I guess two face Mitt was wrong on this one too! LOL
-- Modified on 1/5/2015 10:32:37 AM
Had we followed Romney's plan, we wouldn't have lost anything.
Why do you think GM was entitled to not paying back ALL the money they received from U.S. tax payers???
“Why do you think GM was entitled to not paying back ALL the money they received from U.S. tax payers????”
Really, Jack, I understand the stock market is not your thing but surely you must understand the basic distinction between a loan and a stock purchase.
The ten billion loss resulted from the government’s decision to sell its GM equity stake before it recovered its losses, probably on St. Croix’s advice. If the gov had used my “buy and hold” approach and held the stock till it reached it $52 or so, it would have broken even.
The gov, of course, acquired the equity stake in GM’s bankruptcy when it injected some 31 billion in GM in return for a stake in the company when it emerged post bankruptcy. But of course GM is not required to repay the government bc the stock never reached the break even point when the gov decided to sell. The gov chose to take the risk in large part bc they saved millions of jobs.
The real bailout was - gasp - to the middle class workers of Detroit whom you so regularly lament. If you think Detroit and the middle class are struggling now, can you imagine their plight if there were millions more unemployed up there?
The government did make some loans to GM but GM paid back the loans with interest, and five years early I might add.
“Had we followed Romney's plan, we wouldn't have lost anything.”
That is pure speculation. Romney wanted the government to guaranty bank loans to GM. Of course this was a dumb idea bc there were no banks at the time willing to make loans to GM. But if the loans had been made and GM had defaulted on them, the taxpayer would have been on the hook for the loans
That's the very definition of "Crony Capitalism."
And a big reason the stock DIDNT go up as much as hoped was exactly because any smart investor knew the govt was going to liquidate its shares at some point. Kind of a disincentive to buy the stock, don't ya think Mari?
Why would you think millions of auto workers would lose their job just because all the money should have been marked as a loan and not a grant form the gitgo? Not following that logic.
The govt should have, at minimum, broken even by requiring ALL the money be paid back. And with everyone crowing how great the automakers are doing these days, it should have been a piece of cake for them to repay it.
While you are at it, why don't you tell us what businesses/industries should and should not get govt bailout protection. Is the auto industry so special because it is loaded with union workers?
What makes auto workers so special and places them on a loftier plateau over all other workers? Many companies went bankrupt and forced to go out of biz during the last 6 years. Should we have bailed all of them out too???
Where was the U.A.W.'s give backs? No cut in pay, HC or pensions. Swell...
Shouldn't they have had to sacrifice SOMETHING to save their own job? Should they have had some skin in the game rather than have John Q. Public take it up the pooper?
When people bitch about crony capitalism, the auto bail out is the very face of that discontent.
-- Modified on 1/5/2015 5:25:01 PM
And you would have “required them to pay it all back?”
LOL- How does that work? All loans are required to be paid back. Suppose they had gone bankrupt anyway? Guess who is ahead of the US government in the payout line? All secured creditors, pension obligations, and prior unsecured creditors – the US would have ended up getting nothing.
Plus, if you know how to read a balance sheet, you would understand that there are many advantages to a capital injection rather than a loan. Sec Paulson determined there was more bang for the buck by making direct equity injections. If you are really interestd in this topic I recommend Too Big to Fail where there is a detailed discussion of why they went the capital injection instead of the loan route.
If the gov had simply let GM go bankrupt, a million plus jobs would have been lost plus the pension obligations would have been dumped on the Pension Benefit Guaranty Corporation. That is why I say the workers were the ones who really got bailed out. And the UAW DID take a significant haircut - they agreed to to take 30% less than what GM was obligated to pay in legacy payments in return for stock
What they should have done was force the UAW to accept pay cuts, contribute more towards HC and see a temporary reduction in pension contributions AND coupled that with a fully repayable LOAN. NO FREE LUNCH.That way the risk would have been spread around between the govt and the union.
When and if the car companies turned a profit, as they are doing now and have been for awhile, pay and benefits would have been restored to pre-bailout.
Obama's car czar, Steve Rattner, said the govt didn't get nearly enough give backs from the union. In fact it was such a joke the union crowed that current membership didnt have to give up one dime!
