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Old 12-09-2013, 05:03 PM  
ChiefsandO'sfan ChiefsandO'sfan is offline
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U.S government lost us 10 billion in the GM Deal

General Motors is free from the stigma of public ownership almost five years to the day after Congress voted to give emergency funding to GM and Chrysler, but the debate will drag on through history over the cost and benefits.

The government recouped about $10 billion less than the $49.5 billion in aid it provided GM. But a study released Monday estimated that the U.S. would have lost 2.6 million more jobs in 2009 and 1.5 million more jobs in 2010 had the two automakers failed.

U.S. Treasury Secretary Jack Lew confirmed late Monday that the government no longer owns any GM stock. The exit comes nearly four months sooner than the Treasury Department estimated this year.

As expected, President Barack Obama defended the historic intervention, which began under his predecessor, President George W. Bush.

“When I took office, the American auto industry was on the verge of collapse,” the president said. “GM and Chrysler were on the brink of failure, threatening to take suppliers, distributors and entire communities down with them. In the midst of what was already the worst recession since the Great Depression, another one million Americans were in danger of losing their jobs.

“As president, I refused to walk away from American workers and an iconic American industry. But in exchange for rescuing and retooling GM and Chrysler with taxpayer dollars, we demanded responsibility and results.”

“The U.S. Treasury's ownership exit closes just one chapter in GM's ongoing turnaround story,” GM CEO Dan Akerson said in a statement. “We will always be grateful for the second chance extended to us, and we are doing our best to make the most of it.”

Was it worth it?
The study, was compiled by the Center for Automotive Research in Ann Arbor, also estimated that by rescuing GM and Chrysler, the government “saved or avoided the loss of” $105 billion in lost taxes and social services such as unemployment insurance and food stamps.

Neither company contributed to the study.

GM North America President Mark Reuss said the rescue was necessary.

“If you look at … what this did and what it prevented, those are the facts,” Reuss told reporters Monday. “I feel good about that. There’s been tens of thousands of people who can now put food on the table.”

Reuss said the government’s exit from GM stock is a boost to the “pride and morale” of the company’s employees.

“I think that’s a big deal,” he said. “I’m not talking about markets or stock price or anything else. I’m talking about internally. This has been a long, hard road with no repeat customers and the label of ‘Government Motors.’ ”

The government’s exit also removes restrictions on how much GM could pay its top 25 executives, limits that Akerson and Reuss said hurt the automaker’s ability to retain talented leaders and attract new ones from the outside.

But Michael LaFaive, director of fiscal policy for the conservative Mackinac Center for Public Policy, said the free market might have absorbed the impact of GM and Chrysler collapsing.

“Even under a Chapter 7 liquidation, the economy doesn’t necessarily lose in the long run,” LaFaive said. “Other companies, be they Ford or Honda, swoop in and pick up assets at a discount, which they re-employ elsewhere — and taxpayers aren’t on the hook, and cars get made more efficiently and inexpensively.”

The $10-billion loss should not be dismissed, LaFaive argued.

“Those people who are getting bailed out are not getting bailed out by Monopoly money,” he said. “It’s you and I.”

Recovery would have been faster down South
Sean McAlinden, CAR senior economist and co-author of the study, said that manufacturing jobs eventually would have returned, but they would have shifted to the South, while R&D jobs migrated overseas.

“Once again, the results for upper Midwest states such as Michigan, Ohio and Indiana of this relocation would have been severe in the long term,” the study concluded. “Double-digit unemployment rates would still exist in these states today.”

McAlinden said the failures of GM and Chrysler would have triggered a massive crisis in the automotive industry supply chain that, in turn, would have caused widespread layoffs at automakers that didn’t seek government aid.

In addition to GM and Chrysler jobs, the report estimates that 90% of U.S. employees at Ford, Toyota, Honda, Nissan, Mercedes and BMW would been laid off for at least a year.

“When people are not working, not only does the government not collect money, it must spend money,” McAlinden said, pointing to unemployment insurance and food stamps as examples. “Short-run losses are real losses. They don’t go away in the long term. Even if the industry does come back.”

The U.S. recovered about $39 billion on the GM bailout, Treasury officials said. That included cash from GM’s November 2010 IPO, a stock buyback and gradual share sales on the open market.

The $81 billion in aid to GM, Chrysler and their lending arms was dwarfed by a total of $421.8 billion disbursed to the automakers, banks and the insurance giant AIG under the Troubled Asset Relief Program (TARP). Treasury said in a statement that it has recovered $432.7 billion of that TARP outlay so far.

The Treasury Department has been selling GM stock throughout the year, reducing its stake gradually to avoid disrupting the market. After the government announced last month that it expected to completely exit GM stock by the end of the year, investors have been driving the share price up to an all-time high since the IPO.

