ktlight
6th June 2011, 09:35
FYI:
It's a sign of grim times indeed when the Obama administra tion is touting a potential $14 billion loss to the taxpayers as a great economic success.
The White House is running on its auto bailouts as courageous acts that saved the industrial Midwest. It's a telling point of pride. In bragging about the bailouts of GM and Chrysler, the administration is boasting of a process shot through with lawlessness and political favoritism -- not to mention reckless disregard for taxpayer dollars.
The administration believes it trumps all criticism with one data point: GM and Chrysler are still with us. GM has even been making money, and had the biggest IPO in American history last November.
Yet, as The Atlantic's Megan McArdle tartly observes, it shouldn't have been in doubt that if government threw $80 billion at two companies, not expecting to get all of it back, it could save them. She points out that the loss from the bailouts (the administration's estimate is $14 billion) will be close to the entire market capitalization of GM in 2007. It will be several times as big as the company's 2008 market capitalization.
McArdle figures that, at a cost of roughly $10 billion to $20 billion, we might as well have given GM's pre-bankruptcy workforce of 75,000 hourly workers $250,000 each and called it a day.
The government has also given GM a special tax break that will save it $14 billion on its US tax bill, and is trying to induce consumers to buy GM's signature new product, the absurdly expensive electric Chevy Volt, by giving them a $7,500 tax credit on its $41,000 sticker price.
With all this support, GM should be the world's greatest industrial concern. It's hardly that, although it's much improved. We can thank Chapter 11, the tried-and-true method for turning around bankrupt companies that still have value.
source to read more
http://www.nypost.com/p/news/opinion/opedcolumnists/proud_of_losing_gjlXXcZ66ZrHTZ4fHvZgLK
It's a sign of grim times indeed when the Obama administra tion is touting a potential $14 billion loss to the taxpayers as a great economic success.
The White House is running on its auto bailouts as courageous acts that saved the industrial Midwest. It's a telling point of pride. In bragging about the bailouts of GM and Chrysler, the administration is boasting of a process shot through with lawlessness and political favoritism -- not to mention reckless disregard for taxpayer dollars.
The administration believes it trumps all criticism with one data point: GM and Chrysler are still with us. GM has even been making money, and had the biggest IPO in American history last November.
Yet, as The Atlantic's Megan McArdle tartly observes, it shouldn't have been in doubt that if government threw $80 billion at two companies, not expecting to get all of it back, it could save them. She points out that the loss from the bailouts (the administration's estimate is $14 billion) will be close to the entire market capitalization of GM in 2007. It will be several times as big as the company's 2008 market capitalization.
McArdle figures that, at a cost of roughly $10 billion to $20 billion, we might as well have given GM's pre-bankruptcy workforce of 75,000 hourly workers $250,000 each and called it a day.
The government has also given GM a special tax break that will save it $14 billion on its US tax bill, and is trying to induce consumers to buy GM's signature new product, the absurdly expensive electric Chevy Volt, by giving them a $7,500 tax credit on its $41,000 sticker price.
With all this support, GM should be the world's greatest industrial concern. It's hardly that, although it's much improved. We can thank Chapter 11, the tried-and-true method for turning around bankrupt companies that still have value.
source to read more
http://www.nypost.com/p/news/opinion/opedcolumnists/proud_of_losing_gjlXXcZ66ZrHTZ4fHvZgLK