Comments on: Treasury exits GM

By: kavita11

kavita11 — Tue, 14 May 2013 11:55:39 +0000

http://alternativetherapiesarticles.com But there’s a symbolic importance to TARP’s profitability, which is why things like AIG’s favorable tax treatment is never taken into consideration when the numbers are summed. And when the symbols are disappointing, you release the news when it is likely to have zero electoral consequences.

By: KenG_CA

KenG_CA — Fri, 21 Dec 2012 18:03:08 +0000

KevyD, I’m a believer in creative destruction also, but not all destruction is creative. Just as there would have been massive collateral damage if the debt crisis went unaddressed, the destruction of GM would have consequences far beyond those who deserved to pay the price.

New companies utilizing new technology and business practices displacing older companies is creative, but that’s wasn’t necessarily the case with GM. It wasn’t that they weren’t selling cars, and being displaced by competition. They had structural flaws that mandated change, and a company that large and widely held cannot just change on its own.

By: brotherkenny4

brotherkenny4 — Fri, 21 Dec 2012 16:10:00 +0000

GM is conservative and so are their customers and investors and every conservative was attempting to make Obama a one term president. Watch as the Gov gets out of GM how they “rebound”. Looks like a good pick right now. However, you conservatives don’t want to help Obama help the country, so wait until after there is no more federal investment.

By: KevyD

KevyD — Fri, 21 Dec 2012 15:39:08 +0000

KenG, You are certainly right about the potential impact on economy; lost jobs etc. And knowing how much money the gov’t ended up getting back I do think we got our moneys worth (so it would seem we agree on that point).

I’m just a believer in creative destruction. If the gov’t cares about unemployment then have them directly confront that ala FDR’s New Deal, not in some round about manner that involves picking winners and losers of private companies.

By: KenG_CA

KenG_CA — Fri, 21 Dec 2012 05:36:40 +0000

KevyD, if they let GM die, the impact on the economy would have been huge. Not only would GM workers would have lost their jobs, but so would workers at their suppliers and car dealers, and the micro-economies surrounding those locations. It can’t be dismissed as a statistical blip, it would have had disastrous second order effects that would have put the economy on a totally different course.

The decision to save GM was not about creating jobs, but about preventing damage.While I’m in favor of high speed rail projects and increased funding for schools, neither would have offset the broad and deep destruction a GM bankruptcy would have caused. I was only saying that if the government only recoups all but $5 billion of the GM bailout funds, it will have avoided a much bigger cost.

We expect our government to play a role in the national economy, and unfortunately, that sometimes involves saving private companies.

By: KevyD

KevyD — Thu, 20 Dec 2012 21:14:17 +0000

Not sure I agree KenG, If your going to try to quantify indirect costs/benefits you need to compare them to the opportunity costs. Who’s to say if the government hadn’t taken that 5 billion and spent it on high speed rail/schools/ or any other capital project they wouldn’t have recieved/saved even more than 5 billion. I have no idea myself (although I don’t think saving private companies should be part of a governments mandate)

By: KenG_CA

KenG_CA — Thu, 20 Dec 2012 06:59:07 +0000

If you only look at first order effects and the government can’t get $50 a share for GM, stock, then yeah, maybe they lost money. But we need to look downstream. How much tax revenue was generated by salaries of workers at GM, their suppliers, and dealers? How much would the government had spent on unemployment and other assistance if GM had filed for bankruptcy? What about taxes on capital gains from people who bought GM stock and sold it after it did increase? My guess is it’s more than $5 billion.

By: TFF

TFF — Wed, 19 Dec 2012 21:41:14 +0000

Those shares are an overhang regardless of the timing of the sale. Everybody knows they aren’t in it for the long haul. The announcement is perhaps seen as a vote of confidence, akin to a share split?

By: fourcentson1

fourcentson1 — Wed, 19 Dec 2012 21:19:25 +0000

Felix and others should start paying attention to the Fannie and Freddie stress test results (projections of the GSEs financial performance dated October 2012) that show that Freddie can pay back taxpayers in four years and that Fannie can do so in about five years. And there are plenty of possibilities (even probabilities) that suggest that this could happen much sooner if AIG-style financial restructuring was accomplished. And, it can happen without getting Congress involved (gridlock is good).

The already emerging housing recovery and taxpayers getting repaid is going to give a huge boost to Obama’s chances at going down in history as protecting and saving the American economy after the tumult of 2008. The stress test results are available on the FHFA website under the public info/agency reports tab.