Bailouts were profitable

[TexasTiger 12,828]

“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment…” researchers Sean McAlinden and Debra Maranger Menk wrote in “The Effect on the U.S. Economy of the Successful Restructuring of General Motors.”

“If the U.S. government had refused to assist (GM and Chrysler)… in a financial crisis of unprecedented proportions, then the whole U.S. economy was operating without a safety net, with the exception, of course, of the banking system,” McAlinden and Maranger Menk conclude. The center independently funded the new study as a follow up to a November 2008 analysis.

“The bottom line is that a failed GM would have left a lot of collateral damage,” said Karl Brauer, senior analyst at Kelley Blue Book. “Instead, GM is profitable, it’s making the best products in its 100-plus-year history, and it’s growing sales in the U.S. and globally. In looking at the recent history of government intervention, this one rates pretty well.”

http://www.forbes.co...round-any-more/

What do you expect from a librul rag like Forbes?

[homersapien 11,357]

The above references are for DKW's benefit. He apparently thinks my views on the bailout are uniquely mistaken. (Although he put it much more rudely)

Maybe so, but I'd hate to have him think I am alone. :-\

[DKW 86 7,419]

Blah blah blah with the hallucinated numbers.

GM cost the taxpayers a $10BN loss.

http://www.nationalr...ies-john-berlau

28,000 UAW workers were paid full pension benefits that GM had promised, but 41,000 other workers were not.

About 100,000 mostly blue-collar jobs — a number approaching the total work force of GM and Chrysler, according to the ClevelandPlain Dealer — were put on the chopping block by “Team Auto,”

http://www.nationalr...ks-john-lott-jr

$50 billion in TARP bailout funds, a special exemption waiving payment of $45.4 billion in taxes on future profits, an exemption for all product liability on cars sold before the bailout, $360 million in stimulus funds, and the $7,500 tax credit for those who buy the Chevy Volt.

The 1M Jobs BS...

The “million jobs” contention is quite a stretch. Before filing for bankruptcy in July 2009, GM had 91,000 employees in the United States. You can reach a 400,000 total by assuming that all of GM’s jobs, as well as all the jobs of its parts suppliers and car dealers, would have been lost. Last year, employment in the entire automotive industry in the U.S. (counting Ford, Toyota, and other companies and their suppliers, in addition to GM and Chrysler) was only 717,000.

Even saving 20 percent of 400,000 comes at quite a cost — at least $780,000 per job. How many workers would have been willing to quit working for GM for a $400,000 severance payment?

http://conversableec...-bail-outs.html

Standard bankruptcy law, in a nutshell, is that the stockholders get wiped out and the debtors and bondholders take losses--but end up owning a restructured firm with renegotiated contracts and obligations. However, Chrysler and GM used a formerly obscure part of the U.S. Bankruptcy Code, Section 363( , that had been used for the Lehman Brothers bankruptcy. Basically, a newly formed company would receive all the desirable assets from the company--properties, personnel, contracts--while the old company kept the toxic stuff. This approach created "new" Chrysler out of "old" Chrysler in a month; GM took five weeks.

Saving 20,000 jobs at a cost of $10 billion works out to $500,000 in government spending per job saved.

Bondholders (owners of SECURED EQUITY) of secured debt got 29 cents on the dollar.

The GM bondholders, who in a standard bankruptcy arrangement would have ended up owning the firm, got the smallest slice.

http://nlpc.org/stor...hing-brag-about

Existing GM shareholders, who were the owners of the "Old" General Motors, lost everything and those who lent money to the company, primarily old GM bondholders, lost almost everything. $27 billion of bondholder debt was erased and bondholders were given a very small piece of the new GM pie.

So between taxpayers and bondholders, we lost $37BN to save what may have been 20,000 jobs.

