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US Treasury Completes Bailout of General Motors

Unknown Lamer posted about 10 months ago | from the just-in-time-for-peak-oil dept.

Transportation 425

Hugh Pickens DOT Com writes "Jim Puzzanghera writes in the LA Times that the federal government has sold its remaining shares of General Motors stock, ending the controversial $49.5-billion bailout of the automaker begun in late 2008 under former President George W. Bush. Although the GM bailout ended with a $10.5-billion loss for taxpayers, Treasury officials say the goal never was to turn a profit. The rescue prevented further damage to the economy and the potential loss of 1 million jobs says Treasury Secretary Jacob J. Lew. 'This marks one of the final chapters in the administration's efforts to protect the broader economy by providing support to the automobile industry.' At its height, taxpayers had a 60.8% ownership stake in GM. The auto bailout will rank as 'one of the most important interventions, maybe the most important, in U.S. economic history,' says Sean McAlinden, chief economist for the Center for Automotive Research. Without it, 'the upper Midwest would still be a gaping, double-digit unemployment hole in the economy, 600,000 retirees would've lost their pensions.' ... The Cadillac CTS was picked as Motor Trend's car of the year and the Chevrolet Impala was the first U.S. car chosen as the best sedan on the market by Consumer Reports in 20 years. 'We will always be grateful for the second chance extended to us and we are doing our best to make the most of it,' says GM CEO Dan Akerson. 'Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.'"

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Union Beard (2, Funny)

smitty_one_each (243267) | about 10 months ago | (#45649399)

Union beard
$10B it's feared
Need a crony scrape
Or the market's a jape
Burma Shave

Corporate Suit (1, Funny)

ObsessiveMathsFreak (773371) | about 10 months ago | (#45649507)

Corporate Suit
Thinks it's a hoot
$10B in loot
GM still a coot
Burma Shaved

Re:Corporate Suit (-1)

Anonymous Coward | about 10 months ago | (#45650005)

Both views are moot
Taxpayers boot
to your chute
the poot
Burma Shaved

Obama (-1, Flamebait)

Anonymous Coward | about 10 months ago | (#45649431)

Damn Democrats always messing with the free market.

Let these guys fail and someone better will take their place. Buy no instead they are too busy pushing Obama care (which they didn't even read because Obama was too busy playing golf/faking his birth certificate) or other socialist crap.

The market has been fine since the beginning of human history. Leave it alone

Re:Obama (4, Insightful)

erikkemperman (252014) | about 10 months ago | (#45649967)

Damn Democrats always messing with the free market.

Um, this started under GWB -- it's even in the summary. I doubt it mattered who was in office at the time, as the major parties are basically the same on all but cosmetic issues, but if partisan trolling is your thing at least get it right.

And the birth certificate thing... Really? Still?

Re:Obama (1)

ebno-10db (1459097) | about 10 months ago | (#45650079)

Mod parent up. Taking Poe's law into account, there are two possibilities, neither of which should be modded down.

1. The PP is a parody.
2. It's from a ... what's the polite term? Screw it - a wingnut. It should be seen in order to understand the political thinking of a certain faction, and to debate if one feels like a little sport.

Is it just me, or ... (2)

Ihlosi (895663) | about 10 months ago | (#45649435)

... does betting almost your entire pension on the fate of one single company seem like a really unwise idea?

Re:Is it just me, or ... (0)

Anonymous Coward | about 10 months ago | (#45649467)

I can tell you have no idea how pensions work...

Also, the subject field is for a short description of the content of your message and NOT for the first few words of your message.

Re:Is it just me, or ... (0)

Anonymous Coward | about 10 months ago | (#45649585)

Yes, i certainly do not understand the pensions system in usa. I'm just reading about it in the wikipedia. It's a terrifying idea, that you can loose your pension when the company goes bust.

Re:Is it just me, or ... (1)

motorhead (82353) | about 10 months ago | (#45649683)

That's why they're required to be funded as it goes along.

Re:Is it just me, or ... (2)

khallow (566160) | about 10 months ago | (#45649859)

Which is fine when the stock market is doing well, and not so hot when it's not.

Re:Is it just me, or ... (3, Interesting)

Anonymous Coward | about 10 months ago | (#45649743)

The pensions are insured by the government and you can draw social security upon retirement. It isn't as much as you would have gotten if the company didn't go bust, but it's something.

What is terrifying is all of the public employee pensions that are under-funded by municipalities on the brink of bankruptcy. Those pensions are not required to be insured, and often are not. Meanwhile, the unions themselves opted out of social security and the premiums there applied to the pension. Which means pensioners are ineligible for social security.

Detroit? That's just the tip of the iceberg. As city after city goes bankrupt from their legacy costs and erosion of tax bases, you are going to see something of a crisis where all of THOSE pensions go belly-up.

Re:Is it just me, or ... (0)

Anonymous Coward | about 10 months ago | (#45649479)

It used to be completely safe and normal. People used to get a job at 20-something and then retire from the same place at 55. Unions used to not be demonized by "the media" like they are now.

