The Truth about the GM and Chrysler Bailouts


Vice presidential candidate Paul Ryan has been accused of lying when he claimed that Obama broke a promise by letting a Wisconsin auto factory close, when in fact the factory closed before Obama took office. Although that isn’t precisely what Ryan said, there is some validity to the accusation that his statement was deceptive.

But numerous Obama supporters are playing just as loose with the facts when they say that, if Obama hadn’t rescued GM and Chrysler, far more factories would have closed permanently. That is simply untrue. While news agencies have fact-checked some of the things being said at the Democratic convention, I haven’t seen any challenges of this claim.

Both GM and Chrysler were headed for bankruptcy. If they had gone bankrupt under chapter 11, most of their factories would have stayed open and they would have continued making and selling cars. Bankruptcy would have allowed the companies to avoid interest and dividend payments for a time, and to renegotiate union contracts. Under bankruptcy laws, stockholders would have lost the value of their stocks, but bond owners–who have first claim to company assets and profits–would have been paid off, if not in whole than at least in part.

Instead of letting the companies declare bankruptcy, Obama decided to “bail them out” by taking them over. Once the administration had control of the companies, it had them file for bankruptcy, just as they would have done without the government takeover. Stockholders still lost everything, but so did Chrysler’s bond holders. Instead of renegotiating union contracts, the administration gave the unions greater say over the companies. In other words, the administration didn’t bail out the companies; it bailed out the unions at the expense of (in Chrysler’s case) the bondholders.

In doing so, the administration created uncertainty in the bond market. Bonds were supposed to be safer investments than stocks. But who would want to invest in long-term bonds if the government could step in at any time and void the legal rights of the bond owners? The result is that bond sellers must be willing to pay more interest to attract buyers.

In short, the Obama auto bailout probably didn’t save many jobs (though it probably did keep worker pay uncompetitively high). Instead, it is more likely that the Obama administration’s action prolonged the recession by discouraging private investment in American industry.


http://www.cato-at-liberty.org/the-truth-about-the-gm-and-chrysler-bailouts/ 



So, taxpayers...how'd you like the payoffs?

That Bassard..!! 😠

DWD here in 5.....4.......3........2.....

Will king address the Delphi management workers, why the f would he? He doesnt work for them, they dont pay him. What is your interest here Doc, you hate labor, must be because of the injustice of it. Zrx, sorry I was late.

Guess if they were union, he would have represented them.

What a piece of work you are DWD.


You moaned how you couldn't find work on this site because illegal aliens standing around a Home Depot parking lot could do your job for pennies on the dollar. You screamed for fairness!

Here we have a company...a company that was stolen away from bond and shareholders by the US government. You think that's fine. A company ran by the government that says these employees keep their same pay, benes, and because they're union...we're gonna give them more power of this company when we relinquish control. Those other employees...the management types...the clerks...the secretaries...the engineers...the support personnel that have invested the same in their 401K's as a union employee (why not...they both work for the SAME company...it's not my fault if one of them invests and the other blows their money at the bowling alley!) they have to take it in the ass. Sure they did what they were told, they did a great job...that's not the issue is it? The problem is these employees...these ones...they're UAW...they donate to OUR coffers every election cycle...a union so damn powerful that when they feel like it they drag a auto manufacturing company to the bargaining table and hold them hostage for more of the "golden goose". Now these companies...and their subsidiaries...the ones that got BILLIONS form the American taxpayer...have lost market share, stock share and are once again teetering on the verge of bankruptcy!! Have no fear Mr. Fairness...those employees...the UAW...they keep their jobs, their pay and benes.

This is what diametrically opposes me to the Democratic party anymore. I will not ever support a person with a D next to their name no matter WHAT they want, because I know they'll vote in a second to takeover privatized companies! We have a legal system designed to support companies that are going bankrupt. There are winners and losers all over Wall Street. A failed business model is a failed business model and shouldn't be allowed to thrive. It shouldn't exist. A well run company that does the right thing for a consumer, a shareholder and it's employees should be allowed to make a profit. The free enterprise system that our Founding Father, and quite possibly one of the greatest President's this nation has had at it's helm; Thomas Jefferson believed in Laissez-faire. That is being ignored. No help. No picking winner and losers by a government entity, and no propping up a failed business model. I don't expect you to even grasp these ideals. You're tainted. Jaded by the free handouts a government can give it's economy at the expense of only the rich. You can't see for a second that the base of the system isn't designed like that. Now its all up for grabs and guess what? This very system will pick winners and losers because precedent has been set. You're failing to see that the 1%...those evil evil bastards...they're untouchable! No matter what. They will always pay more into the system than those with their hands out EXPECTING to be taken care of from cradle to grave. That's the failed system that GM created too.

No, keep on doing what you're doing...bumping around like a ship without a rudder...expecting the government to tuck you in at night and make sure you're warm. In your fantasy world this is the way it's supposed to be. No personal responsibility...no maturity...no punishment. Just lollipops, rainbows and unicorn rides. We're NOT getting the 97+ BILLION paid back that was ripped away from your kid's future. Each child is now saddled with a 50K yoke that they have to pay down to see ground level. That's called being a slave to the debt. A debt they didn't ask for. I can't expect you to grasp that philosophy though. It's all what was that line..."Tears in the rain"...yeah that's it, tears in the rain with you. Today whatever side you think "won" got theirs. One day you'll be screaming for fairness again...precedent has been set and they will point to it and take more. This great nation that was carved out because we were being taxed without representation by an oppressive government (only 13% I might add!!!!) has gone astray. They've forgotten it's roots. They're wiping their feet and butt with the very same spirit that gave us the Constitution, the Declaration of Independence and the Bill of Rights. No, the yoke has been put upon the children. The political promises broken. The ramrod has worn smooth the rifling of the barrel. The Pavlovian expectation has been set. Conditioning and response. Take your "treat", you've earned it by slobbering on the feet of your Master.

Doc, you wanted to know why King wouldnt address the fairness, I told you. Most times mamagement are anti union, and negotiate for themselves. As far as fairness goes, guess you wont be voting for the corporate raider in this election?

Slobber some more.

Thats the best you got, who are you voting for?

The best? Pearls before swine.

Why in the world would I waste the best on the likes of you?

You can't even grasp the fact that I posted a link to a supporting post...you "think" I was asking for something!!

Not voting then?

Who's a good lil' doggie...YOU are...look at that little doggie wag it's tail...who's a good lil' dog...YOU are!

Doc, you are so mature, wipe the snot off your nose.

Rollover boy.


So, I ask again...

So, taxpayers...how'd you like the payoffs?

DrMaddVibe wrote:

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