That works out to $1.35MN/job. Even using hyper inflated numbers of of GM's entire workforce of 111,000 Jobs that is...$333,333.00/job. We screwed the bondholders out of $27BN, you know those poor old middle class retirees etc. We screwed 100,000+ auto dealer workers out of their jobs.

[homersapien 11,357]

Actually the Center for Automotive Research is a well-respected source. Once you simply dismiss them as "blah, blah, blah" then you are pretty much free to flog the immediate numbers without reference to the cost of not doing it.

Of course you already knew that, since that is the basis of your argument.

Unfortunately, any good business or policy decision accounts for the costs of not doing the option in question. Large red text notwithstanding.

[DKW 86 7,419]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

[homersapien 11,357]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

I'm not dreaming at all. I am using the estimates developed by the well-respected Center for Automotive Research. And did you take into account the suppliers that supply the suppliers? This wouldn't have stopped at the first line suppliers you know.

And it's not TARP that has institutionalized anything. It's the lack of follow-up regulations that has made this likely to occur again.

TARP was necessary for the emergency at hand, nothing more.

[homersapien 11,357]

And as far as my being a shill for Wall Street and the Auto industry, I lost about 50% of my investment portfolio at the worst of the crisis. Personally, I wasn't interested in losing the rest, which is what we were contemplating at the time.

But the good news is it's come back. So all's well that end's well. At least until it happens again.

Tell me, do you support the reinstatement of government subsidies to Wall Street that was a part of the recent spending bill? It was supported by most if not all Republicans and some Democrats. Is that going to influence the way you vote in the future?

[icanthearyou 4,462]

I have no doubt that the "bailouts", "could" have been profitable to taxpayers. My objection to how these bailouts, or access to emergency capital, were granted, is the seemingly arbitrary nature to how they were granted and, a total disregard as to whom, and what, caused the conditions that made them necessary.

I still contend that the auto industry is a distraction to the real factors that created the crisis. GM's sudden problems were not so much the result of management's inability to run an automobile manufacturing company but rather, their inability to run a bank within an automobile manufacturing company. Like GE, and GE Capital (whose need for assistance was much less publicized), the basic practice of borrowing short term and, lending long term, was disastrous in the midst of a credit crisis.

What really bothers me is the fact that small and medium sized businesses were left out. They received no consideration for how, or what effect, their demise would have on the economy. Individuals with stellar credit histories were not given the same opportunity to borrow their way out of a temporarily bad situation that could have saved their homes and credit rating. Once again, the middle-middle class and, the upper-middle class disproportionally bear the burden of what is done in the name of the "greater good".

My other problem is with derivatives. No one in government wants to wade into that murky water and figure out exactly what a CDS is and, their effects on the crisis. No wants to figure out how these "hedges" or insurance can lead to disaster in a systemic financial environment built on credit. The normal insurance model assumes that every home in America will not burn down in the same fire or, every car will not crash in the same accident. Does anyone understand the role of companies like AIG? Does anyone understand the risks in an environment that is vulnerable to it's own systemic nature? Can anyone explain the value of betting against others as opposed to merely hedging your own exposure to risk? How many other crises are lurking out there?

[DKW 86 7,419]

And as far as my being a shill for Wall Street and the Auto industry, I lost about 50% of my investment portfolio at the worst of the crisis. Personally, I wasn't interested in losing the rest, which is what we were contemplating at the tim2e.

But the good news is it's come back. So all's well that end's well. At least until it happens again.

Tell me, do you support the reinstatement of government subsidies to Wall Street that was a part of the recent spending bill? It was supported by most if not all Republicans and some Democrats. Is that going to influence the way you vote in the future?

hell no. But it should never have gotten to this point if the feds werent blindly bailing out every stupid criminal executive decision from now on.

[DKW 86 7,419]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

I'm not dreaming at all. I am using the estimates developed by the well-respected Center for Automotive Research. And did you take into account the suppliers that supply the suppliers? This wouldn't have stopped at the first line suppliers you know.

