The federal government sold its remaining shares in General Motors today. The whole affair cost U.S. taxpayers $10,500,000,000. I’m pretty sure we were assured this would be a profitable venture, but hey, who’s counting lies at this point?
The sale is a good thing, of course. In a constitutional republic, the government has no business owning car companies, partially or otherwise.
It also means I can consider GM’s products again. Now I’m not in the market for a car at the moment. The Technical Writing Express only has 72K miles on it. But I play the game all the time because I like cars. If I were shopping right now, I might like to lease a Cadillac ATS. I’d definitely drive one.
Now our esteemed president was fond of saying that Mitt Romney “would have let Detroit go bankrupt.” He left it at that, because that makes it sound like Romney would have let the car companies cease to exist. That is not at all what would have happened. Existing, by-the-book, bankruptcy law would have preserved GM and ultimately left it healthier.
But see, the government “managed” the bankruptcy. (“Managed” is code for “placated the unions in ways they wouldn’t have been otherwise.”) “Managing” the bankruptcy has made it more likely that GM will get in trouble again.
(And, while Chrysler continues to exist, it’s a subsidiary of an Italian company now. Is that what we wanted?)
Welcome back, GM. Wishing you the best and hoping it works out. Be smart.
You might also like:
- Let’s rush to define Paul Ryan
It is a wonderful thing for Barack Obama that Mitt Romney has selected Paul Ryan as his running mate… - America’s warranty!
“But just in case there are still nagging doubts, let me say it as plainly as I can: if you buy a c… - Kudlow nails it on Obamacare
Larry Kudlow had a great post on his blog this morning about Obamacare. After convincingly arguing t… - Happy Holidays from Hillary Clinton
Check out Hillary’s soul-warming holiday message. I’d swear this was a joke, but apparently it’s pre… - Mitt Romney out for ’16; what’s it mean to the “establishment”?
Mitt Romney said on a conference call this morning that he would not run for president next year. Ro…
Your math is way off. You assume that the original pricetag was a complete write-off. It wasn’t. As you later describe – the shares were SOLD. That implies a value in return. So we must take the purchase price MINUS the sale price to get the actual profit/loss. Bear with me here because it’s going to get complicated – The amount the government sold those shares for exceeded (that means more than) the amount of the bailout. This means that there wasn’t real money lost – except as adjusted for inflation and that’s a calculation you are not prepared to attempt as yet. Imagine the fun when we get into opportunity costing, macro-stimulus calculation, and economic valuation. It’s a fun road ahead.
Rick, it’s not “(my) math.” It’s the math.
“The U.S. Treasury confirmed this week that it recovered $39 billion from selling its GM shares and that the government had put $49.5 billion of taxpayer money directly into the bailout.“
https://custom.cvent.com/FC2043E4E1084DD49249D452E4CA74FE/files/6340447b16954722a21798240e57acb3.pdf
Great, but that’s not apples to apples, Rick. Of course it’s trivially easy to make an inductive case for financial benefit from what happened. After all, GM remained open. Duh.
The rest of my post is the germane part. There need not have been any direct use of taxpayer funds. Obama wanted to “manage” the bankruptcy to protect union interests. GM could have filed bankruptcy under existing law and continued to operate without the executive branch lifting a finger. That’s the difference.
Ten and a half billion of them, actually.