Still Don't Think Obama Should Have Saved GM? (1 Viewer)

[RhymesMcJuice]

By bailing out GM, Obama saved the U.S. from a massive loss and now the U.S. is well on its way to recouping its $52B investment.

Link

DETROIT (Reuters) - General Motors Co posted a $2 billion third-quarter profit on Wednesday, driven by an accelerating turnaround in North America as it rushes to complete an initial public offering of stock set for next week.

The quarterly profit was the largest for GM since it emerged from bankruptcy in July 2009 and provides the last piece of financial data for investors evaluating the automaker's $13 billion IPO.

GM said it expected to post solidly profitable results for 2010, its first full-year profit since 2004.

A large part of that profit reflects lower operating costs and reduced sales incentives in GM's U.S. operations, which had posted deep losses in the run-up to its 2009 bankruptcy funded by the Obama administration.

The automaker reported increased cash earnings in North America for a third consecutive quarter, with its international results flat to up slightly and a bigger loss in Europe.

"We know we have much more work to do," Chief Executive Dan Akerson said in a conference call. "We still need to fix Europe. We continue to be vigilant in reducing cost in the enterprise, and we have just started doing a better job in marketing our brands to consumers."

The automaker's IPO will include common and preferred shares and will allow the U.S. Treasury to reduce its stake in GM from about 61 percent to near 43 percent.

GM executives have started an investor road show to support the IPO plans and Akerson and Chief Financial Officer Chris Liddell did not take questions after a presentation on third-quarter results.

The pitch to investors continuing this week aims to sell a GM that has slashed costs in North America, has a plan to make Europe profitable and retains more exposure than any other automaker to the fast-growth, developing auto markets in Brazil, Russia, India and China.

Akerson replaced Ed Whitacre as CEO on September 1 and will add the chairman role by year end. His appearance on the GM earnings conference call marked a departure from practice under Whitacre, who had a reputation as a hands-off manager.

In North America, GM's earnings gain in the third quarter was driven mainly by a reduction in sales incentives and discounts to consumers on the back of better-selling new vehicles like the Chevrolet Equinox and GMC Terrain.

The automaker also reported an increase in truck production that supported the results since trucks like the Chevy Silverado carry higher prices and richer margins than smaller vehicles.

GM expects to build more cars in the fourth quarter with the introduction of the Chevrolet Cruze compact, a new car that represents the automaker's most serious effort to date to compete against the Honda Civic and Toyota Corolla on features and fuel economy.

GM's profit met the expected range it outlined last week when it released details of its plans for an IPO. The automaker reported earnings per share of $1.20 for the quarter.

GM posted revenue of $34.1 billion in the third quarter. GM emerged from its government-funded bankruptcy in July 2009, making year-ago comparisons less relevant.

GM's profit topped U.S. No. 2 rival Ford Motor Co's $1.7 billion third-quarter profit, and Chrysler's $84 million net loss for the quarter.

GM expects earnings before interest and tax to be significantly lower in the fourth quarter than it was through the first three quarters due to vehicle introduction costs and spending for future products among other expenses.

The automaker expects to take a $700 million noncash charge in the fourth quarter in connection with a plan to acquire the U.S. Treasury's holdings of GM preferred shares.

The U.S. automaker reported losses totaling about $88 billion from 2005 to 2009, when it fell into bankruptcy, as losses mounted in its home market.

 

[jonessed]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

 

[Andy Dufresne]

The demand for those cars would have shifted to the remaining automakers.

 

[texasheat]

Right, I still don't

 

[videoguy505]

The share price after the IPO has to reach a point where GM is valued higher than it's ever been valued for the US Gov't to break even, IIRC.

 

[RhymesMcJuice]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

I believe that money is included in the $50B I mentioned. The loans were forgiven but the U.S. gained a 61% share in GM. I'm not saying that the U.S. likely won't be in the hole when it's done, but it was far better decision that what other people were proposing at the time.

 

[Phil Elliott]

Lehman Brothers is asking a similar, but not quite the same, question.

 

[bg0546]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

I believe that money is included in the $50B I mentioned. The loans were forgiven but the U.S. gained a 61% share in GM. I'm not saying that the U.S. likely won't be in the hole when it's done, but it was far better decision that what other people were proposing at the time.

No it wasn't.

 

[RhymesMcJuice]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

 

[the moops]

Lehman Brothers is asking a similar, but not quite the same, question.

GM has over 200,000 employees. Lehman had 25,000.Not arguing for one or the other, but they are not even close to being similar.

 

[eoMMan]

This is our country.

 

[DevilsTrifecta]

Ah, Corporatism at its finest!