Re:Is it just me, or ... (2, Insightful)

Sarten-X (1102295) | about 10 months ago | (#45649579)

Exactly. Back in the mob days, the unions demonized themselves.

Re:Is it just me, or ... (4, Insightful)

P-niiice (1703362) | about 10 months ago | (#45649969)

I'm glad we had anti-union pushback to provide those 50 years of higher wages and prosperity after the depression! Who knows how much higher wages would have been without the unions messing stuff up and preventing business owners from paying more out of the kindness of their hearts!

Re:Is it just me, or ... (2)

SJHillman (1966756) | about 10 months ago | (#45650027)

Because unions were totally the only thing affecting the economy in those 50 years...

Re:Is it just me, or ... (1)

BringsApples (3418089) | about 10 months ago | (#45649551)

If I remember correctly, it wasn't just GM that had problems, it was just the only one that got bailed out. One day we heard that housing was a problem, and people's homes were being foreclosed on left and right. The next day we heard the GM suddenly needed $50-Billion.

It was done in the same manner in which 9/11 was done by terrorists named Al Qaeda, but then the US went and invaded Iraq and outed Saddam Hussein for WMDs that didn't exist.

Re:Is it just me, or ... (1)

gtall (79522) | about 10 months ago | (#45649581)

Yes, well, after a few years of the economy tanking, it managed to take out GM. The housing crisis and GM tanking were not simultaneous, regardless of your faulty memory. Both Iraq and the bailouts were hotly debated in Congress before being agreed to. Your problem is selective memory and the fact they didn't do what you would have done.

Re:Is it just me, or ... (0)

Anonymous Coward | about 10 months ago | (#45649863)

GM had problems since the late 1990's and early 2000's. they just covered them up.
lots of 0% interest loans on almost every car they sold. then they would lend more than the value of the car when people came to trade their 0% interest car and found out the value was almost nothing. it just happened to collapse around 2008 when people stopped buying cars.

Re:Is it just me, or ... (1)

Opportunist (166417) | about 10 months ago | (#45649587)

Oh don't worry. Despite GM being bailed, pensions are down the drain.

Re:Is it just me, or ... (3, Informative)

sumdumass (711423) | about 10 months ago | (#45649947)

In more ways than we realize. The bailout of gm actually followed what Romney said, forced bankruptcy then a cash infusion apon restructuring. The bankruptcy negated a lot of pension liability but part of the cash infusion was paid by Canada's pension funds too. If we are taking a loss, i am almost certain they are too.

This also neglects all the pension funds that was looted when all of GM's stock and debt where invalidated as part of the bankruptcy. Detroit is even worse as municiple bonds has always been considered a safe bet as the governing authority can raise taxes to satisfy the debt but with its bankruptcy, it looks like it will be pennies on the dollar if anything is paid out. But detroit is another beast altogether.

Re:Is it just me, or ... (1)

u38cg (607297) | about 10 months ago | (#45649845)

It's a complex problem. Without question, pension provision should *somehow* arise from compensation paid for your work. The problem is that you are squirelling away money for long periods, with uncertain returns, and then when you start paying it out, no-one is quite sure how long you'll live for. For the company, paying enough money up front to guarantee a particular level of pension would be a drain on resources, so we let them catch up later. Alternatives, such as just paying a fixed amount into a fund and letting the employee deal with it are easier but don't lead to better outcomes.

I think... (3, Interesting)

Andrio (2580551) | about 10 months ago | (#45649447)

That if GM had collapsed, it would have created a huge vacuum, that would have rapidly been filled with new startups. The automotive industry could have gotten a big injection of "new" and we'd have maybe dozens of Tesla-like automotive companies.

Re:I think... (5, Interesting)

gstoddart (321705) | about 10 months ago | (#45649483)

You think so? You don't think the smoking carcass would own all of the patents and make it impossible for a bunch of new startups to get into the industry?

Because in pretty much every other industry patents essentially prevents that from happening.

I'm of the opinion that in many cases, you'd just end up with a huge patent troll which prevents newcomers from entering the market.

There can be no innovation without really deep pockets to cover all of the rent seeking which happens. Because the game has been stacked that way.

Re:I think... (4, Interesting)

jcr (53032) | about 10 months ago | (#45649521)

You don't think the smoking carcass would own all of the patents and make it impossible for a bunch of new startups to get into the industry?

Patents are assets. Assets are auctioned off in bankruptcy. The owner of a patent benefits from licensing the patent for fees, not from sitting on a patent and preventing anyone from using it.

-jcr

Re:I think... (4, Insightful)

gstoddart (321705) | about 10 months ago | (#45649565)

Patents are assets. Assets are auctioned off in bankruptcy.

Which, if history is any indication, will go to the existing companies with deep pockets, and will continue to restrict the market to a couple of huge players -- or one smaller one backed by someone with deep pockets.

A collapse of GM would not magically create a bunch of small startups to fill the void. It would mostly just redistribute among the big players.