GM stock rose 1.8% to close at $40.90 Monday, after reaching $41.17, its highest post-IPO price, earlier in the day.

http://www.freep.com/article/2013120...otive-Research
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Old 12-09-2013, 05:08 PM   #2
mlyonsd mlyonsd is offline
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I have to admit we got more back than I would have guessed.
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Old 12-09-2013, 05:35 PM   #3
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Am I reading this right: The $81 billion in aid to GM, Chrysler and their lending arms was dwarfed by a total of $421.8 billion disbursed to the automakers, banks and the insurance giant AIG under the Troubled Asset Relief Program (TARP). Treasury said in a statement that it has recovered $432.7 billion of that TARP outlay so far.

Doesn't that mean we made 11 billion on TARP?
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Old 12-09-2013, 05:41 PM   #4
cosmo20002 cosmo20002 is offline
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Originally Posted by ChiefsandO'sfan View Post
U.S. Treasury Secretary Jack Lew confirmed late Monday that the government no longer owns any GM stock. The exit comes nearly four months sooner than the Treasury Department estimated this year.
These socialists don't seem to know how this is supposed to work.
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As long as Jesus Christ was the president of the US and approved of it Yes.
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Old 12-09-2013, 05:43 PM   #5
J Diddy J Diddy is offline
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These socialists don't seem to know how this is supposed to work.
****ing Obummer.
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Old 12-09-2013, 05:54 PM   #6
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Originally Posted by J Diddy View Post
Am I reading this right: The $81 billion in aid to GM, Chrysler and their lending arms was dwarfed by a total of $421.8 billion disbursed to the automakers, banks and the insurance giant AIG under the Troubled Asset Relief Program (TARP). Treasury said in a statement that it has recovered $432.7 billion of that TARP outlay so far.

Doesn't that mean we made 11 billion on TARP?
No, TARP was 475 billion plus another 187 Billion for Fannie and Freddie.

Link: http://projects.propublica.org/bailout/
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Old 12-09-2013, 06:00 PM   #7
J Diddy J Diddy is offline
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No, TARP was 475 billion plus another 187 Billion for Fannie and Freddie.

Link: http://projects.propublica.org/bailout/
According to that site the difference between breaking even and the current shortfall being exclusively in Fannie and Freddie (stated 30.3 billion outstanding, shortfall is 31 to Fannie and Freddie) and that ultimately it is expected that they make a profit.
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Old 12-09-2013, 06:09 PM   #8
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According to that site the difference between breaking even and the current shortfall being exclusively in Fannie and Freddie (stated 30.3 billion outstanding, shortfall is 31 to Fannie and Freddie) and that ultimately it is expected that they make a profit.
The problem is that the government does not have wealth of its own. It take s its money from the citizens in the form of taxes, debt, and inflation. So, no matter if the government makes a profit or not the damage is that 608 billion was taken from citizens to prop up businesses that failed or businesses that didn't want or need the money. 608 billion in the private sector causes a lot more growth then in the governments hands.
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Old 12-09-2013, 06:25 PM   #9
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Whether they make a profit or not, I don't like being forced to invest without any choice.

This deal was nothing but classic cronyism, corporatism, neo-mercantilism. Iacocca should have never been bailed out, particularly since his firm even had a buyer.
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Old 12-09-2013, 06:29 PM   #10
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Originally Posted by GloucesterChief View Post
The problem is that the government does not have wealth of its own. It take s its money from the citizens in the form of taxes, debt, and inflation. So, no matter if the government makes a profit or not the damage is that 608 billion was taken from citizens to prop up businesses that failed or businesses that didn't want or need the money. 608 billion in the private sector causes a lot more growth then in the governments hands.
Didn't they put that wealth in the hands of the private sector?
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Old 12-09-2013, 06:32 PM   #11
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Hell, it's a better investment than most of what the Fed does with our tax dollars. At least they got some of it back.
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Old 12-09-2013, 06:32 PM   #12
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detroit has been a ghost town more than ten years and flint 15 years before that.
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Old 12-09-2013, 06:34 PM   #13
BucEyedPea BucEyedPea is offline
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detroit has been a ghost town more than ten years.
Now that the govt is underfunded and less operational, I hear there's spots in there that are coming back. Go limited govt!
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Old 12-09-2013, 06:37 PM   #14
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Now that the govt is underfunded and less operational, I hear there's spots in there that are coming back. Go limited govt!
perhaps, but it isn't mfr related. in fact, I'd bet it is more subsidized business. a token.
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Old 12-09-2013, 06:40 PM   #15
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perhaps, but it isn't mfr related. in fact, I'd bet it is more subsidized business. a token.
No it's not. It's entrepreneurial related and unsubsidized. Karen de Coster writes about it. She's from there. Even whites are returning.
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