And it's not TARP that has institutionalized anything. It's the lack of follow-up regulations that has made this likely to occur again.

TARP was necessary for the emergency at hand, nothing more.

TARP was a one time deal? You cannot believe that for one second. It is now Fed Policy from now on. Every stoopid manager in America is now covered for every stoopid decision he will ever make. No matter how ludicrous or criminal it will be covered.

[Auburn85 432]

https://www.youtube....h?v=GwM1YqE5crw

The bondholders got shafted in the bailout. Then, in 2012, they were swept under the rug by this ad.

Yet, they were used as collateral in their own screwing.

But it made for an uber awesome campaign slogan.

https://www.youtube....h?v=bKCwQnIygcw

[TexasTiger 12,828]

https://www.youtube....h?v=GwM1YqE5crw

The bondholders got shafted in the bailout. Then, in 2012, they were swept under the rug by this ad.

Yet, they were used as collateral in their own screwing.

But it made for an uber awesome campaign slogan.

https://www.youtube....h?v=bKCwQnIygcw

All bankruptcies have losers. What would you have done?

[Auburn85 432]

I'll make two statements:

If they (government using bondholders as collateral) could bailout the banks and the auto industry, they had enough money to bailout the bondholders too. Yet, they chose not to. Guess we will never know why they literally shafted the bondholders the way they did.

We've had this conversation on this subject a couple years ago, so this will be my last reply to you. I learned this line from the best.

"Like I've said, I have no interest in investing any time trying to convince anyone here of anything. I won't change your minds and wouldn't really care if I could. "

[TexasTiger 12,828]

I'll make two statements:

If they (government using bondholders as collateral) could bailout the banks and the auto industry, they had enough money to bailout the bondholders too. Yet, they chose not to. Guess we will never know why they literally shafted the bondholders the way they did.

We've had this conversation on this subject a couple years ago, so this will be my last reply to you. I learned this line from the best.

"Like I've said, I have no interest in investing any time trying to convince anyone here of anything. I won't change your minds and wouldn't really care if I could. "

Well, you answered my question, so thanks.

[homersapien 11,357]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

I'm not dreaming at all. I am using the estimates developed by the well-respected Center for Automotive Research. And did you take into account the suppliers that supply the suppliers? This wouldn't have stopped at the first line suppliers you know.

And it's not TARP that has institutionalized anything. It's the lack of follow-up regulations that has made this likely to occur again.

TARP was necessary for the emergency at hand, nothing more.

TARP was a one time deal? You cannot believe that for one second. It is now Fed Policy from now on. Every stoopid manager in America is now covered for every stoopid decision he will ever make. No matter how ludicrous or criminal it will be covered.

That doesn't prove it was the wrong policy at that time.

And it's not every stupid manager in America, its the few stupid executives who run enterprises that are so large their failure could pull the rest of the economy down with them.

We are discussing two different things. 1) Was TARP necessary at the time? and 2) Do we want to accept the same policies that might make it necessary in the future.

The answer to 1 is yes. The answer to 2 is absolutely not. It's a terrible thing for our government to intervene in bailouts in order to preserve the greater economy. But it's still better than letting the economy collapse. If it's necessary, it needs to be done. As it turned out, it was far far cheaper than simply letting the financial cards collapse.

The point now is to learn from it and not allow for the same conditions to recur.

There is absolutely no reason for not reinstituting the measures (regulations) that prevented the need for this in the past.

[DKW 86 7,419]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

I'm not dreaming at all. I am using the estimates developed by the well-respected Center for Automotive Research. And did you take into account the suppliers that supply the suppliers? This wouldn't have stopped at the first line suppliers you know.

And it's not TARP that has institutionalized anything. It's the lack of follow-up regulations that has made this likely to occur again.

TARP was necessary for the emergency at hand, nothing more.

TARP was a one time deal? You cannot believe that for one second. It is now Fed Policy from now on. Every stoopid manager in America is now covered for every stoopid decision he will ever make. No matter how ludicrous or criminal it will be covered.

