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How to Save the Auto Industry
There are a number of recommendations to help “save” the Auto industry that would probably be more effective than the current Bridge Loan, but they won’t be tried, and they probably won’t even be suggested anywhere else. You’ll never hear anyone in the Mainstream Media saying that taxpayers (from whom the bailout money purportedly comes) should receive an equity share in the failing companies. I previously suggested that the auto bailout will never be repaid, at least not in any meaningful sense. In reality, anyone who pays taxes should be able to claim an equity stake in the companies that have been bailed out with their money. This will never happen, but I think it would be preferable to the outright corporate welfare that is Teh Auto Bailout “Bridge Loan”. It’s not … Read entire article »
Filed under: American Politics, Auto Industry, Economics Lessons, Michigan
Will the Auto Bailout Be Repaid?
An awful lot of GM shares have already changed hands today. If you knew that the government was going to bail out the Auto Industry, you could’ve bought shares of GM yesterday at $3.66 and sold them today for $4.30 — a 17% profit overnight. Someone knew, that someone just wasn’t you: just yesterday signs pointed to Big Three bankruptcy.(“Now” is Friday, December 19, 2008 at 9:48 Eastern) GM probably got about $8B in short-term financing this morning. I have no idea what the terms are, or what the interest rate is, although I can say with 100% certainty that this rate is far lower than GM could otherwise obtain, which means that nobody was willing to voluntarily lend them the money. Additionally, the people from whom this money … Read entire article »
Filed under: American Politics, Auto Industry, Michigan
What if the Auto Bailout Doesn’t Work?
Yesterday, the the White House was talking about bankrutpcy for the Big Three, too, but it seems that GWB doesn’t want to let that happen on his watch. If bankruptcy is the course, he’s going to force Obama’s hand. I posted Don Boudreaux’s WSJ editorial, “Bankruptcy Doesn’t Equal Death, about the Big Three, and the possibilities of bankruptcy in lieu of bailout, on my Facebook page. I was particularly fond of Boudreaux’s comment, and quoted it: A government bailout of the Big Three keeps huge amounts of productive inputs in firms that can’t use them efficiently This is the unseen that most people never consider. Yes, there are people working for these companies that will truly suffer under bankruptcy. But the flip-side, is that some of these … Read entire article »
Filed under: Uncategorized