And what about Ford? They handle there business well, watch costs, put out a product people want and what does the govt do? REWARDS ITS COMPETITION for mismanagement! Yeah, that's a great business lesson. Lol
I am not in favor of a bailout but the above would have been much more preferable than having a country swimming in red ink lose another 10 billion, especially when there were better methods to handle it and be more confident tax payers didn't get hosed.
But politics reared its ugly head and Obama needed union votes in Michigan but more importantly in Ohio. Let's be honest about that Mari.
-- Modified on 1/6/2015 1:17:58 AM
I knew I wasn’t smart enough to pick winners in the fracking boom so I decided to invest in Hi Crush, a company that sells sand to the frackers. But, bc the price of oil has dropped so low, those mother frackers have stopped buying sand from Hi Crush and the stock price has sunk about as fast as your post. What am I suppose to do with a hundred thousand tons of sand?
You see, Jack, I am only happy or sad when an issue personally affects me. Whether the UAW should have gotten a bigger haircut does not affect me – I am simply correcting your erroneous belief that they made no concessions.
Hey Jack – would you like to buy some sand? I can have a couple of car loads sent over to your home tomorrow? Just dump it on your lawn – you will never have to mow again
This was their exact quote from 2009:
"For our active members these tentative changes mean no loss in your base hourly pay, no reduction in your healthcare, and no reduction in pensions."
Are you saying the union was lying?
They didn’t say “all UAW members,” did they? They said “active members.”
Did you know that, at least prior to 2009, UAW members could retire in their 50s? And that GM had promised to pay for their healthcare until they reached Medicare and then to pay for out of pocket costs Medicare did not cover?
The Big Three formed a trust to do this. GM owed some 20 billion to the trust when it went into bankruptcy. At the risk of oversimplifying, the UAW agreed to accept stock in the new GM in lieu of the 20 billion GM owed the trust for retirees. The stock was worth maybe 3 dollars a share after the US equity injection but far less than 20 billion. That is the haircut UAW took in the restructuring. Not for active members Jack – but for retirees.
Now remember my point about the balance sheet? Think of what would have happened if the government had taken your advice and made a loan to GM. The stock would have been worth zilch and UAW and the other creditors would never have agreed to the restructuring.
Your sand should arrive tomorrow but put it on your lawn, not in your eyes. LO
When you mentioned the "millions of workers who would have lost their jobs" YOU weren't talking about retirees. You were talking about ACTIVE members.
When the govt stepped in to bail out the car companies, it was to save the jobs of the ACTIVE workers.
And my point all along is that the taxpayers got unnecessarily stuck with a $10b tab to ensure the ACTIVE UAW workers didn't have to make any concessions at all and suffer none of the pain the rest of the country had to endure to get through the recession.
-- Modified on 1/6/2015 5:26:51 PM
It would have been quite easy for the US Government to have structured the bailout as debt, or even better as a convertible debenture, which would have given GM the cash infusion it needed, would have secured the debt for the government, and still would have served to prop up both GM's balance sheet and their stock price.
Anyone who claims to be not only an investor in equities AND a lawyer to boot would have to know this. Sometimes I can't decide if Mari is as dumb as some of the positions he has taken, or if he is simply trying to see how dumb an argument he can make here without being called out for it. And then other times, I think FatBoy might actually be onto something when he calls Mari a "fake lawyer" for a lawyer he seems to have no real grasp of how financial instruments work.
Next he is likely to point out how the bondholders at Chrysler got fucked, but before we go down that road, those bondholder got fucked by the government, not Chrysler, and it's rather unlikely that the US Government would rule against their own interests. lol
Mari just can't get his head around the fact that the bailout was a political decision, not a "what's best for the country" approach.
He actually thinks the govt fk up wasn't that they didn't bargain hard enough with the UAW for give backs but that they didn't hold the stock in GM long enough!
I had hopes Mari would have a better 2015 than his disastrous 2014 but he is off to a bad start. Lol
but the more Mari posts, the more I believe our BigBackstabber might just have a point about Mari.
Obama bent over, not backwards, but forward on behalf of the country for the UAW, but they still don't think it was enough. There were a dozen different ways the deal could have been structured to not only save GM, and the million or so jobs at stake, but to make sure the taxpayers didn't get reamed in the process. I bet you even our ninth grade dropout Quad could think of a few different ways to have done it.