That doesn't prove it was the wrong policy at that time.

And it's not every stupid manager in America, its the few stupid executives who run enterprises that are so large their failure could pull the rest of the economy down with them.

We are discussing two different things. 1) Was TARP necessary at the time? and 2) Do we want to accept the same policies that might make it necessary in the future.

The answer to 1 is yes. The answer to 2 is absolutely not. It's a terrible thing for our government to intervene in bailouts in order to preserve the greater economy. But it's still better than letting the economy collapse. If it's necessary, it needs to be done. As it turned out, it was far far cheaper than simply letting the financial cards collapse.

The point now is to learn from it and not allow for the same conditions to recur.

There is absolutely no reason for not reinstituting the measures (regulations) that prevented the need for this in the past.

homer, you are just lost. It is now policy, why change a thing? We are gonna bailout everything and everybody from now on. The executives will write a few checks and it will all be done once again. I would love to see Glass-Stegall put back in place. I would love to see real reform. it is not gonna happen though. The Dems and the Reps were too busy cashing checks to care.

BTW, want to know how i am so cocksure? Simple: GM COULD REPAY THE LOSS IF THEY WANTED TO DO SO. IT WAS SIMPLY GM WELFARE.

http://archive.freep...-profit-sharing

The good news: A $7.5-billion operating profit in North America (in 2013) will translate to profit-sharing checks of up to $7,500 for GM’s 48,500 UAW employees, an increase from $6,750 last year. GM shares, after sliding more than 3% in pre-market trading, recovered to close at $35.23, down a penny from Wednesday.

http://www.nytimes.c...pectations.html

In North America, the company said it had pretax profit of $2.45 billion, compared with $2.19 billion in the third quarter of 2013.

[homersapien 11,357]

The ENTIRE AUTO INDUSTRY, you know Ford, Chrysler, GM, Nissan, Toyota, Honda, and parts suppliers only comes in at 717,000.

So just keep dreaming about the 1.2 bajillion jobs that or whatever it supposedly saved. TARP has now institutionalized American Business doing as stoopidly as they can and they know that the American taxpayer will always bail them out, shaft the poor old people depending on their investments to survive, and provide the executives with Golden Parachutes and absolutely protected status in any criminal investigations later on.

Wall Street and Detroit owe stupid people like you lemmings ssooo freakin much...

I'm not dreaming at all. I am using the estimates developed by the well-respected Center for Automotive Research. And did you take into account the suppliers that supply the suppliers? This wouldn't have stopped at the first line suppliers you know.

And it's not TARP that has institutionalized anything. It's the lack of follow-up regulations that has made this likely to occur again.

TARP was necessary for the emergency at hand, nothing more.

TARP was a one time deal? You cannot believe that for one second. It is now Fed Policy from now on. Every stoopid manager in America is now covered for every stoopid decision he will ever make. No matter how ludicrous or criminal it will be covered.

That doesn't prove it was the wrong policy at that time.

And it's not every stupid manager in America, its the few stupid executives who run enterprises that are so large their failure could pull the rest of the economy down with them.

We are discussing two different things. 1) Was TARP necessary at the time? and 2) Do we want to accept the same policies that might make it necessary in the future.

The answer to 1 is yes. The answer to 2 is absolutely not. It's a terrible thing for our government to intervene in bailouts in order to preserve the greater economy. But it's still better than letting the economy collapse. If it's necessary, it needs to be done. As it turned out, it was far far cheaper than simply letting the financial cards collapse.

The point now is to learn from it and not allow for the same conditions to recur.

There is absolutely no reason for not reinstituting the measures (regulations) that prevented the need for this in the past.

homer, you are just lost. It is now policy, why change a thing? We are gonna bailout everything and everybody from now on. The executives will write a few checks and it will all be done once again. I would love to see Glass-Stegall put back in place. I would love to see real reform. it is not gonna happen though. The Dems and the Reps were too busy cashing checks to care.