 

[CletiusMaximus]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

I think some people took this "sham bankruptcy" position regarding the Chrysler reorg (which involved a ton of loud public squawking by one very small group of senior lenders, some of which was picked up by the financial press before being discredited), but was not aware some felt the same about the GM reorganization. In my view, which I think is shared by most who followed the case, the GM bankruptcy was the product of excellent lawyering on all sides, aggressive, hard work by Obama's auto task people, and the thorough, thoughtful and extraordinarily smart oversight of judge Gerber.Whether or not one supports the auto bailout of course is a completely separate issue. In my opinion, like it or not, the political reality is that no president from any party would allow a big 3 auto maker to fail during times of economic distress.

 

[Fennis]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

I think some people took this "sham bankruptcy" position regarding the Chrysler reorg (which involved a ton of loud public squawking by one very small group of senior lenders, some of which was picked up by the financial press before being discredited), but was not aware some felt the same about the GM reorganization. In my view, which I think is shared by most who followed the case, the GM bankruptcy was the product of excellent lawyering on all sides, aggressive, hard work by Obama's auto task people, and the thorough, thoughtful and extraordinarily smart oversight of judge Gerber.Whether or not one supports the auto bailout of course is a completely separate issue. In my opinion, like it or not, the political reality is that no president from any party would allow a big 3 auto maker to fail during times of economic distress.

very

 

[jonessed]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

GM isn't vital to the US. We have other manufacturers that could have picked up the slack as well as smaller companies that were solvent and would have loved the opportunity to step up.

 

[CletiusMaximus]

an interesting tidbit on the IPO I saw today - it appears a banker at UBS likely cost his company millions in fees and probably is on the street today:

GM: Underwriter Dropped From IPO Due To Email; UBS No Longer On DealNov 10, 2010 12:16:07 (ET) By Brett Philbin Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--General Motors Co. confirmed Wednesday a previously-named underwriter of its initial public offering was dropped after an employee of the underwriter sent an unauthorized email to "potential institutional accounts."GM didn't identify the underwriter by name in a filing with the Securities and Exchange Commission, but Dow Jones Newswires reported last Wednesday that UBS AG (UBS) was no longer listed as an underwriter on the auto maker's prospectus. The Swiss bank was included on a previous prospectus filed by GM on Oct. 28.Representatives for UBS and GM declined to comment for this story.In the filing, GM said, "we were not involved in any way in the preparation or distribution of the e-mail by the employee of the previously-named proposed underwriter, we had no knowledge of the e-mail until after it was sent, and the e-mail does not reflect our views."Additionally, the company said "the e-mail message may constitute a prospectus that does not meet the requirements of the Securities Act." GM didn't say what was in the email.While it's not unheard of for companies to be removed as underwriters of initial public offerings, among U.S.-listed IPOs, only a few have been removed from such deals so far in 2010, including KeyBanc Capital Markets--which was taken off Campus Crest Communications (CCG)--according to data provider Dealogic.While Morgan Stanley (MS) and J.P. Morgan Chase & Co. (JPM) are the lead bookrunners on the GM offering, the remainder of the underwriters range from familiar top-tier firms, such as Bank of America Merrill Lynch (BAC) and Goldman Sachs Group Inc. (GS), to smaller shops such as Muriel Siebert & Co. and Lebenthal & Co.Earlier Wednesday, General Motors Co. said it earned $2 billion in the third quarter, marking a third straight quarterly profit. The auto maker is pitching itself to investors ahead of next week's planned IPO.-By Brett Philbin, Dow Jones Newswires; 212-416-2173; brett.philbin@dowjones.com(END) Dow Jones NewswiresNovember 10, 2010 12:16 ET (17:16 GMT)

 

[EasyMorningRebel]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

GM isn't vital to the US. We have other manufacturers that could have picked up the slack as well as smaller companies that were solvent and would have loved the opportunity to step up.

You don't really believe this, do you?

 

[Andy Dufresne]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

GM isn't vital to the US. We have other manufacturers that could have picked up the slack as well as smaller companies that were solvent and would have loved the opportunity to step up.

You don't really believe this, do you?

Of course. What, people that were going to buy a GM but ended up not being able to would have just decided to buy NO car?It would have been painful in the short term as GMs suppliers retooled to support the companies taking up the demand, but it wouldn't have been a killer.

 

[Fennis]

Lehman Brothers is asking a similar, but not quite the same, question.

Interesting question. It is possible the crisis would not have been so deep if we had saved Lehman. The loss of Lehman is what sent the market spinning out of control.

 

[Phil Elliott]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

So who gets to decide? I do not support the bailouts. At what point is it "vital" enough to bail out. Its subjective.

