our own automakers. Again for Union favoring provisions in law. Government and Union power have the lion’s share of responsibility for the industry and the company’s financial depletion, and government policy was completely responsible for the financial crisis of ’08 which pushed 2/3 of our auto industry into bankruptcy and left the lone survivor buried under a mountain of entitlement debt.
Saving GM was a very good thing for our country. Not only did it save economic devastation of the Midwest, a probable national depression and millions of jobs, we retain the coveted and rare national capability to operate the largest and most complex of enterprises, automaking. GM continues to pay payrolls and suppliers, and has made $7.3Billion in capital investments in America since exiting bankruptcy. Criticize Obama and the UAW tie, but applaude an American company once again #1 in the world, very profitable, and with great prospects to prosper in the years to come. This is a win for America, even if direct loss on the capital investment ends up to be $12.7Billion.
Is GM and/or the UAW going to pay full restitution, plus interest to their bondholders?
No,
They went through bankruptcy. It gets you out of contracts, leases, and restructures your debt. Debtors might get something but not 100%. That is how it works. It’s the law. Leahman Bros. went under and did not pay bondholders either. In a Capitalist system there is always risk. Do you want Socialism instead?
Was this an actual bankruptcy through the courts, with a judge, following all the established laws?
No,
Yes it was. There is this neat thing called Google that lets you look stuff up like that. Try it, you’ll like it.
So why were the laws involving secured creditors not followed?
http://washingtonexaminer.com/obama-did-not-save-detroit/article/1355336
A noted bankruptcy law professor, Todd Zywicky of George Mason University, has an article on the matter:
http://www.nationalaffairs.com/publications/detail/the-auto-bailout-and-the-rule-of-law
By the way, I suggest doing web searches using “StartPage.com” – it does not record your IP address, nor your seach info.
StartPage.com protects your privacy. That old hat product, Google, is way behind the curve.
GM did NOT go through bankruptcy. Our national government decided to circumvent the law and create a “bailout” for GM so that GM would be allowed to avoid going into bankruptcy Court for a Chapter 11 reorganization- NOT a Chapter 7 liquidation.
Craig,
From that Nazi, Communist, Muslin, Socialist source of information Wikipedia
“The General Motors Chapter 11 sale of the assets of automobile manufacturer General Motors and some of its subsidiaries was implemented through section 363 of Chapter 11, Title 11, United States Code in the United States Bankruptcy Court for the Southern District of New York. The United States government-endorsed sale enabled the NGMCO Inc.[1] (“New GM”) to purchase the continuing operational assets of the old GM.[2][3][4] Normal operations, including employee compensation, warranties, and other customer service were uninterrupted during the bankruptcy proceedings.[2] Operations outside of the United States were not included in the court filing.[2]
The company received $33 billion in debtor-in-possession financing to complete the process.[5] GM filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court on June 1, 2009 at approximately 8:00 am EST. June 1, 2009 was the deadline to supply an acceptable viability plan to the U.S. Treasury. The filing reported US$82.29 billion in assets and US$172.81 billion in debt.[6][7] [8][9][10]
After the Chapter 11 filing, effective Monday, June 8, 2009, GM was temporarily removed from the Dow Jones Industrial Average and replaced by Cisco Systems. From Tuesday 2 June, old GM stock has traded Over the Counter (Pink Sheets/OTCBB), initially under the symbol GMGMQ[11] and currently under the symbol MTLQQ.
On July 10, 2009, a new entity completed the purchase of continuing operations, assets and trademarks of GM as a part of the ‘pre-packaged’ Chapter 11 reorganization.[12][13] As ranked by total assets, GM’s bankruptcy marks one of the largest corporate Chapter 11 bankruptcies in U.S. history. The Chapter 11 filing was the fourth-largest in U.S. history, following Lehman Brothers Holdings Inc., Washington Mutual and WorldCom Inc.[14] A new entity with the backing of the United States Treasury was formed to acquire profitable assets, under section 363 of the Bankruptcy Code, with the new company planning to issue an initial public offering (IPO) of stock in 2010.[15] The remaining pre-petition creditors claims are paid from the former corporation’s assets.[12][15]“
Dan,
Good post. I agree with everything except “Our Auto Industry itself was the victim of the UAW’s power, created by Democrat initiated laws going back at least to the FDR era and Democrat initiated auto regulations that opened arms to global competition and severely harmed our own automakers.”
We need to compete in he global market place. That is what free enterprise is all about.
Season’s greetings to my sparring partners – I look forward to arguing and sometimes agreeing with you in the coming year.
Appreciate your viewpoints and debate points, iron sharpens iron and all that.
This is a good place to hash things out. A lot of comment spaces are just echo chambers but not here. The important task of restoring our Republic and educating people on our Constitution requires the relentless pursuit of truth. No sacred cows of the GOP or the Dems or even Libertarians. Thanks again for your efforts.