Re:I think... (1)

khallow (566160) | about 10 months ago | (#45649831)

A collapse of GM would not magically create a bunch of small startups to fill the void. It would mostly just redistribute among the big players.

Actually, the collapse of GM, which is something that's been going on since the 1970s, has grown a lot of rival automobile businesses in the US. They're just owned by foreign companies like Toyota [toyota.com] or Mercedes [wikipedia.org] .

I don't know that completing the collapse of GM would create a bunch of start ups, but I do know that bailing GM out won't do that.

Re:I think... (1)

jonwil (467024) | about 10 months ago | (#45649789)

As we have seen when other companies with big portfolios have collapsed or sold off their patents, usually its well established companies that pick them up. Look at what happened to the Nortel Networks patents (that were bought by Microsoft and others)

Re:I think... (0)

Anonymous Coward | about 10 months ago | (#45649527)

Who needs patents on failed ideas.

Its the resources that count ... the factories and equipment. Plus a lot of skilled labor to pick and choose from ... although I bet it would not have been union jobs.

Re:I think... (1)

Michael Casavant (2876793) | about 10 months ago | (#45649715)

Patents who's ideas are poorly implemented doesn't make the patent a "failed idea", just a poor implementation.

Re:I think... (1)

smitty_one_each (243267) | about 10 months ago | (#45649489)

Oh, get over your capitalist self. We're all about preserving fat benefits for people whose main task in life is controlling other people these days.

Re:I think... (1, Insightful)

Anonymous Coward | about 10 months ago | (#45649533)

What a cute and naive view of the world. Ah to be an undergrad again...

Re:I think... (1)

stiggle (649614) | about 10 months ago | (#45649557)

IF GM had collapsed then the remains would have been picked over by the other main car manufacturers and you'd have ended up with the brands being owned by VW, Fiat, TATA, etc. Not good for the America.

Although Fiat already has strong links with Chrysler (they basically own it)

Re:I think... (0)

Anonymous Coward | about 10 months ago | (#45649825)

VW? Ha. Toyota would have taken their pre-Abenomics deflated yen and bought up GM like they've been wanting to do since WW2 ended.

Re:I think... (1)

Sique (173459) | about 10 months ago | (#45649965)

FIAT owns 61.8% of Chrysler's shares (6.6% are disputed). Everything else is owned by the VEBA trust. Which means that FIAT is the corporate owner of Chrysler. Chrysler cars get sold as Lancia (a FIAT subsidary) in Europe, and Lancia and FIAT cars are badged Chrysler in the U.S.. The CEO of Chrysler is tjhe CEO of FIAT, Sergio Marchonne.

Re:I think... (3, Insightful)

DarkOx (621550) | about 10 months ago | (#45649567)

Right and lets not forget either that all that manufacturing equipment does not just get set on fire because of bankruptcy. It would have been sold off cheap to those same start ups. Deflation can be a good thing.

Re:I think... (1)

gtall (79522) | about 10 months ago | (#45649601)

Yes, if you ignore the supplier and dealer networks which would have gone titsup and those are not easily established. Just consider the problems Tesla has right now. Starting a new car company is not easy, it takes years. In the meantime, all the pensioners and workers are SOL.

Re:I think... (0)

Anonymous Coward | about 10 months ago | (#45649605)

That if GM had collapsed, it would have created a huge vacuum, that would have rapidly been filled with new startups. The automotive industry could have gotten a big injection of "new" and we'd have maybe dozens of Tesla-like automotive companies.

You may like to think that, but it probably wouldn't have happened. The auto industry is an established consolidated market with a a small number of big players. One of them disappearing would not spawn the creation of a whole bunch of new ones; it would just result in the remaining players each taking a bigger slice of the market share. There might be some room for new small players, but they would only get the crumbs dropped from the table by the big fish.

Re:I think... (2)

tie_guy_matt (176397) | about 10 months ago | (#45649699)

It can cost up to $1-6 billion for car companies to come up with a new model ( http://translogic.aolautos.com/2010/07/27/why-does-it-cost-so-much-for-automakers-to-develop-new-models/ [aolautos.com] ) and that is what it costs if you are already a car company and are already making similar cars. If you are a company that has never made a car before then it will cost even more. A lot of foreign car companies only got started because they had help from their governments.

Two things to keep in mind: entering into a new market is not always as easy as opening a lenonade stand, and Ayn Rand novels are shelved under fiction for a reason.

Re:I think... (1)

khallow (566160) | about 10 months ago | (#45649899)

It can cost up to $1-6 billion [...] If you are a company that has never made a car before then it will cost even more.

Telsa Motors didn't spend that kind of money to develop their cars.

You have no idea... (5, Insightful)

sjbe (173966) | about 10 months ago | (#45649721)

That if GM had collapsed, it would have created a huge vacuum, that would have rapidly been filled with new startups.

