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March, 2024

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GM and Chrysler steal $23 Billion

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Von
Posts: 4869 - Karma: 21
http://news.yahoo.com/s/ap/20090909/ap_on_bi_ge/us_tarp_oversight_panel

I was saying back in December that the auto bailouts were a crock of shit and that the government should not do anything and just let both of these companies go into bankruptcy. Sadly since I'm not the Treasury Secretary (not yet at least) the Federal Government hooked these companies up with taxpayer funded loans to the tune of $23 Billion, I knew these loans would never get paid back but again I'm not the Treasury Secretary.

Now 9 months latter both companies have gone through bankruptcy despite the massive government bailouts (both companies should have just gone into bankruptcy in December and saved the taxpayers billions) and both are now saying it is unlikely they will ever repay the loans they were given. So what has happened is that the American Taxpayer has been robbed of $23 Billion by car companies and in the case of Chrysler it was Ceberus Group (a hedge fund headed by former Bush Treasury Secretary John Snow) who was the main recipient of the funds.

This whole thing is a naked case of economic fascism and makes me sick even thinking about it, what do you NSer's think?

Sep 9 2009 10:11AM
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kepler.
Posts: 8761 - Karma: 139
I'm a raging liberal. I'll scream woman's right to choose, help the poor, legalize, etc all day long till my lungs are blue.

But these bailouts are utter bullshit. If a company sucks and made poor decisions, it should go under.

Sep 9 2009 10:26AM
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freezed
Posts: 12973 - Karma: 500
me too pretty much. we have a pretty "silly" free market system happening here...loss is socialized, and profits are privatized, is that how it's working?
Sep 9 2009 10:28AM
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Von
Posts: 4869 - Karma: 21
This isn't the free market this is Economic Fascism, the free market would be if they car companies wern't bailed out.

Capitalism is all about the lack of government intervention, so it isn't capitalism when the government is intervening and bailing out companies.
Sep 9 2009 10:38AM
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kepler.
Posts: 8761 - Karma: 139
I just realized I sounded like a retard up there. I'm terrible with tenses.

Either way. I'd like to hear someone who thinks the bailouts are a good idea. I'd also like them to back up their statements because I can't make any sense out of the bailouts from a business standpoint. That is, as an objective observer. I'm sure the car companies loved the free money.
Sep 9 2009 10:42AM
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Von
Posts: 4869 - Karma: 21
http://www.lewrockwell.com/ronpaulbookbomb/

Right there with you man, the Federal Reserve is the biggest problem that the US Government has today.
Sep 9 2009 10:45AM
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dbstar
Posts: 2038 - Karma: 20
first off that is retarded, it is not economic fascism, not at all, that is just your typical right wing bullshit in which they make statements people may not understand in order to further brainwash them. Perhaps what was economic fascism was bush and your right wing buddies allowing corporations such as GM and Chrysler to become such powerful entities that the government was almost forced into bailing them out.
Sep 9 2009 11:00AM
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Brenone
Posts: 4944 - Karma: 296
http://nymag.com/news/business/58094/index1.html

I lean a little to the left myself, but the idea of the fed bailing out private companies reaches a little too far for me. check out this link to an article in New York magazine about Goldman Sachs and AIG. it will blow your mind.

its a long one but ill try and give you the spark notes version:              

Hank Paulson, former Goldman Chairman/CEO, was the treasury secretary in charge of the stimulus funds and bailouts. he decided to direct $85,000,000,000 to AIG so it would not collapse. he also decided to not bailout out Lehman Brothers and Bear Stearns, Goldman Sach's biggest competitors. why did he direct all that money to AIG? because Goldman (AIG's largest client) purchased over $20,000,000,000 in financial instruments to hedge its bets against the commercial real esatate market that it would of lost had AIG collapsed. Goldman Sachs received $13,000,000,000 of the bailout funds given to AIG and it received another $10,000,000,000 directly from the fed. and turned it into a $5,000,000,000 profit. thats crazy.

sorry......not trying to threadjack the OP but i figured whoever is reading the original thread might find this interesting too.