They become RETIRED MEMBERS my obtuse friend. Do they get the health care benefits that GM contractually agreed to give them before the bankruptcy? Nope. They get whatever benefits are supplied by the Trust as supplemented by good old – drum roll- Obamacare. The Trust’s ability to pay for benefits is dictated in large part by the value of the stock transferred to the trust in exchange for releasing GM of its contract obligations.
So while the Active Members did not lose health care benefits during their employment years, they did take a haircut once they retired. If your employer goes into bankruptcy and asks you to give up your pension in return for keeping your job, are you really going to tell your friends that you didn’t take a haircut? It is just a matter of when the haircut takes place
If I wasn't cash strapped I'd buy small homes and charge big rent.
When the Government quits propping up Wall Street, I'll take a train car load of your
sand to cover my yard.
I'd find no comfort in growing grass when eating seed would better serve my survival.
With millions and millions of citizens not participating as employees in the country's private work force, yet they are paid to spend dollars, something's eventually going to give.
With interest rates inevitable drastic rise, much lower than today, goes the stock market .
The dollar could be closer to a downward trend than many Gurus believe , with World events not shining bright, accompanied by most of Congress and influence peddlers not concerned with tens of billions here and there, and continual Congressional opposition to balanced books.
http://www.marketwatch.com/story/obamas-speech-on-housing-could-move-shares-of-fannie-freddie-2015-01-05?mod=MW_story_recommended_default
You see, Jack, I am only happy or sad when an issue personally affects me. Whether the UAW should have gotten a bigger haircut does not affect me – I am simply correcting your erroneous belief that they made no concessions.
Hey Jack – would you like to buy some sand? I can have a couple of car loads sent over to your home tomorrow? Just dump it on your lawn – you will never have to mow again.
A weak dollar is a GOOD thing. We've been fighting the Chinese on them dumping their currency for decades, as for Mari's hundred thousand pounds of sand, I would be more than happy to take it off his hands, at a considerable discount of course. lol
I quit school a year before Economics was offered as an elective .
All the knowledge I have in most subjects is due to my ability to take a wild guess,
without any fear of repercussion for my wrong analysis.
Do they accept 9th grade drop outs in Congress or is that club reserved for
educated dummies ?
How hard could a Senator's job be, when it's rare they have to answer a multiple choice question?
but that doesn't mean that either you or Mari have the slightest idea how some things actually work, like you were it comes to the relative positives and negatives of a strong dollar, and what actually creates a strong or weak dollar.
Without trying to sound superior, it's hard to have a real conversation about such matters when it's plain you (and mari most often) don't even understand the basics.
That said, I am sure you are every bit as smart and well qualified as someone like Nancy Pelosi or Harry Reid, and if you were running against either of them, you would almost assuredly get my vote. lol
For once....Mari and I are in complete agreement
Really, Jack, I understand the stock market is not your thing but surely you must understand the basic distinction between a loan and a stock purchase.
The ten billion loss resulted from the government’s decision to sell its GM equity stake before it recovered its losses, probably on St. Croix’s advice. If the gov had used my “buy and hold” approach and held the stock till it reached it $52 or so, it would have broken even.
The gov, of course, acquired the equity stake in GM’s bankruptcy when it injected some 31 billion in GM in return for a stake in the company when it emerged post bankruptcy. But of course GM is not required to repay the government bc the stock never reached the break even point when the gov decided to sell. The gov chose to take the risk in large part bc they saved millions of jobs.
The real bailout was - gasp - to the middle class workers of Detroit whom you so regularly lament. If you think Detroit and the middle class are struggling now, can you imagine their plight if there were millions more unemployed up there?
The government did make some loans to GM but GM paid back the loans with interest, and five years early I might add.
“Had we followed Romney's plan, we wouldn't have lost anything.”
That is pure speculation. Romney wanted the government to guaranty bank loans to GM. Of course this was a dumb idea bc there were no banks at the time willing to make loans to GM. But if the loans had been made and GM had defaulted on them, the taxpayer would have been on the hook for the loans.
Your tax cheat got blown away two years ago! GM bailout saved jobs.