Chevy Volt a Failure - GM to Layoff 1,300

I apologize, but I am totally not following. There is no breaking even on this. They paid off GM's debt, took an equity stake in return and in the process took money from entities that were actually owed money by GM and gave it to the UAW.

You don't break even when you GIVE someone money for equity, and way overpay for that equity. It's a handout.

In simple terms, the scorecard looks like this:

1) United States: $27 billion in debt. We're all on the hook for that.
2) The UAW, which had virtually no debt stake in the company: An outsized equity stake in the new company that was made possible by what will turn out to be an additional $27 billion of American debt.
3) The actual debt holders in GM before its bankruptcy: zilch.

If there was a textbook to teach political corruption, this would be one of the case studies.

 

Massive concessions? They got a ton for nothing, and it was done by ripping off others -- all through political strongarming. In what world does that amount to "concessions." They were bought for political patronage reasons and the money used to buy them came by ripping off others.

The UAW's health care benefits trust had a $20 billion debt holding in the company. For that, the government gave them a 17.5 percent stake in the company and $10 billion back into the trust.

GM's other creditors were owed $27 billion. For that, they received only a 10 percent equity stake in the new company.

In a normal bankruptcy that would have never happened. In an act of political subversion, in which politicians can buy off interests, that was exactly what happened.

And on top of it, in order to keep this sham going, the rest of us are going to foot tens of billions of dollars worth of debt.

Massive concessions?

And this was not a bailout. A bailout would have been a money infusion. That in itself is corrupt, because, for example in the case of banks that got handed money, it was our government unfairly benefiting some at the expense of others.

This however, was much more insidious. It wasn't a bailout. They took over the company. And once they had control, they used that control to hand out political favors and did it by robbing people and screwing the rest of us by adding tens of billions of dollars to our already staggering debt.

There was nothing brilliant about it, unless you are a fan of political corruption.

 

And millions of others who weren't politically connected not only didn't get that same quid pro quo, they are suffering worse for it today, because of all the consequences of that kind of political corruption. I won't even spell it out again. You know.

But if all that matters to you is the results, we could have just issued treasury debt, had the Federal Reserve monetize that debt the way we are, and mailed checks to a hell of a lot more people than benefit from GM being around.

If we're going to play make believe prosperity games like that, we might as well let more people share in our running up of the national credit card.

Also, as you alredy know your "result" is incredibly short-sighted. When you fuck with debt markets by changing the rules on people who lent money, you take away incentive from anyone to make those loans. The lesson. Loan money, and if the company heads to bankruptcy, a politician can step in and take what you are owed and give it to a political supporter who was owed nothing.

Aside from that, when you politically try to create economic activity without regard for actual demand (but based on political cronyism), you divert money from potentially productive areas of the economy that can grow our GDP and put people to work. So really, the "result" you got was another anchor on our economy that will ensure more people suffer longer. That money could have been going toward creating actual jobs based on actual demand. As I said, nothing brilliant about corruption and there was nothing great about the results, which hurt a whole lot of people in the aggregate.

 

What happened to Delphi was one of those "results" you find brilliant. It was made possible by our government stepping into PRIVATE economic activity with its corrupt motives.

1) You can't have it both ways.
2) You betray your biases when you poke around the small consequence (the millions of dollars in play for Delphi and a vulture fund) and ignore the large consequence -- the billions of dollars we were talking about. It's a red herring.
3) Again, you can't have it both ways. You want corruption. You get lots of it. It benefits the people you think are noble and the people you don't find noble. You can't advocate government unfair benefits to JUST the people you like. You get everyone with their hands in the kitty.

And no, "we" all didn't make sacrifices. We were all fucked over. Especially those of us who don't pay to play. Our national debt continues to grow -- as we pile up debt that gets used by politicians to buy patronage. Unemployment will be a problem for years because of the anchor our government is on our economy with this nonsense. Economic growth has been stifled enormously by the "brilliance" you see. And on top of it, given the world economic climate -- and the debt and monetization of that debt that has been the result of all of this insanity -- our country's credit standing has taken a deep hit, making our current path just plain unsustainable.

Once again, nothing brilliant there. It's unjust. Our government shouldn't be robbing people. And it shouldn't be handing out money to hand picked entities they like. What about the millions of people who lost jobs who didn't have a hand in a politician's pocket in order to get their kickbacks?