Taxpayers will be paying for the auto bailouts for decades to come.

Bodhisattva

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Like going to Vegas and not counting your losses, deeming bailouts a "success" only works if you don't count all the failures.

The bailouts worked, the story goes, because General Motors and Chrysler still exist and their stocks are trading above $0. (This is known in some circles as "Bamaro logic.") Yet existence is a lousy measure of success, given that the car makers were able to shed billions of dollars of debt and labor obligations in their government-managed and -financed bankruptcies.

And while GM, Chrysler and Ford may be out of financial danger, for now, their political liabilities continue to multiply. The Bush-Obama bailout isn't over because its terms increase the chances that one or more of the Big Three end up in trouble again.

...

That was the real issue for the White House because of its potential damage to union labor. So it proceeded to orchestrate an out-of-court prepackaged bankruptcy. Bond holders would have taken a severe haircut no matter what, but Mr. Obama's force majeure subordinated their rights to the UAW's. Even Steve Rattner, who led the auto task force and is its most ardent defender, conceded to the Detroit News in December that "We didn't ask any active worker to cut his or her pay, we didn't ask them to sacrifice any of their pension and we maybe could have asked them to do a little bit more."

Thus the bailout become a tool for less discipline, not more, when Chrysler entered bankruptcy with $8.1 billion in government financing and GM with $30.1 billion. The government became the majority shareholder in the latter and the UAW in the former. Taxpayers still own 26% of GM, and shares will need to rise to $53 from their current $26 to recoup the Bush-Obama investment.

...

The point is that the auto bailout isn't an example of enlightened government revitalizing an industry after a market failure. It is a bailout in the wake of failed government policies and bad management that may keep going and going as Washington does whatever it takes to make sure Detroit keeps doing its political bidding.
http://online.wsj.com/article/SB100...1490.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop
 
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ValuJet

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Where can I sign up to be a non-tax payer?
Make a campaign contribution to Pres. Obama. Start an algae growing operation. You'll get a visit from VP Biden, several hundred million in taxpayer funded startup grants, and you're all set.
 

Bamaro

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The US auto industry screwed up royally over a period of more than 40 years. At the same time that they were ready to fail, the economy as a whole was on the edge of a precipice. Unfortunately, the cost of doing nothing was significantly larger than the cost of doing something. Rather than crying about what we had to do in the past we should be taking steps to assure that we never have to do it again in the future.
 

Bodhisattva

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The US auto industry screwed up royally over a period of more than 40 years. At the same time that they were ready to fail, the economy as a whole was on the edge of a precipice. Unfortunately, the cost of doing nothing was significantly larger than the cost of doing something.
Not true. Many companies go through bankruptcy without the economy collapsing. You can buy the government line of bull if you want to, but you won't be able to sell it to those who know better.

Rather than crying about what we had to do in the past we should be taking steps to assure that we never have to do it again in the future.
Who is "we"? If you mean the "taxpayers" or the "government" we should never have had to do anything and never should in the future. The market, if allowed to work, takes care of this. Success or failure is earned. All the government does is punish the winners and bailout the losers, which nets us less winners and more losers. Why doesn't ignoring the established rule of law bother you? This was just a big gift from taxpayers to the unions. Obama's theft doesn't bother you either?
 
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Bamaro

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Not true. Many companies go through bankruptcy without the economy collapsing. You can buy the government line of bull if you want to, but you won't be able to sell it to those who know better.
Sure but to use a term that has become popular, it was the perfect storm. A critical manufacturing industry at an extremely critical time. I dont like bailouts anymore than you but sometimes situations force us to do things we really would rather normally not do.
 
I

It's On A Slab

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Sure but to use a term that has become popular, it was the perfect storm. A critical manufacturing industry at an extremely critical time. I dont like bailouts anymore than you but sometimes situations force us to do things we really would rather normally not do.
You do what you have to do in desperate times.

And it saved us from that precipice. Everything else we hear right now are sour grapes over failed economic policies proven wrong(yet again).
 

Bodhisattva

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Sure but to use a term that has become popular, it was the perfect storm. A critical manufacturing industry at an extremely critical time. I dont like bailouts anymore than you but sometimes situations force us to do things we really would rather normally not do.
You do what you have to do in desperate times.

And it saved us from that precipice. Everything else we hear right now are sour grapes over failed economic policies proven wrong(yet again).
P.T. Barnum was right. Unfortunately, you suckers cost us all a lot of money.
 
I

It's On A Slab

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P.T. Barnum was right. Unfortunately, you suckers cost us all a lot of money.
So was Einstein: "The definition of insanity is doing the same thing over and over again and expecting different results".



 

crimson fan man

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I don't know much about the economy or business in general but all I know is obama done this not for the nation benefit but for the unions. This is another example of the gov buying votes. Unions should be a dying breed.
 

GreatMarch

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I am no brilliant businessman, but when this whole bailout thing happened it seemed fishy. I keep hearing how if GM "went under" the whole economy would collapse. I don't get it. I know the economy was (and is still) bad but people were not going to stop driving. There was a demand for their product. File bankruptcy, close the doors, whatever. Someone was going to come in and take over that segment of the industry. The only thing that bail out seem to protect was the legacy costs courtesy of the UAW labor union.
 
I

It's On A Slab

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Right. Government involvement in the economy keeps screwing things up. And yet, for some perverse reason, you buy the "government should ride to the rescue" line of bull. Why do you do that?
It worked. Your ideology failed you again. Yet you persist. Being wrong doesn't seem to matter for the committed.
 

twofbyc

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I railed against this bailout from the start, I thought I was gonna stroke out, literally, because I was so hacked off. So I'm not surprised that it will be a long time before taxpayers get their money back, if they ever do. But, in comparison to this WS bailout, frankly, this one pales. Taxpayers got nothing for that, not even the courtesy of a reach-around, and IMO we will NEVER get repaid.
So this, while going against everything I believe in, was bad, WS bailout was worse, much worse.
 

SimplyTide

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The problem with any discussion of the success/failure of the bailouts is that we have no idea what would have happened if the government had just allowed the financial institutions and auto manufacturers to collapse. Both sides have their ideas, and each sells their conclusions as "fact", but no one knows.
 

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