No it would not have. You clearly have NO idea how much capital is required nor how much infrastructure is needed to build an auto company and the supply chain that goes with it. Furthermore you seem to be forgetting that in 2008 there was ZERO capital available. Nobody could get capital from the banks because there was no liquidity to be had. Your notion that a bunch of startups could even begin to fill the void left by a suddenly missing GM is laughable. Even if we could have magically waived a wand and provided the capital the engineering would take years. It takes many years to even build a very small auto company like Tesla.

GM isn't just an assembly line. It is the keystone in an entire supply chain. GM goes under and so does virtually every Tier 1 supplier as well as Ford and Chrysler. Even the CEO of Toyota admitted publicly that GM being liquidated would have hurt Toyota badly because they depend on many of the same suppliers. My company would have been out of business entirely and we are a Tier 3 supplier to GM. And we would have been just one of thousands of firms that would have collapsed. Even Tesla would likely have collapsed because the supply chain would have imploded. Tesla depends on many of the same suppliers who would now be bankrupt.

Re:You have no idea... (0)

Anonymous Coward | about 10 months ago | (#45649821)

THANK YOU!

Someone else gets it. The level of ignorance on here is scary.

Re:You have no idea... (1)

khallow (566160) | about 10 months ago | (#45649949)

Bankruptcy doesn't destroy the supply chain.

Furthermore you seem to be forgetting that in 2008 there was ZERO capital available. Nobody could get capital from the banks because there was no liquidity to be had.

And if GM was a competently run business they wouldn't have needed capital so badly in 2008.

Even if we could have magically waived a wand and provided the capital the engineering would take years. It takes many years to even build a very small auto company like Tesla.

So why is it relevant that some things take a while to do? Does that mean that no one should start a winery or olive orchard because those things take time?

Re:You have no idea... (2, Interesting)

Xest (935314) | about 10 months ago | (#45649961)

But all that assumes that for some unexplained reason the demand for cars would just dry up.

There seems no reason to think that if GM disappeared that demand for cars would also vanish too. More realistically the slack would just be picked up by the other auto manufacturers who'd see a drastic increase in demand as they filled the void.

There may be a temporary supply shortage as they struggled to meet demand, but this would likely be met quite quickly by established firms simply buying up GM's old plants. It may even be the case that they'd buy up the entire end-to-end IP and production chain for some of GM's offerings. This is after all what GM itself did with companies like Vauxhall.

It sounds like the argument against decreasing executive wages - that we have to pay that much to get top talent, it's similarly false because it's based on the false premise that such top talent is rare. It's not. You could sack the entire top tier of every Fortune 500 company tomorrow and there'd be plenty enough equally or even more competent people lining up to replace them for only a fraction of their salaries.

I'm not saying it'd be smooth running, there would be a fairly noticeable impact of GM's demise without a doubt, but it wouldn't be an end of world scenario, and frankly the forced re-organisation of the industry away from such a monolithic dinosaur being at the core of it would almost certainly be more healthy for the industry long term.

Re:I think... (3, Interesting)

johnlcallaway (165670) | about 10 months ago | (#45649993)

Or .. someone would have bought up GM at fire-sale prices, still owned all the patents and brand name but free from the yoke of union blackmail, been able to reduce wages and benefits to be in line with other auto manufacturers, and become a stronger company that is better able to whether economic downturns.

Instead, we have the same company with the same problems just waiting for the same conditions to happen again. One that screwed some minor unions and dealers that didn't have political backing in the process that no one seems to care about and the media doesn't seem to want to point out.

Why is it that the banks were able to pay back their infusion of cash, but not GM??? Because it's not the economic powerhouse we have all been mislead to believe it is. The 'what if' story is spread as if it is the truth, when in fact it's just what someone wants us to believe to make themselves look good.

I will never buy a GM car again. Thousands of Americans feel the same way. I'm sure at some point our memories will fade, but Toyota, Honda, and Ford all offer fine US made cars so it's going to take a long time.

Re:I think... (4, Insightful)

braeldiil (1349569) | about 10 months ago | (#45650071)

No, if GM had collapsed it would have taken the rest of the auto industry with it. See, first GM goes down. Then the GM suppliers start falling, because they're close to the edge and GM defaulting on payments breaks them. There's no funding available to restructure, so they're all getting liquidated at pennies on the dollar (remember, we're in a massive banking crisis with a liquidity crunch). The failures cascade down the supplier chain, and then start taking out other automakers (because they can't get parts anymore). Pretty soon you've blown up most of the industry. The correct anology isn't a a tree falling, making room for new, younger trees. This would be more akin to a massive forest fire (or even a volcanic eruption). Sure eventually you'd recover, but it would take years to decades and meanwhile it leaves a massive patch of utter devastation to deal with.

Not just $10.5 billion.... (5, Interesting)

felrom (2923513) | about 10 months ago | (#45649469)

The government previously forgave $15.4 billion in loans to GM: http://www.reuters.com/article/2009/05/19/gm-bankruptcyplan-idUSN1943363120090519 [reuters.com]

In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said.

The government also made a "special ruling" for companies receiving bailout money... http://online.wsj.com/news/articles/SB10001424052748704462704575590642149103202 [wsj.com]

It [GM] won't have to pay $45.4 billion in taxes on future profits.