Sep 9 2009 11:11AM
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Von
Posts: 4869 - Karma: 21
Dude I'm not right wing. If you didn't notice this thread is about how stupid the Auto Bailouts are. They were made during the Bush administration!!! How stupid do you have to be to think I like Bush when I'm making a thread about how badly one of his policies sucked balls?

Why was the government forced to bail out these firms? They could have just let them go into bankruptcy in December like they did anyway in April after the bailouts happen.

And how about reading this article about Economic Fascism, and then call this Loyola Professor a retard.
http://www.lewrockwell.com/dilorenzo/dilorenzo85.html
The practice of bailing out politically connected companies is Economic Fascism, what else would it be? What would you call it? Because it certainly has nothing to do with Capitalism.  
Sep 9 2009 11:14AM
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Von
Posts: 4869 - Karma: 21
No apology needed but I would prefer if the thread stayed on topic because the stupidity of the Auto bailouts is a lot easier to see and understand than the Financial Bailouts.
Sep 9 2009 11:15AM
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wh@t
Posts: 6204 - Karma: 52
hahah i love how you mentioned your leftward stance but he called you that anyway, and no hate to you dbstar i just thought it was funny. typical NS.

but what i think he meant by the government was forced to bailout the firms, is that these huge corporations have this sense of security that they can do whatever the fuck they want because they have so many employees and if they went under or were at risk of going under, the government will step in just to stop them from firing all their employees and raising the unemployment rate. which stems into politics there but still.

personally, i agree with you wholeheartedly. and i dont think the bailout should have happened either. lets say these companies went out of business, bankrupt, sold off, gone. Toyota, those enterprising motherfuckers, would either buy out their factories and slap Toyota emblems all over it and start churning out more Priuses, or it would buy out the factory and buy out the company as well and just keep selling "American" cars. though with the whole "green" thing i doubt that would happen. in the end, the employees lost their job at Chrysler or at GM yeah, but they were then hired or just switched over to working for Toyota or Honda or whoever else. fucking Hyundai i dunno. see what im saying?

if we stick to capitalism, without these shitty exceptions, and we let companies know that if they suck theyre going under, then we wont have what happened with GM who just blunderfucked around for the last 20 years because they knew when it all went downhill they would get the bailout. capitalism would have solved the problem of unemployment within itself. but the administration apparently lacked the foresight to forsee that... OR DID THEY?! which supports your idea of econo-facism. excellent thread sir.
Sep 9 2009 11:28AM
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T.L.
Posts: 4729 - Karma: 3,008
i pre-ordered it a few months ago and got my copy last week.  I haven't gotten into it yet but I will when I get a minute. 
Sep 9 2009 1:05PM
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The_Tim
Posts: 779 - Karma: 36
GETTIN' PAID BIIIITCH!!!
Sep 9 2009 2:02PM
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Dustin.
Posts: 13839 - Karma: 7,704
The problem is that everyone feels that every person needs (no wait, DESERVES!) to be middle class or better simply because they exist.  This is impossible, but we still try by taking money we don't have and giving it to those who we feel need it.  "Oh no!  Your company is crap?  Take this money!"  The sooner people sack up and say "shit happens", the sooner we can get failures and lazy people to snap out of it and perform useful services for society.
Sep 9 2009 3:55PM
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AlexGaynor
Posts: 947 - Karma: 148
Natural selection made humans the way they are. Natural selection should decide the fate of large companies. Where the weak die, and the strong survive. Thus a better product for everybody..

