The Auto Bailout

H

Howey

Banned
The effects on our economy if GM/Chrysler hadn't been saved would have literally destroyed our country and sunk us into a depression far worse than the Great Depression.

The Center for Automotive Research (CAR) has been studying the effects of the General Motors and Chrysler bailouts in 2009. Now that the US Treasury has officially sold off the rest of its stake in GM (and Chrysler has already paid back its loan), CAR has released its study on the effects of the bailout with this concluding note: "CAR is confident that in the years ahead, this peacetime intervention in the private sector by the US government will be seen as one of the most successful in US economic history."

Big words, for sure, but there's plenty of evidence to back up the claim. Bailing out GM alone saved 1.2-million jobs. If both GM and Chrysler hadn't been bailed out, US employment would have been reduced by 2.631-million jobs in 2009 and another 1.519-million jobs in 2010, according to the study. If both automakers were allowed to fail, personal income in the US would have decreased by $173.5 billion in 2009 and $110.9 billion in 2010. Instead, the study found that $284.4 billion of personal income was saved by the bailouts.

The Federal government's budget would have been affected due to higher transfer payments, lower social security receipts and lower personal income taxes paid, according to the study, which would have cost the Fed $64.7 billion in 2009 and $40.6 billion in 2010. That's much more money than what the government spent on GM's bailout ($49.5 billion) and Chrysler's bailout ($12.5 billion). It's also much less than the the US Treasury's loss of about $10 billion on GM's bailout. The US Treasury lost $1.9 billion on Chrysler's bailout.

If the numbers seem high, it's because the auto industry is linked at many levels, and the survival of parts suppliers (and their employees' jobs) largely is dependent on the survival of US automakers. For example, the study found that 51 percent of GM's parts suppliers also sell parts to Ford, 56 percent to Chrysler, 58 percent to Asian automakers and 37 percent to European automakers. A failure of virtually any major US automaker would have severe consequences in the global automotive industry.
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The automakers were not going anywhere. The would have applied for bankruptcy protection while reorganizing their debts. Companies do this all the time.

By sticking his nose into this process, Obama turned the investment world upside down.

Corporate bondholders are the investors taken care of first during insolvency. They signed on for the lowest risk and the lowest returns. Common shareholders usually lose everything, entering the arrangement knowing there will be either high gains or high losses.

Obama told the bondholders to take a hike while he gave priority to the common shareholders (his UAW crony capitalist buddies). This put a chill on the investment market, which exists until today. Investors hate uncertainty, especially in the bond market, where people accept low returns on investment in exchange for that certainty.

I'm not surprised to see liberals still crowing about their president unilaterally rewriting bankruptcy law without any authority to do so. I'm not surprised to see they're too ignorant to recognize the damage by Oboober during this process. After all, if the HuffPo or MSNBC don't mention it, how important can it be?
 
at some point you idiots are going to have to realize that government can only fuck shit up worse, not make it better. this little fluff piece is nothing more than statist trash by the evil corporations you say deserve to be shredded.
 
your right wing crap made this mess.

you like a fucking idiot just keep marching to the tune the wealthy play for you to dance for them.


Your not going to convince enough Americans your bullshit is anything but bullshit.

give it up and peddle your horseshit in some other country.
 
Taft2016 said:
The automakers were not going anywhere. The would have applied for bankruptcy protection while reorganizing their debts. Companies do this all the time.

By sticking his nose into this process, Obama turned the investment world upside down.
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Name one investment firm at that period of time during the financial crisis willing and/or able to front the money to GM in the amounts the federal government was able to.

Yeah, NONE. The investment world was already turned upside down and Obama had nothing to do with it. Greed did.

Without private investment in GM and to a lesser extent Chrysler, we would have seen liquidation of the companies resulting in the wholesale rape of our economy.

It's sad that you profess to be so intelligent yet fail to grasp such a fundamental business realism.
 
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