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Originally Posted by The_Blur
It doesn't make the bailout okay. I'm not excited about it either, but it does get people off their high horse on the subject.
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No it doesn't, you're trying to compare a loan to what was, despite the spin, a gift. Next time I'm at the bank looking for a loan I'm going to remember to tell them to just give me the money in exchange for something that I have which is, fundamentally, absolutely worthless because according to the U.S. government, GM, and GM's intrepid fans there is, effectively, no difference. Sadly, I'm guessing the bank isn't going to see it that way.
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Originally Posted by The_Blur
The bailout was fundamentally a low-interest loan and a purchase of stock. GM could use that money to restructure. This is oversimplification, but it basically explains what happened. Governments all over the world routinely invest in large businesses in order to reap from profits or promote technologies that those companies are producing. This is a new move for the US government which goes to show how uneven the playing field has been until this happened.
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It's a new move for the U.S. government which goes to show that, in yet another area, we have regressed and are no longer wiser than our international peers. Chew on this for a second, if a private banking firm
had taken investor money and done with it what the government did as it relates to GM people would be
in prison right now.
Basically what happened is the government gave GM 60 billion give or take in exchange for stock that was...wait for it...absolutely worthless. The loan was a complete shame akin to a magicians trick intended to take the focus off of the fact that what the government was actually doing was ethically abhorrent. Again, what the government did was akin to saying "Hey, you need 60 billion, I'll give you 65 billion and you can just tuck away the extra five billion and give it back to me in two or three months. That way we can get all these suckers to focus on that bogus five million dollar loan you'll repay me ensuring a lot of them will miss the actual bailout which is ten times as large". Once again, if the private sector had done this with investor money people would be
in prison right now. The fact that GM's bankruptcy was overseen by the same government that bought this worthless stock created a minor conflict of interest to be kind. Why? Because the government that purchased that worthless stock is the same government that allowed GM to legally walk away from debts, etc. which were a part of the reason that stock was worthless in the first place. Does anybody see a minor, ethical conflict going on here yet?
"Hey, I'll tell you what. I'll give you fifty billion for something that is worthless because you owe Joe's Widgets and various investors, etc over here sixty billion. Conveniently for both of us, I also have the legal authority to effectively declare your debts to Joe's Widgets and those investors null and void at any time as I so choose. What about Joe and the investors you say? Ah, screw 'em."
Yeah, that was a real victory for capitalism, seeing GM vendors and investors who did things the way they were supposed to get the shaft so the government could save a GM that looked like it had been run by narcissistic three year olds for about the last decade or so. Makes me proud of my government alright.
Sadly, even with this ridiculous scheme the reality is that the government is still absolutely certain to lose money on this deal. Why? Because GM isn't even close to being worth sixty billion despite what the pundits are saying. That tells us two things.
1: How unbelievably deep the crap GM was in actually was.
2: Our government really can't run anything correctly, not even what would be considered a money making, criminal scheme if a private firm had done the same thing.
But please, do continue to try and compare the above to a genuine loan, the laughter is good for me.