I personally believe toyota or honda make a higher quality car, and since they are now made in the US anyways, I don't see the problem. They still employ Americans.
Sep 9 2009 5:18PM
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Ben.
Posts: 21463 - Karma: 683
i wouldnt go so far as to say that the bailouts (or at least the AUTO bailouts) were a good idea. i think its quite apparent that they failed miserably in the auto industry. however i can see where they are coming from. if all those workers had lost their jobs, the result would have been catastrophic. more catastrophic than the debt were in? idk, but i can see the thought process.

as you or someone else said though, socialized losses and privatized profits clearly wont work
Sep 9 2009 6:06PM
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basedjase
Posts: 2510 - Karma: 640
wow. the treasury fails fails and fails some more.
Sep 9 2009 6:27PM
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dbstar
Posts: 2038 - Karma: 20
why is that???
Sep 9 2009 6:29PM
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Von
Posts: 4869 - Karma: 21
Because what you said was completely wrong?
Sep 9 2009 7:04PM
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NomenClature
Posts: 4348 - Karma: 83
I think your all missing the point of the gov intervention.

The sudden loss of the American auto industry would have had a shock-wave effect on the broader economy, the point of the "bailout" was always to SLOW the march toward bankruptcy. (and it was a success)

 The few tens of billions we spent on the Autos was a lot better deal $ for $ than much of the governments other action.

Also, no one "siphoned off" money from the Bailout, the parent company of Chrysler which was a Private Equity Fund NOT a Hedge Fund (they have almost nothing in common except their SEC fillings).  As a majority stake-holder, they received considerable benefits from any rise in share price, but they by no means "received" bailout money.  They just got what every other shareholder got.

The FED and specifically Ben Bernanke, are the ONLY REASON were are still on our feet.  They stopped the country from entering the abyss, period.
                        -If your beef is with fiat currency, then you dont know shit about money. 
                        (dont start with   the tally sticks and the rest of it either, your want tangible
                        reserves, then move to the middle east and tell me how you like not earning interest.)

if you have to demonize some part of this bailout, stick with AIG, that money really did go in the front door and out the back to AIGs Counterparties (peope who bought financial products from them, like Goldman).

no offense, but Sept 2008 didn't suddenly make the public understand finance any better, and most of you dont have a clue.


Sep 9 2009 7:29PM
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dbstar
Posts: 2038 - Karma: 20
how is what i said completely wrong? One could argue that companies such as GM and Chrysler among others, as a result of the capitalist system, have created a form of "economic" fascism, as you call it. Through capitalism large corporations in the US have garnered huge political pull due to the insane amount of capital and money at their hands (as im sure you know, capitalism is solely about money) but do not involve the public in any way in their affairs, and that is economic fascism.
Sep 9 2009 7:44PM
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kepler.
Posts: 8761 - Karma: 139
Fight fire with fire?
Sep 9 2009 7:51PM
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Funnel
Posts: 7808 - Karma: 1,414
NEVER saw this coming.......
Sep 9 2009 7:52PM
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NomenClature
Posts: 4348 - Karma: 83
having money does not equate to political power.

it is very difficult for corporations to get involved in individual campaigns that is why you always hear about executives getting in trouble for organizing pooled donations (also called bundling).

Its been illegal for decades.

also "Fascism" is a form of ultra-nationalist government, we have a large pool of influential organizations and political alliances that all together form a unique form of political pluralism.  There's nothing fascist about it.

Capitalism is not about Money, its about freedom of commerce.


Sep 9 2009 8:00PM
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Mr.Panda
Posts: 17711 - Karma: 564
even though Ford may stand for Found On Road Dead...  oh, guess what, guess who DIDNT go bankrupt OR need a bailout and is actually GAINING ground in the amount of sales they have?  oh right, FORD!  HA!  suck my cock GM and Chrysler lovers.
Sep 9 2009 8:00PM
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Von
Posts: 4869 - Karma: 21
It seems that your name fits you well as you appear to be a supporter of this countries nomenclature. GM and Chrysler both went through bankruptcy and both shed thousands and thousands of workers during those bankruptcies, the feds illegally using TARP money (which was borrowed btw) to postpone those bankruptcies just a few months made no sense. All it did was give Cerberus (I was wrong about the hedge fund thing, you must excuse me) more time to try to sell off its share of the business that it had help run into the ground. Both of these companies had been failing for a long time and will continue to fail further hurting the American economy and taxpayer. I would like to see both of these companies go the way of Studabaker or Edsel and have new better American or foriegn companies manufacture cars in America.