 

[Flying Spaghetti Monster]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

GM isn't vital to the US. We have other manufacturers that could have picked up the slack as well as smaller companies that were solvent and would have loved the opportunity to step up.

You don't really believe this, do you?

Of course. What, people that were going to buy a GM but ended up not being able to would have just decided to buy NO car?It would have been painful in the short term as GMs suppliers retooled to support the companies taking up the demand, but it wouldn't have been a killer.

The whole auto company bailout was a VERY bad idea.Car companies can go away and it will not have a large enough effect to hurt the entire economy. **Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

 

[LHUCKS]

If they pay back the money with interest, I don't see the problem.

 

[Fennis]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

So who gets to decide? I do not support the bailouts. At what point is it "vital" enough to bail out. Its subjective.

absolutely. I think the crisis we were in dictated the need for a response. If GM were to go fold up shop not during the financial crisis, they would have been allowed to go. However, in the middle of the crisis action was required.

 

[bostonfred]

Of course. What, people that were going to buy a GM but ended up not being able to would have just decided to buy NO car?It would have been painful in the short term as GMs suppliers retooled to support the companies taking up the demand, but it wouldn't have been a killer.

I see this economic theory play out a lot in these threads. I'm curious how well thought out it is. Let's say that most of the people who wanted to buy a car would still buy a car, just a different brand. Meanwhile GM fails, factories are closing, people are losing jobs, and so on. It sounds like you agree that there is some quantifiable cost involved in this - and that it would have been "painful". Comparing this to one of the alternatives - bailing them out - you seem to think that the cost is higher, and the "pain" is just spread out over a longer period of time. So basically, the cost of letting them fail is smaller than the cost of keeping them afloat. Is that right? And if so, how do you factor in the time value of money? Say we're borrowing the money to bail them out and paying X dollars in interest, but the government is collecting increased taxes from the employees and the company, which brings in Y dollars, and collecting Z dollars back on the principle plus interest. Do you think it's possible that this leads to less "pain" than letting them fail?

 

[jonessed]

We didn't just bailout GM. We turned the bankruptcy process on its head by bribing banks with government money to turn the other way and let the government pick winners and losers in the process. It was a sham bankruptcy.

IF GM ever comes back and offers to pay the loan money it was forgiven then I might consider it successful. I doubt that happens though.

I think some people took this "sham bankruptcy" position regarding the Chrysler reorg (which involved a ton of loud public squawking by one very small group of senior lenders, some of which was picked up by the financial press before being discredited), but was not aware some felt the same about the GM reorganization. In my view, which I think is shared by most who followed the case, the GM bankruptcy was the product of excellent lawyering on all sides, aggressive, hard work by Obama's auto task people, and the thorough, thoughtful and extraordinarily smart oversight of judge Gerber.Whether or not one supports the auto bailout of course is a completely separate issue. In my opinion, like it or not, the political reality is that no president from any party would allow a big 3 auto maker to fail during times of economic distress.

It was a small group because the larger group was tied to the TARP bailout and turned the other cheek to satisfy the government.The GM bankrptcy worked the same way. Under a normal bankruptcy the employees would not have benefitted over secured creditors.

I imagine you are aware of all of this though.

 

[EasyMorningRebel]

The whole auto company bailout was a VERY bad idea.Car companies can go away and it will not have a large enough effect to hurt the entire economy. **Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

 

[timschochet]

I believe it had to be done. But we can argue that all day. Here's the part that should be undeniable to everyone: if, at this time, GM was failing, all the Obama critics would be screaming "See? We told you so!"

 

[bostonfred]

If they pay back the money with interest, I don't see the problem.

The flip side of what I just said applies to this stance. Paying the money back with interest may not fully recuperate the government, and may indirectly encourage companies to make risky financial decisions because they know the government will bail them out if things go wrong. Paying back the interest may be a fine short term remedy, but it doesn't mean that everything's hunky dorey, either.

 

[eoMMan]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

So who gets to decide? I do not support the bailouts. At what point is it "vital" enough to bail out. Its subjective.

I was crushed when Sizzler filed for bankruptcy.

 

[LHUCKS]

"See? We told you so!"

Right, but they didn't fail, so it was the right call...assuming the money is paid back over time.

 

[Dr. Bronner]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

GM isn't vital to the US. We have other manufacturers that could have picked up the slack as well as smaller companies that were solvent and would have loved the opportunity to step up.

You don't really believe this, do you?

Of course. What, people that were going to buy a GM but ended up not being able to would have just decided to buy NO car?It would have been painful in the short term as GMs suppliers retooled to support the companies taking up the demand, but it wouldn't have been a killer.

