If you needed further proof that the whole GM bailout thing was anything but political, you can check out the most recent news from Washington:
The U.S. government plans to sell a significant share of its remaining stake in General Motors Co. this summer…
On one hand, that’s great news. The less productive assets we have in the hands of the government, the better off those productive assets are.
On the other hand, it’s kind’of a bummer.
See, the deal was that we were all gonna make money of this turkey. The idea that the government would bailout and then take an ownership take in the company was sold to us on the idea that we would then sell back that share for a nice hefty profit.
How’s it gonna work out?
A sale within the next several months would almost certainly mean U.S. taxpayers will take a loss on their $50 billion rescue of the Detroit auto maker in 2009.
To break even, the U.S. Treasury would need to sell its remaining stake—about 500 million shares—at $53 apiece. GM closed off 27 cents a share at $29.97 in 4 p.m. trading Monday on the New York Stock Exchange, hitting a new low since its $33-a-share November initial public offering.
Not so well. Looks like a 46% loss to me.
But at least this works for Obama:
Government officials are willing to take the loss because the Obama administration would like to sever its last ties to the auto maker, the people familiar with the matter said. A summer sale makes it more likely Treasury could sell all of its stake in GM by year’s end, avoiding a potentially controversial sale in the 2012 presidential election year.
This is the danger afforded each of us when the government gets involved. It’s not because people in government are mean ugly people who are actively looking to harm the American people. Not at all. Most are good-natured folk truly looking out for our best interests.
No. The danger lies in the fact that the incentives of elected officials are not the same incentives as us the taxpayer. Obama wants to get elected. We wanna make money. And when those two things are in conflict, the wrong decision is made.
Every time.
This is why government fails.
When was the deal that we were all going to make money on this? I don’t remember that. We were told there was a chance we might get the money back. We can certainly debate the merits of the decision to bail GM out. The facts appear to be that GM was bailed out, has experienced a decent recovery and the Govt will get about half the money it invested back (if the sale in fact happens now).
When was the deal that we were all going to make money on this?
http://www.dailyfinance.com/2010/11/18/obama-praises-gm-bailout-as-shares-gain-4-in-ipo/
The facts appear to be that GM was bailed out, has experienced a decent recovery and the Govt will get about half the money it invested back (if the sale in fact happens now).
I agree on all of those points. However, we were sold that this wasn’t going to cost us. Further, the method of the deal was ugly and politically and financially benefited Obama’s supporters. Last, I don’t think that the government ought play a role in that kind of action.
Thanks for stoppin’ by.
The quote you linked to came almost a full year after the bailout of GM. I thought we were talking about how the bailout was justified in the first place? The justification was that it would save the company and american auto industry from collapse. While it’s far too soon to judge whether that’s the case, most of the signs so far have been promising.
I think it’s a bit interesting that the goal posts have shifted since the initial decision was made regarding GM. Now that the company seems to be doing well, we have to also make all our money back. I’m willing to admit that some of this was fostered by statements made by the Administration that we might in fact recoup all the money (we still might, by the way), but I suspect what’s really at play here is that for Obama’s critics, whatever he does is wrong. Running GM was wrong. Now suddenly, giving up running GM until we make all our money back is wrong. Which is it?
I thought we were talking about how the bailout was justified in the first place?
Fair enough. 30 minutes of searching and I can’t find support.
While it’s far too soon to judge whether that’s the case, most of the signs so far have been promising.
I struggle to see that saving GM saved the car industry.
I’m willing to admit that some of this was fostered by statements made by the Administration that we might in fact recoup all the money (we still might, by the way), but I suspect what’s really at play here is that for Obama’s critics, whatever he does is wrong.
That has been part of it. However, I don’t think he went in to save the industry OR to make money–he clearly doesn’t care. He went in to reward the Unions that supported him. Heck, those same unions get to pick a member of the board.
Running GM was wrong. Now suddenly, giving up running GM until we make all our money back is wrong.
Of course it’s always been wrong.
The point of the partisan jabbing is that the administration took a partisan approach as they did this. If it’s fun then, it’s fun now. For example, if we were really just interested in propping up an auto industry, why not just give ’em the money and step back?
When they inserted themselves into the process and later claimed that they “would make money” they set themselves up for this.
Chickens and Roosting come to mind.
I think I prefer to see GM spun off now as opposed to later. The government’s in one less business.
I think I prefer to see GM spun off now as opposed to later. The government’s in one less business.
I agree. I’m happy Obama wants to get out of the car business. I just wish it were for the right reasons.