The FED did not save us from disaster all they did was postpone the disaster and make it worse. Hyperinflation will come, you can't double the money supply in such a short period of time without that being the result. Just look at what gold did today it jumped over 1,000 an indicator that inflation is coming, and the dollar index is just getting weaker and weaker hovering in the low 70's righ now I believe.
Sep 9 2009 8:13PM
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NomenClature
Posts: 4348 - Karma: 83
You don't understand the logistics of holding a billion dollar stake in a company.  You cant just "sell off" your shares, because before your done selling 1/4 of them, the rest of your position is worthless because you flooded the market.  The liquidation of a large stake can only be done by tender offer.

Cerberus initially introduced capital to Chrysler (prior to the crash), they were just unwilling to introduce more.  (and rightly so)

The fact that they continue to decline is all but irrelevant, the eventually piecemealing and dissolution of those companies is fine, so long as they don't SUDDENLY COLLAPSE.  No one ever gave a shit about the auto makers.  It was always about the surounding indusrty, which can adapt, but not all at once.

Hyperinflation will not happen.  You can not achieve Weimar-like devaluation with a currency as broadly used as the Dollar, its just to highly demanded by those without hard currency.  (we will likley face double digit inflation eventually, but likley under 25% per year)

We didn't even get close to doublling the money supply, and beyond that a very significant portion of that which was injected will be absorbed by the monetization of the masive current debt issuances held b the Fed.  (without debt monetization, we would have eventually had around 35 trillion in new money, but it will never even get a quarter of the way there, as cash used to buy pre-issued bonds is taken out of circulation by the Fed)

Gold is a highly liquid speculative asset that holds value in the short term (5 - 30 days), and very long term (+20 years)  it is otherwise volatile, and a terrible hedge.  Its something of a barometer of risk appetite, but only idiot goldbugs buy gold to hedge against inflation.  The run up in gold is due to a declining world supply, a major reduction in production, Chinas industrial demand, and India's monetary demand.

FYI the dollar index only measures against other currencies, and the currency markets are going berzerk.
Sep 9 2009 8:49PM
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dbstar
Posts: 2038 - Karma: 20
I don't think that the US is fascist, however i definitely do not think that the bailout is a form of economic fascism. The argument that large American corporations have a large amount of political pull and thus contribute to a corporatist state is not a new one, and not one that i really believe, just throwing it out there. Freedom of commerce? HA, capitalism is all about money and always has been. Freedom of commerce is just a way to sugar coat what capitalism is about.
Sep 9 2009 9:07PM
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NomenClature
Posts: 4348 - Karma: 83
um...what the hell are you talking about.

the idea your referring to is "Corporatocracy", and its horseshit.

Even Marx realized that capitalism in based on the freedom of commerce, he just contended that only the rich could take advantage of that freedom.  I don't know how you can deny this, as money is itself a result of the existence of commerce.  You can't base anything around "money", its just an arbitrary medium of exchange.

Your post is nearly incomprehensible.  Please articulate your ideas more clearly.

Sep 9 2009 9:17PM
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hoodhugo
Posts: 988 - Karma: 33
 
Sep 9 2009 10:10PM
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killabees
Posts: 8558 - Karma: 494
i hate when nerds have conversations on the interweb
Sep 9 2009 10:14PM
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Von
Posts: 4869 - Karma: 21
I'm not talking about selling shares, they got bought out by Fiat. They didn't have to sell off shares in the marketplace they just had to sell their stake, or a large enough stake to another company which is exactly what they did.

Those two companies in particular had been in decline for the last decade, and the only reason they didn't  go bust after the dot com bubble was because the housing bubble provided cheap credit that people bought cars on. There was no SUDDEN COLLAPSE both of these companies were in the toilet and everyone knew it. The jobs associated with those companies could have easily have been reallocated to other manufacturers. What's funny is that the workers and the UAW were two major problems that help bring these companies down, now everyone is concerned about the auto workers jobs when it's clear that the auto workers didn't care enough about their own jobs to cut their benefits and the like.

