Repeat After Me: “A Bailout… A Bailout… A Bailout”

Posted: November 17, 2010 in Technology and Business
While TARP wasn’t a bailout… the money thrown at the auto companies… including GM… totally was.
 
Given how hot the GM IPO is right now, some people are now cheering that these auto company bailouts were, in fact, really terrific investments.
 
Not so fast.
 
It is wonderful that we’re going to get some of our money back.
 
    

     At G.M., the government injected about $49 billion to stabilize the company and help it through bankruptcy.

     G.M. has repaid $7 billion, and the government will receive $12 billion more this week from its share of the stock offering, assuming the shares are priced in the upper range of expectations, from $31 to $33. Even then, the Treasury Department could be sitting on a $7 billion to $9 billion loss.

 
Even in the most optimistic scenarios, I still don’t see any way we — the American taxpayers / investors of last resort — will make any money from this. 
 
People say that there was a qualitative benefit that I’m not taking into account… in that GM didn’t have to file bankruptcy, lay off tons of people, bad morale, etc. 
 
My response is, "huh?  they did file bankruptcy… and none of those bad things happened."
 
The only bad thing that happened was the American taxpayer / investor of last resort grossly overpaid for our ownership stake.
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