Not only is the taxpayer out over $70 billion to bail out GM, but the original bond holders who were illegally robbed are still waiting for their money too.

Re:Not just $10.5 billion.... (3, Funny)

smitty_one_each (243267) | about 10 months ago | (#45649495)

Listen to you get all pedantic. Next you're going to want a proper audit of the Federal Reserve, or something insane like that.

Re:Not just $10.5 billion.... (2, Insightful)

DarkOx (621550) | about 10 months ago | (#45649623)

I used to be a big backer of the audit the FED movement but the reality is, if we want a fair economy where everyone gets equal treatment the only solution is END THE FED. What are we going to learn from an audit that could possibly matter when they tell us they are effectively printing $85B every month?

What they have been public about since the start of QE is so large in comparison to every reference frame we have, no other theft could amount to much of anything; because its a fiat currency reference is all the matters.

Re:Not just $10.5 billion.... (1)

Anonymous Coward | about 10 months ago | (#45649687)

"END THE FED"

Oye. What is it about economics that draws all the armchair "experts"? You don't see any armchair surgeons. Yet everyone and their grandmother feels they're an expert on macroeconomics on the most complex financial system in the world.

Take a look at the all the bank crises in the 1800s which prompted congress to create the Fed in the first place. If you actually want to learn (instead of regurgitating what some guy on some blog comment said), start there.

Re:Not just $10.5 billion.... (0)

Anonymous Coward | about 10 months ago | (#45649723)

What is it about economics that draws all the armchair "experts"? You don't see any armchair surgeons.

Have you been on slashdot before?!

Re:Not just $10.5 billion.... (2)

Anonymous Coward | about 10 months ago | (#45650003)

Oh I'm no stranger to slashdot idiocy. Slashdot has become one of the trashier sites on the net in the past few years.

But econ has this weird quality that makes everyone an expert in their own mind. I'm not talking about only slashdot. I notice this on almost every site, tv show, and in many real life conversations.

No non-doctor in their right mind would ever opine on proper triple heart bypass procedure, yet everyone has an opinion on complex and broad issues such as the role of a central bank or the efficacy of fiat currency vs specie.

Re:Not just $10.5 billion.... (4, Interesting)

Nimey (114278) | about 10 months ago | (#45650001)

Dunning-Kreuger. As D&D players know, there's a reason why INT and WIS are separate stats.

It is OK. They can print more money. (1, Insightful)

h00manist (800926) | about 10 months ago | (#45649553)

The government can just print more money. Then those dollars go sit in some foreign bank account, so it doesn't affect inflation immediately. Then some electronic currencies appear, make national currencies worthless, and the whole financial world explodes. Then we go back to creating local neighborhood markets, planting food in the backyard, and trading based on barter because no money of any kind is trusted by anyone.

Re:Not just $10.5 billion.... (2)

danceswithtrees (968154) | about 10 months ago | (#45649607)

Not only is the taxpayer out over $70 billion to bail out GM, but the original bond holders who were illegally robbed are still waiting for their money too.

If the government had not stepped in to save GM, how would the bond holders be doing now? I imagine that if GM were liquidated, they would have gotten a few cents on the dollar. So yes, the bond holders got a raw deal, but lots of people got a raw deal during the meltdown of 2008. As the summary points out, the bailout prevented the loss of ~1M jobs and 0.6M people losing their pensions. If the government had not stepped in, most of the rust belt would be in bankruptcy. So all in all, money well spent.

Re:Not just $10.5 billion.... (0)

Anonymous Coward | about 10 months ago | (#45649903)

they would have gotten a few cents on the dollar

For values of "a few" that include "zero", yes. GM's liquidated assets wouldn't have covered everyone in line before the bondholders.

Re:Not just $10.5 billion.... (1)

khallow (566160) | about 10 months ago | (#45650011)

As the summary points out, the bailout prevented the loss of ~1M jobs and 0.6M people losing their pensions.

No. Even in a chapter 7 bankruptcy the job loss would have been less than that. And how many jobs were never created because the US government interfered? We'll never know. The political metric is "jobs created or saved" not "jobs lost or never created in the first place".

Re:Not just $10.5 billion.... (2)

dkleinsc (563838) | about 10 months ago | (#45649609)

the original bond holders who were illegally robbed are still waiting for their money too

If a company goes bankrupt, bondholders are among the last people to get their debts paid - payroll, suppliers, bank lines-of-credit, and retirees all get paid before bondholders see a dime. That's at least part of why corporate bonds have an interest rate that is higher than a US Treasury: there's always that risk to bonds that is priced into the interest rate. It's also at least part of why bonds issued by successful and established companies have lower interest than bonds issued by no-name companies.

GM did effectively go bankrupt. What the bailout did (reasonable people can disagree on whether it should have happened, I lean towards "no") was ensure that something called "General Motors" emerged from the rubble. But under those circumstances, bondholders getting screwed is to be entirely expected.