So you let GM fail, a company with 204,000 employees. How much tax revenue do we lose by doing this? How many foreclosures occur? How much is the cost of unemployment insurance for all these people? Surely all these layoffs cause people to drink more, use drugs more, maybe even turn to some criminal enterprises to bring money in, how much does that cost the criminal justice system? How long would it take another auto company to come in and take up the void left by GM? Months? Years? Would existing companies do it? Would they employ some of the out-of-work GM employees?I don't know all of these answers, obviously, but I wonder if any of us are looking at the entire equation here. And if anyone who knows more about American economics than either of us can paint a picture of what it'd look like had GM failed, I'd appreciate it. But I can't imagine it would've been better than what ended up happening. That neither Bush nor McCain opposed TARP leads me to assume that it would've been very, very ugly.Giving money to corporations is undesirable under any circumstances, but better to do it to save a company and jobs than the old-fashioned method of just giving your buddies some extra dough because you can.

 

[Phil Elliott]

Lehman Brothers is asking a similar, but not quite the same, question.

Lehman wasn't nearly as vital to the U.S.

So who gets to decide? I do not support the bailouts. At what point is it "vital" enough to bail out. Its subjective.

absolutely. I think the crisis we were in dictated the need for a response. If GM were to go fold up shop not during the financial crisis, they would have been allowed to go. However, in the middle of the crisis action was required.

Why did Ford survive so well? We're just rewarding non-performance.

 

[Leroy Hoard]

I was crushed when Sizzler filed for bankruptcy.

Weren't we all?

 

[LHUCKS]

If they pay back the money with interest, I don't see the problem.

The flip side of what I just said applies to this stance. Paying the money back with interest may not fully recuperate the government, and may indirectly encourage companies to make risky financial decisions because they know the government will bail them out if things go wrong. Paying back the interest may be a fine short term remedy, but it doesn't mean that everything's hunky dorey, either.

I understand the moral hazard argument, but this was a once in a generation type of event...I'm not buying the argument that auto companies are now going to take on elevated amounts of risk....under normal circumstances the US will definitely let them fail.Good call by the US govt. on this one, even though I disagreed with it in principle...as a fiscal conservative.

 

[jonessed]

The whole auto company bailout was a VERY bad idea.Car companies can go away and it will not have a large enough effect to hurt the entire economy. **Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

Because the administration had a vested interest in satisfying the UAW.

 

[LHUCKS]

The whole auto company bailout was a VERY bad idea.

Car companies can go away and it will not have a large enough effect to hurt the entire economy.

**Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

Because the administration had a vested interest in satisfying the UAW.

X

 

[Andy Dufresne]

So you let GM fail, a company with 204,000 employees. How much tax revenue do we lose by doing this? How many foreclosures occur? How much is the cost of unemployment insurance for all these people? Surely all these layoffs cause people to drink more, use drugs more, maybe even turn to some criminal enterprises to bring money in, how much does that cost the criminal justice system? How long would it take another auto company to come in and take up the void left by GM? Months? Years? Would existing companies do it? Would they employ some of the out-of-work GM employees?I don't know all of these answers, obviously, but I wonder if any of us are looking at the entire equation here. And if anyone who knows more about American economics than either of us can paint a picture of what it'd look like had GM failed, I'd appreciate it. But I can't imagine it would've been better than what ended up happening. That neither Bush nor McCain opposed TARP leads me to assume that it would've been very, very ugly.Giving money to corporations is undesirable under any circumstances, but better to do it to save a company and jobs than the old-fashioned method of just giving your buddies some extra dough because you can.

All of your questions in paragraph 1 are can be summed up in the words "Too Big To Fail". I don't believe that to be true. No, I have not "crunched the numbers". But I think zombie companies are a drag on the creative destruction process inherent in the free enterprise system.TARP had nothing to do with the auto bailouts.Again, I believe (and it's only my belief) that we'd have been worse off in the short term but better off in the long.

 

[jonessed]

"See? We told you so!"

Right, but they didn't fail, so it was the right call...assuming the money is paid back over time.

The $15+ billion that was forgiven will never be paid back.

 

[LHUCKS]

Again, I believe (and it's only my belief) that we'd have been worse off in the short term but better off in the long.

hard to say for certain on the long term, but in theory I agree with the above...but it's just theory at this point.

 

[Fensalk]

I went to an alternate universe to see what happens if GM was allowed to fail.

