Thursday, May 1, 2014

Now HERE'S A Kick In The Teeth...

U.S. government says it lost $11.2 billion on GM bailout
The U.S. government lost $11.2 billion on its bailout of General Motors Co (GM.N), more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares in December, according to a government report released on Wednesday.

The $11.2 billion loss includes a write-off in March of the government's remaining $826 million investment in "old" GM, the quarterly report by a Treasury watchdog said.
$11.2 billion dollar loss. Let me bust out my calculator here. Assuming a yearly salary of $50,000, that means the loss alone could have paid the salaries of 224,000 people. According to General Motors, they has 212,000 employees.

So, basically, we would have SAVED money if the federal government had simply written a check for $50K to every single GM employee and then shuttered the damn buildings. If you factor in the $50 billion that was spent to save GM, we could have cut everyone a check for $200K - or paid them $50K a year for four years. Any of which would have been a gross misuse of taxpayer funds, mind you.

"But Jay!" you shriek. "GM was too big to fail!" You know something? If you need $50 billion from the government just to stay afloat - and you still can't handle a simple recall? Maybe we're thwarting natural selection by allowing your company to continue to exist? Ah, but then how would the union thugs get their kickback if the company had been allowed to expire?

I take it back - even if I did hit the lottery, I won't buy anything from GM...

That is all.

Another dispatch from...
(image courtesy of Robb Allen)


libertyman said...

If you ask a liberal if GM paid the government back, they will say they did.

Murphy's Law said...

Yeah, but they saved all those union jobs, so eventually the Democrat Party will get a lot of that cash back in the form of mandatory dues and contributions.

Ted said...

...... And then there's also all the dealerships ( well the ones that were owned by Democrat contributors at least ) that were spared.

...... And ultimately all thoose votes

Old NFO said...

+1 on Ted... Old friend (and life long Pub) lost their Chevy dealership they had owned since 1931...

Anonymous said...

But Jay, how else would we get that sense of awe and wonder when trying to work on a GM product.

Awe and wonder being like the 1992 Olds Delta 88 I owned where I said "Aw! What convinced them that having the passenger side motor mount straddle the water pump was a good idea?"

Joseph in IL

DaddyBear said...

One of the many reasons we own two Fords now. Plus that whole "We knew about the issue, but didn't think it was worth the bad press to fix it" thing.

abnormalist said...

Honestly as someone who lives in Michigan, and sees all the tier two suppliers and tier 3 suppliers who are still alive today due to that bailout that didnt get dime 1 directly from the fed, it was a huge success.

You're not talking about the quarter of a million GM employees, we're talking about the millions of supplier employees, the supporting businesses, the massive trickledown. The schools, the homes, the taxes, everything.

50 billion on GM was a tiny drop in the bucket it would have taken to absorb the damage that allowing them to fail would have cost.

Yes GMs failure was well earned, yes the writing had been on the wall for decades.

But they also seem to have learned their lesson (for now) and have made substantial changes to prevent getting in that place again.

Personally I dont care for GM, never have. Yeah I drive imports and fords for that reason, but letting GM fail would have tanked ford, and chrysler as well, and driven a huge amount of business from America overall.

we all mock the idea of "top men working on this" but really in this case they didnt do a half bad job at it.

Ted said...

If GM had been forced into bankruptcy a number of the product lines would have survived and emerged as independent operations.

As a prime example , imagine corvette as a stand alone company.

Probably then combined with Viper. Or maybe made part of the Audi group ?

What else would work as independent. GMAC ? DELCO ? Possibly even Caddilac as an independent brand again

Geodkyt said...

Abnormalist --

It always puzzles and amuses me when people equate "going bankrupt" with "going out of business" and leaving some great vacuum where no business takes place.

Generally speaking, with major corporations, it doesn't work that way. Especially businesses that deal with concrete products, like a car manufacturer.

First of all, the type of bankruptcy ("Chapter 11) GM would have gone through would have been a reorganization of their debts, with some debts getting restructured (in the long term, on much the same terms as currently) and some debts being written off or severely written down (i.e., what the government forced on GM investors - but not the union pension plans which were the largest drag on GM's sustainability - anyway, only without the protections normally offered that a normal Chapter 11 bankruptcy would have resulted in, while simultaneoulsy burning through billions of taxpayer dollars).

Even if a major corporation files bankruptcy in such a fashion that they do "go out of business" ("Chapter 7" - a liquidation), there are still assets, physical assets, that some onther company will generally swoop in and buy at fire sale prices, and use to expand their market share into the recently vacated one.

Here's a partial list of US corporations you might recognize that have previously been through Chapter 11 bankruptcy (without the federal government having to throw billions of US taxpayer dollars down a rathole while screwing over investors not at fault and rewarding political allies who were a major cause of the problem), yet are still in business:

Eddie Bauer
Continental Airlines (now merged with United)
United Airlines
Delta Airlines
American Airlines
Japan Airlines (JAL) (filed under Japanese law)
Friendly's restaurants
Liberty Medical ("dia-beet-us" ;-) )
Owens Corning
Pittsburgh Penguins (hockey)
Texas Rangers (baseball)

Even corporations that went under due to bankrupcy ended up having their assets picked up by other corporations that expanded -- for example, Delta bought up a bunch of Pan Am routes and assets and used them to expand.