As for inflation
This is a graph of the Monetary Base for the US. I should have checked the facts before I said doubled, that was wrong, I'm an idiot. But look at the spike in the middle of 2009 that is a %25 increase in a very short period of time

[img]http://research.stlouisfed.org/fred2/fredgraphfile/?height=378&width=630&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s[1][id]=BASE&s[1][transformation]=lin&s[1][scale]=Left&s[1][line_color]=%230000FF&s[1][range]=5yrs&s[1][cosd]=2003-09-24&s[1][coed]=2008-09-24&s[1][revision_date]=&s[1][vintage_date]=2008-10-06[/img]

A lot of countries are currently trying to get rid of dollar reserves/questioning the purchase of US debt. Its stature in the world a the currency of choice is being highly questioned by many of the worlds newest economic powers (as well as the UN). So it's possible that many foreign countries could bail on the dollar.

Gold has rose almost %300 in the last 9 years while the dollar has dropped %33. So as a hedge against the dollar and inflation I'd say that gold is a great bet. But hey you keep investing in the DOW and keep your money in citi bank and in cash, we'll see how that works out.


Sep 9 2009 10:25PM
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NomenClature
Posts: 4348 - Karma: 83
very poignant
Sep 9 2009 10:26PM
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Von
Posts: 4869 - Karma: 21
Actually the Monetary Base did double I had it wrong in that last post as did you here's the graph.

Click for larger image

Sep 9 2009 10:28PM
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NomenClature
Posts: 4348 - Karma: 83
the Montary base is not the money supply.

The number your looking for is M2
Sep 9 2009 10:31PM
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Von
Posts: 4869 - Karma: 21
Of course M2 didn't rise as drastically because it is much harder for the Fed to control M2 than BASE.

"The monetary base comprises only coins, paper money, and commercial banks' reserves with the central bank"

That is what they have the most direct control of and it doubled in the fall of last year.
Sep 9 2009 10:36PM
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MEGAZORD
Posts: 4531 - Karma: -7
What brought them down was the UAW.  Paying benefits has gotten so outrageously expensive that they cannot afford to pay and survive; coupled with the lack of auto sales.
Sep 9 2009 10:51PM
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jambone
Posts: 934 - Karma: 11
Not entirely true, but your on the right track.
Sep 9 2009 11:08PM
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Von
Posts: 4869 - Karma: 21
I mean there are other aspects to capitalism clearly. But in a capitalist economy the government would have no role in that economy.
Sep 9 2009 11:09PM
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NomenClature
Posts: 4348 - Karma: 83
yes I'm well aware of that.

My point is that M0 is the least relevant measure of the money supply.  M2 is the relevant measure because it refers to funds in the broader financial system, which is where things like price level come into play.

MS grows primarily by deposits moving through different institutions.

The process is called the Money Multiplier, and its a function of reserve requirements.
Sep 9 2009 11:17PM
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Von
Posts: 4869 - Karma: 21
But all that needs to happen for M2 to begin a sharp increase of for the banks to start lending out all of the excess reserves they have. That would make the huge increase in Monetary Base (the banks reserves) into a huge increase in M2. The feds are encouraging banks to make more loans and if they follow this advice M2 will increase and has the potential to increase by the amount Monetary Base has which is doubled. This is very dangerous and should not be encouraged but for some reason the feds keep telling the banks to make more loans.
Sep 10 2009 11:44AM
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Von
Posts: 4869 - Karma: 21
And isn't the reason that the Fed increased bank reserves so much so that they could lend them to the general public (that would mean the rise in M2=the rise in MB)?
Sep 10 2009 11:46AM
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NomenClature
Posts: 4348 - Karma: 83
Those funds would have to deposited in 1/.08 institutions in order for the multiplier to be fully realized.  That takes a while.
Sep 10 2009 8:26PM
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