Turns out it inspires Harley-Davidson of all companies to become extremely aggressive in marketing their motorcycles to fill the void. Sales of Harley go through the roof as they innovate and create a cheaper motorcycle that is also high quality. They eventually branch out into the auto business a few years later. The most popular pickup truck in 2025 is the Harley Attitude. Black and chrome pickup trucks with black leather seats are actually all the rage.

 

[Fennis]

So you let GM fail, a company with 204,000 employees. How much tax revenue do we lose by doing this? How many foreclosures occur? How much is the cost of unemployment insurance for all these people? Surely all these layoffs cause people to drink more, use drugs more, maybe even turn to some criminal enterprises to bring money in, how much does that cost the criminal justice system? How long would it take another auto company to come in and take up the void left by GM? Months? Years? Would existing companies do it? Would they employ some of the out-of-work GM employees?I don't know all of these answers, obviously, but I wonder if any of us are looking at the entire equation here. And if anyone who knows more about American economics than either of us can paint a picture of what it'd look like had GM failed, I'd appreciate it. But I can't imagine it would've been better than what ended up happening. That neither Bush nor McCain opposed TARP leads me to assume that it would've been very, very ugly.Giving money to corporations is undesirable under any circumstances, but better to do it to save a company and jobs than the old-fashioned method of just giving your buddies some extra dough because you can.

All of your questions in paragraph 1 are can be summed up in the words "Too Big To Fail". I don't believe that to be true. No, I have not "crunched the numbers". But I think zombie companies are a drag on the creative destruction process inherent in the free enterprise system.TARP had nothing to do with the auto bailouts.Again, I believe (and it's only my belief) that we'd have been worse off in the short term but better off in the long.

I believe the US government actions we saved a much worse financial disaster. However I do agree we played with the "free" markets and that will have unintended long term consequences. Worth the price IMO.

 

[eoMMan]

Link to celebrities and some companies that filed for bankruptcy:

http://www.angelfire.com/stars4/lists/bankruptcies.html

Toni Braxton filed twice....the second time in 2010.

 

[LHUCKS]

"See? We told you so!"

Right, but they didn't fail, so it was the right call...assuming the money is paid back over time.

The $15+ billion that was forgiven will never be paid back.

Which is bull####...this part I vohemently am at odds with.

 

[jonessed]

The whole auto company bailout was a VERY bad idea.

Car companies can go away and it will not have a large enough effect to hurt the entire economy.

**Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

Because the administration had a vested interest in satisfying the UAW.

X

They didn't just keep the company afloat. They hosed secured lenders and handed over substantial portions of new ownership to the UAW. Even if they wanted to just "save the jobs" there was no need to force this. It was done solely to benefit the UAW,

 

[Christo]

an interesting tidbit on the IPO I saw today - it appears a banker at UBS likely cost his company millions in fees and probably is on the street today:

GM: Underwriter Dropped From IPO Due To Email; UBS No Longer On Deal

* * * *

GM didn't say what was in the email.
* * * *

Thank a lot, GM!

 

[Andy Dufresne]

I believe the US government actions we saved a much worse financial disaster. However I do agree we played with the "free" markets and that will have unintended long term consequences. Worth the price IMO.

There are good reasons to believe this to be true.

 

[Flying Spaghetti Monster]

The whole auto company bailout was a VERY bad idea.Car companies can go away and it will not have a large enough effect to hurt the entire economy. **Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

Because the administration had a vested interest in satisfying the UAW.

Politically it would have been a disaster for the president.

 

[Statorama]

The demand for those cars would have shifted to the remaining automakers.

Exactly. It's not like if GM went out of business we wouldn't be able to purchase cars anymore.

 

[CletiusMaximus]

The whole auto company bailout was a VERY bad idea.

Car companies can go away and it will not have a large enough effect to hurt the entire economy.

**Obligatory Notice: Yes I would be sorry for those that lost their jobs and sorry for their families and for their neighbors.... - BUT the real bad guy here is the upper management of GM.

So why'd we do it?

Because the administration had a vested interest in satisfying the UAW.

X

They didn't just keep the company afloat. They hosed secured lenders and handed over substantial portions of new ownership to the UAW. Even if they wanted to just "save the jobs" there was no need to force this. It was done solely to benefit the UAW,

I think you are confusing the GM case with Chrysler. GM secured bondholders were paid in full. Chrysler's secured lenders got about 30 cents on the dollar. In both cases, the secured lenders almost certainly got more than their paper was worth in a liquidation.

 

[bg0546]

If the government hadn't bailed out GM what would have happened? They would have filed a traditional bankruptcy. They wouldn't have gone away overnight. People act like 200,000 jobs would have just disappeared. Hate to tell you but they'd still be here right now just like people are still working at Blockbuster.