10B net loss? (1)

Christopher Joseph (3455763) | about 10 months ago | (#45649473)

General Motors only employs 200,000 people. I'm not saying that there wouldn't be a peripheral effect, but 1 million jobs is a gross overestimate. Also, a large number of STEM professionals work for General Motors. Engineering degree + 20 years in the industry = almost guaranteed employment. Quality of life may need to decrease temporarily but most of those employees will definitely rebound quickly.

Re:10B net loss? (2, Insightful)

Anonymous Coward | about 10 months ago | (#45649503)

No, you're wrong.

There is a lot of supporting industry around automobile manufacturing. You can't just put it off to the side like you did. Also, if automobile manufacturing shut down the entire region would be thrown into deep economic turmoil that would spread to completely unrelated sectors.

Re:10B net loss? (0)

Anonymous Coward | about 10 months ago | (#45649843)

No, you're wrong.

There is a lot of supporting industry around automobile manufacturing. You can't just put it off to the side like you did. Also, if automobile manufacturing shut down the entire region would be thrown into deep economic turmoil that would spread to completely unrelated sectors.

Note that there's a huge difference between "automobile manufacturing" and "GM" -- yes, if all automobile manufacturing shut down, all the suppliers would also shut down, and huge chunks of the midwest would be in unspeakably deep shit.

And yet, if GM had failed, it's not like people would stop buying cars; other manufacturers would have split up its market share, and needed more parts, so it's not all bad news. There'd be some turmoil while vendors who mainly or exclusively serviced GM either established relationships with the other automakers, or failed. But most of the employees of the ones that failed would find jobs elsewhere in the industry, as the analogous suppliers to Ford, Honda, etc. would all be needing to boost production. It would absolutely have been a big problem, but not nearly as big as you make it out to be.

Re:10B net loss? (2)

Opportunist (166417) | about 10 months ago | (#45649563)

Hell, in 1985, West Germany gave East Germany just a few billion Marks. And on that they ran another 5 years. Even with inflation taken into account, those commies were better managers than GM managers obviously are.

Re:10B net loss? (1)

kenh (9056) | about 10 months ago | (#45649593)

Imagine what a company like Tesla could have done with GM Assets it picked up at pennies on the dollar...

Instead, we got the Chevy Volt [autobeatinsider.com] ...

Re:10B net loss? (0)

Anonymous Coward | about 10 months ago | (#45649637)

wtf? did you actually think before writing that?

Tesla's (and the EV industry in general) issue is not manufacturing, it's charging infrastructure and battery R&D. Neither of which would be magically solved by killing GM and fire selling its assets.

So to answer your silly statement: "Imagine what a company like Tesla could have done with GM Assets it picked up at pennies on the dollar..."

-Absolutely nothing.

Re:10B net loss? (1)

gtall (79522) | about 10 months ago | (#45649617)

Almost guaranteed employment? Care to tell that to the rest of the industries gorging on H1 visa people? Other companies would be very leery of touching any but the best of them.

Re:10B net loss? (4, Insightful)

SJHillman (1966756) | about 10 months ago | (#45649801)

The auto industry has a massive supply chain with dozens of companies involved at each stage from collecting raw materials all the way up to manufacturing finished parts, as well as a massive dealership organization. If any of the major automakers were to just shut down, their own employees would be a drop in the bucket compared to the overall employment effects. Many of those supporting companies would be forced to close altogether.

GM a company our country can be proud of again (0)

MrKaos (858439) | about 10 months ago | (#45649493)

The EV1 was a good reason to be proud, perhaps if GM made cars like that...

What a sweet deal (0)

Anonymous Coward | about 10 months ago | (#45649499)

I wish I could run my business into the ground and then just reach into the taxpayer's pockets, borrow $40B, and only have to pay $30B of it back.

Re:What a sweet deal (1)

SJHillman (1966756) | about 10 months ago | (#45649813)

You can! All you need to do is create a large business that directly employs hundreds of thousands of people, and millions more indirectly. Once you reach that step, the rest of your plan is a cinch.

Told you so ... (3, Insightful)

Anonymous Coward | about 10 months ago | (#45649505)

" Although the GM bailout ended with a $10.5-billion loss for taxpayers, Treasury officials say the goal never was to turn a profit. The rescue prevented further damage to the economy [...] "

Funny how they don't think throwing 10 billion down a toilet didn't further damage the economy. Even if GM went out of business, which it wouldn't have, someone else would have bought the resources and done something with them. Just flatly stating that 1 million jobs would have been lost is so deceitful.

I also remember telling people over and over how this was going to be a huge loss since GM would never be able to pay it back and every liberal democrat crawled out from under every rock saying that this was going to be a great profit and win. NOW ... now its "Oh, we never meant to make a profit." Yeah, just like if I liked my health care / doctor I could keep it.

Just wait till the 2014 elections ...

Re:Told you so ... (1)

Opportunist (166417) | about 10 months ago | (#45649531)

Yeah, we'll vote the other side of The Party in, that's gonna show them. And if that doesn't work, just wait for the 2016 elections when we're gonna vote for yet again the other side. That's gonna show them...