BTW, want to know how i am so cocksure? Simple: GM COULD REPAY THE LOSS IF THEY WANTED TO DO SO. IT WAS SIMPLY GM WELFARE.

http://archive.freep...-profit-sharing

The good news: A $7.5-billion operating profit in North America (in 2013) will translate to profit-sharing checks of up to $7,500 for GM’s 48,500 UAW employees, an increase from $6,750 last year. GM shares, after sliding more than 3% in pre-market trading, recovered to close at $35.23, down a penny from Wednesday.

http://www.nytimes.c...pectations.html

In North America, the company said it had pretax profit of $2.45 billion, compared with $2.19 billion in the third quarter of 2013.

First, you say I am "lost", yet it's you who is resigned to the inevitability that it's part of our future. To assume that level of cynicism - along with the apathy that goes with it - is more characteristic of being "lost".

All of the other stuff constitutes the "how" of how the bailout was done. A lot of people think it was structured to favor the unions more than the bond holders, and they are probably right. But like I said, that has nothing to do with the need for the bailout as the foundational assumption.

Now you can disagree with that and present an economic case for it, but in my opinion, at the time, it was the right thing to do. (Good for you George W.) And there are plenty of economic analysis' that support that case by very respected sources.

Bottom line, I have no quarrel with deficiencies in how it was structured, my sole point it was a necessary action at the time.

Nor am I advocating we continue to depend on such actions. Just the opposite.

[TheBlueVue 177]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

[TexasTiger 12,828]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

[Proud Tiger 4,261]

Proof that would have been the case?

[TheBlueVue 177]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

How do you know what it averted? I am not for nationalizing the auto makers at any cost. They could have done what is available to them by law by pursuing protection in bankruptcy court.

[autigeremt 6,589]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

Can you prove this? I've seen this argument from both sides about various topics but on one really knows.

[TexasTiger 12,828]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

Can you prove this? I've seen this argument from both sides about various topics but on one really knows.

Here's some info:

http://www.wsj.com/articles/BL-234B-3161

http://www.thestreet.mobi/story/12147880/1/saving-gm-was-it-worth-11-billion-you-bet-it-was.html

[icanthearyou 4,462]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

Can you prove this? I've seen this argument from both sides about various topics but on one really knows.

"The bailouts had other impacts besides bringing returns to government coffers. While the auto bailout may not have brought in a profit, a report from the end of last year found that it saved about 2.6 million jobs in 2009 and 1.5 million jobs in 2010. By doing so, it also boosted personal income by more than $284 billion in those years."

[homersapien 11,357]

The auto bailouts were not profitable in fact they lost right at $10 billion dollars. When losing $10 billion becomes profitable, Tex, let me know. The bank bailouts made money but, like I said, the auto stock purchases lost a LOT of tax payer money

When it averts a more costly collapse.

Can you prove this? I've seen this argument from both sides about various topics but on one really knows.

Of course no one really "knows" what would have happened. But based on history, the actual mathematics (interdependence of our economic system) and how all that fits with accepted and proven economic models, a reasonable prediction of risk can be generated by the economists who are in a position to know what's happening.

I know you would like to think otherwise, but neither Bush or Obama simply decided it would be a good thing to do. Believe me, they were both being presented with the probability of various scenarios by the best economists in the field.

Now that's a kind of long rambling response, but it represents more or less why the bailouts were done. And again, as someone who was watching large chunks of their personal wealth disappear day after day, it was not difficult to convince me.

Now do I think that's the way it should have worked or should work in the future? Hell no. But we can prevent it as long as we stop believing the myth from Wall Street that being "too big to fail" is a necessary requisite for competing in the global market. You can damn well believe they want the federal government to back them up. They have proven already they are willing to gamble with private money. What makes anyone think they care about gambling with our money using the governments as an instrument to get it?