Re:Told you so ... (0, Insightful)

Anonymous Coward | about 10 months ago | (#45649561)

Actually ... think I am going with the third option. Both the establishment republicans and liberal democrats despise the Tea Party even though this is just another "crazy" prediction they made that has come true. How many times do they need to be right before they aren't fringe extremists anymore? How many times do liberals/progressives have to be wrong before people stop listening to them?

Re:Told you so ... (1)

Opportunist (166417) | about 10 months ago | (#45649611)

Just because I don't enjoy shooting or hanging doesn't mean that stoning is such a better option.

Re:Told you so ... (0)

Anonymous Coward | about 10 months ago | (#45649675)

Well you for sure are going to vote a republican, no matter that he/she is a new Bush most likely, but for everybodys sake i hope others aren't as stupid.

Campaign Finance Reform, anyone? (1)

rmdingler (1955220) | about 10 months ago | (#45649509)

From the standpoint of your typical national politician, upon whom the fallout of job loss and economic strife will land, too big to fail is a no-brainer. Whether or not these bailouts are actually good for the citizenry as a whole is entirely another matter. Since national elections are funded on the backs of the Corporatocracy, instead of publicly (and evenly) funded, it would appear prudent at this juncture to assume it will continue.

Re:Campaign Finance Reform, anyone? (4, Interesting)

mi (197448) | about 10 months ago | (#45649633)

Whether or not these bailouts are actually good for the citizenry as a whole is entirely another matter. Since national elections are funded on the backs of the Corporatocracy, instead of publicly (and evenly) funded, it would appear prudent at this juncture to assume it will continue.

The Evil Corporations[TM] aren't the problem — GM was bailed out against the wish, desires, and the better judgement of executives and bankers nation- (and world-wide). No, the bailing out of the auto-industry profited unions [wsj.com] — not corporations.

Freshly elected Bush, enjoying the support of the his party's majority in Congress, did not bail-out Enron in 2001. Likewise MCI got liquidated in 2006. What made GM and Chrysler different? Unionized work-force — that's what. But blaming "unionocracy" just does not have the same ring to it, does it?

Re:Campaign Finance Reform, anyone? (1)

rmdingler (1955220) | about 10 months ago | (#45650045)

Many job losses, much economic strife, and at least one corporation was saved during the production of this "Bailout." I don't have time to wiki 'Companies Beholden to GM for their Survival', but my gut tells me it's on the order of chins in a Chinese phonebook.

Re:Campaign Finance Reform, anyone? (1)

Sockatume (732728) | about 10 months ago | (#45650069)

The Bush and Obama administrations have bailed out many large nonunionised financial firms, so it would seem that unionised workforces are not the distinction. Do you have a hypothesis that is less contradicted by the evidence?

Huzzah, GM is safe (0)

Opportunist (166417) | about 10 months ago | (#45649515)

But Detroit is bankrupt and the GM workers are most likely not going to see any kind of pension.

Guess they weren't big enough not to fail.

Why buy a car from someone who owes me money? (0)

Anonymous Coward | about 10 months ago | (#45649529)

Why would I ever want to buy a car from a company that already owes me money?

Re:Why buy a car from someone who owes me money? (0)

Anonymous Coward | about 10 months ago | (#45649573)

GM doesn't owe you money, they never did.

Lets put aside the issue that once you pay taxes that money is no longer yours and you have no direct say on its use nor a direct realization of its benefits.

The gov't bought EQUITY, meaning they owned a portion of the company. They did NOT buy debt. GM never owned the gov't anything aside its share of dividends.

I know you're making a shitty attempt at "trolling". This response isn't for you, it's for others that genuinely have that misconception.

Mission Accomplished! (2)

kenh (9056) | about 10 months ago | (#45649559)

Although the GM bailout ended with a $10.5-billion loss for taxpayers, Treasury officials say the goal never was to turn a profit.

Well done - maybe next time you could try and break even? (Depending on how you look at it, AIG was a profitable bailout [marketwatch.com] , for example.)

Re:Mission Accomplished! (1)

Overzeetop (214511) | about 10 months ago | (#45649807)

They did NOT say that the goal was to realize a loss, just that profit was not the reason for the acquisition.

It should be noted that the loss realized is probably less than the gross federal revenue of the direct GM employees and supply contractors (parts and services) during that time, not including second tier effects like money spent by the employees or default losses on mortgages owned by fannie/freddy. (figure 200,000 direct and 200,000 immediate contract workers, $60k avg at 10% effective gross tax rate over 5 years = $12B)

filthy govt (0)

Anonymous Coward | about 10 months ago | (#45649615)

should keep its stinking hands out of tax payer pockets

The US Economy (4, Insightful)

korbulon (2792438) | about 10 months ago | (#45649631)

Socialism for megacorporations (which, after all, are people too!) that have been managed into oblivion, but free-market capitalism for the rest of us slobs.

How I see it (1)

Daniel Hoffmann (2902427) | about 10 months ago | (#45649645)

Could this money be better spent to improve the economy? Yes

Could the government bureaucracy spend this money in a better way to improve the economy? No

Did the government made the right decision with the loan? Yes giving the bureaucracy.

I don't claim to be right, I'm no economist.

Assuming (1)

IWantMoreSpamPlease (571972) | about 10 months ago | (#45649663)

the numbers of correct, the US could have let GM collapse and give ever person directly affected (1 million people) 50,000$ in a lump sum and we (the people) would probably still have come out ahead.

Something to think about...

Re:Assuming (1)

SJHillman (1966756) | about 10 months ago | (#45649877)

Have you ever heard the phrase "Give a man a fish and he'll eat for a day. Teach a man to fish and he'll eat for a lifetime?" That's exactly what's wrong with your proposal.

Give a man $50,000 and he'll be set for another year - maybe two. But, if instead you use that many to provide him a job, then he'll have a much better chance of being set for a lifetime. A steady source of income is much, much more important than just giving people a short-term amount of money (and $50,000 really isn't a lot of money for a one-time payment in lieu of other income). And if you think he can just use that money until he finds another job, then you have a pretty poor understanding of how entrenched the auto industry is in the entire region's economics.

Wow (1)

nightsky30 (3348843) | about 10 months ago | (#45649665)

How is it the rich and wealthy big businesses can get away without paying their debt? How is it the Tax Payer is left to foot the bill? They should have failed. People can get by, move, or find jobs. That's the chance we all take working for any company. We aren't getting that 10.5 Billion back.

Re:Wow (2)

EmagGeek (574360) | about 10 months ago | (#45649717)

It is because we are economic slaves to the elite. Feudalism never died - it only changed form. Instead of being servants to the lords and masters, we are all servants to government.

Re:Wow (1)

SJHillman (1966756) | about 10 months ago | (#45649919)

Individuals can move or find new jobs, but if you have an entire industry out of work at once, then that ain't happening. Moving is very expensive, especially if your income is suddenly gone - and that's before you consider non-employment-related reasons for why people live where they do. As for finding new jobs, most of these people have skills only directly applicable to their now-gone industry and require training to apply their skills elsewhere. The job market is going to be saturated with job seekers very quickly, leaving hundreds of thousands high and dry. Even if they do find a new job, it's very likely that their income will be significantly lower as they start over with no seniority and little relevant experience, but they'll still be on the hook for any debts they already have.

I'm all for your philosophy on the small scale, but once you start putting hundreds of thousands or millions of people in that boat at the same time, it turns into economic armageddon. That said, I don't think that the government's approach was the best choice by far but it was still far better than doing nothing.

they watch what we order at tim horton's? (0)

Anonymous Coward | about 10 months ago | (#45649679)

& it's spreading... cahoots is cahoots. how embarrassing being fake heritage addicts has become?

no bomb us more mom us

no drone us no bone us

free the innocent stem cells

read the teepeeleaks etchings

Why is it...? (1, Interesting)

ImOuttaHere (2996813) | about 10 months ago | (#45649689)

Why is it that taxpayer money can be used to bail out corporations and banks while not lifting a finger to help "We the People"? _And_ to "forgive" or write-off billions in unpaid debt? I'm shocked the CEO's and corporate officers who drove those companies into the ground haven't been lynched by the citizens of your country.

... which leads me to once again wonder if the bottom 99% in America will ever wake up to discover they have a comment interest and see how powerful they can be when acting together... but that's a topic for another time...

Truly Creepy (0)

Anonymous Coward | about 10 months ago | (#45649763)

"Today is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again.

Doesn't anyone ever tire of the never-ending flag waving at every single event and entity in their lives? The cult of nationalism.

Detroit (1)

stewsters (1406737) | about 10 months ago | (#45649767)

Without it, 'the upper Midwest would still be a gaping, double-digit unemployment hole in the economy
Like Detroit?

Mitt says he was before the bailout (0)

Anonymous Coward | about 10 months ago | (#45649883)

...before he was against it. Same with Obamacare, immigration reform, etc.

Proud of GM? (1)

P-niiice (1703362) | about 10 months ago | (#45649897)

...is not dramatically different from the hundreds of preceding days during which we have worked to make GM a company our country can be proud of again

A lot of Americans will not be proud of GM no matter what cars they build. They've been instructed not to because of the insidious union operating there.

Rented and Impala (1)

Ice Station Zebra (18124) | about 10 months ago | (#45650039)

Nice car, good job GM.

The unspoken reason (4, Insightful)

0xdeadbeef (28836) | about 10 months ago | (#45650041)

We bailed out the automakers for the same reason we subsidize food production - there is a strategic value in being self-sufficient. If there was another world war or a global catastrophe, we'd be fucked if all our cars and trucks and armored vehicles and tanks were manufactured elsewhere. And what's $10 billion compared to the trillions we already throw away to make sure the oil keeps flowing.

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