T Nation

Heavy Losses on Bailout?


#1

Taxpayers face heavy losses on auto bailout
By CHRISTOPHER S. RUGABER (AP) â?? 8 hours ago

WASHINGTON â?? Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department. "But it may not be enough."

The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year.

The shares "will have to appreciate sharply" for taxpayers to get their money back, the report said.

For example, GM's market value would have to reach $67.6 billion, the report said, a "highly optimistic" estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler, about $5.4 billion of the $14.3 billion provided to the company is "highly unlikely" to ever be repaid, the panel said.

Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost. But Meg Reilly, a department spokeswoman, said there is a "reasonably high probability of the return of most or all of the government funding" that was provided to assist GM and Chrysler with their restructurings

Full Article - http://www.google.com/hostednews/ap/article/ALeqM5gaV9V9SqCAHVxIgXEGOCq0YeD2BAD9AJIGVG0

V


#2

[quote]Vegita wrote:
Taxpayers face heavy losses on auto bailout
By CHRISTOPHER S. RUGABER (AP) â?? 8 hours ago

WASHINGTON â?? Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year.

The shares “will have to appreciate sharply” for taxpayers to get their money back, the report said.

For example, GM’s market value would have to reach $67.6 billion, the report said, a “highly optimistic” estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler, about $5.4 billion of the $14.3 billion provided to the company is “highly unlikely” to ever be repaid, the panel said.

Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost. But Meg Reilly, a department spokeswoman, said there is a “reasonably high probability of the return of most or all of the government funding” that was provided to assist GM and Chrysler with their restructurings

Full Article - http://www.google.com/hostednews/ap/article/ALeqM5gaV9V9SqCAHVxIgXEGOCq0YeD2BAD9AJIGVG0

V[/quote]

You mean an “investment” the market would not have touched with a ten foot pole is unlikely to get any returns?

But, but, those advisors went to Harvard and even know totally ideology free heterodox economics!


#3

[quote]orion wrote:
Vegita wrote:
Taxpayers face heavy losses on auto bailout
By CHRISTOPHER S. RUGABER (AP) �¢?? 8 hours ago

WASHINGTON �¢?? Taxpayers face losses on a significant portion of the $81 billion in government aid provided to the auto industry, an oversight panel said in a report to be released Wednesday.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

“I think they drove a very hard bargain,” said Elizabeth Warren, the panel’s chairwoman and a law professor at Harvard University, referring to the Obama administration’s Treasury Department. “But it may not be enough.”

The prospect of recovering the government’s assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM’s case by next year.

The shares “will have to appreciate sharply” for taxpayers to get their money back, the report said.

For example, GM’s market value would have to reach $67.6 billion, the report said, a “highly optimistic” estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler, about $5.4 billion of the $14.3 billion provided to the company is “highly unlikely” to ever be repaid, the panel said.

Treasury Department officials have acknowledged that most of the $23 billion provided by the Bush administration is likely to be lost. But Meg Reilly, a department spokeswoman, said there is a “reasonably high probability of the return of most or all of the government funding” that was provided to assist GM and Chrysler with their restructurings

Full Article - http://www.google.com/hostednews/ap/article/ALeqM5gaV9V9SqCAHVxIgXEGOCq0YeD2BAD9AJIGVG0

V

You mean an “investment” the market would not have touched with a ten foot pole is unlikely to get any returns?

But, but, those advisors went to Harvard and even know totally ideology free heterodox economics!

[/quote]

I usually like to take my life savings and go to the casino. I generally will go to the roulette wheel and put the whole thing on Green. I see no problem with how the government handled this, makes sense to me.

Oh… Wait, I mean I usually like to take someone elses life savings to the casino. Then I go to the roulette wheel with thier money and dump it all on green for one spin. Thats what I origionally meant. I wouldn’t do that shit with my money.

V


#4

I have a chunk of money that I’m going to plunk down on a vehicle in the coming weeks.

This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

For those who are stuck on “Left” and “Right” politics, this is a shining example of why, when it comes to money and wreckless spending, you know, the things that directly affect your wallet, they are THE SAME.


#5

Sept. 9 (Bloomberg) – Wealthy individualsâ?? Chapter 11 bankruptcy filings jumped 73 percent in the second quarter from a year earlier, according to the National Bankruptcy Research Center, a research firm in Burlingame, California.

More individuals or families with at least $1,010,650 in secured debt and $336,900 unsecured are using Chapter 11 of the U.S. bankruptcy code typically associated with business reorganizations. Falling U.S. home prices leave them unable to refinance or sell properties when they drop below the value of the mortgage, said Chicago bankruptcy attorney Joseph Baldi.

Chapter 11 is more expensive and time-consuming for debtors and creditors than a Chapter 7 liquidation of assets. Wealthier people filing for bankruptcy typically have large homes, two car payments and children in private schools, said Leslie Linfield, executive director of the Institute for Financial Literacy in Portland, Maine, a credit-counseling and research group.

â??Youâ??re living on the edge, youâ??re juggling those financial balls,â?? Linfield said. â??When one ball goes, they all fall down.â??

http://www.bloomberg.com/apps/news?pid=20603037&sid=aOYQzpAp2o9w

“But…but…but, we had the Cash for Clunkers Program!!” – the Loony Left

I’m beginning to doubt the very intelligence of Obama. I know he’s a Harvard Law Grad and all, but some of the things he does have the mark of idiocy on them.


#6

[quote]SteelyD wrote:
I have a chunk of money that I’m going to plunk down on a vehicle in the coming weeks.

This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

For those who are stuck on “Left” and “Right” politics, this is a shining example of why, when it comes to money and wreckless spending, you know, the things that directly affect your wallet, they are THE SAME.[/quote]

If you don’t mind me asking, what vehicle do you have your eye on? The reason I ask is because I too am looking at a vehicle, which is not American made.


#7

[quote]MaximusB wrote:
SteelyD wrote:
I have a chunk of money that I’m going to plunk down on a vehicle in the coming weeks.

This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

For those who are stuck on “Left” and “Right” politics, this is a shining example of why, when it comes to money and wreckless spending, you know, the things that directly affect your wallet, they are THE SAME.

If you don’t mind me asking, what vehicle do you have your eye on? The reason I ask is because I too am looking at a vehicle, which is not American made. [/quote]

New or used pickups: Nissan Titan or Toyota Tundra (or Tacoma).

LAST resort may be a used Ford f-150 (XLT FX4 Supercrew) that I’ve been eyeing up. If I can get it dirt cheap. I’m not so much anti-Ford as they didn’t take part in the clusterfuck (best of the worst).


#8

Isn’t Saturn American made? They also get great gas mileage, and have good overall customer satisfaction scores. I currently drive an Ion and have an older SL1 for use as a winter rat. I’m pretty sure they were not bailed out.

V


#9

[quote]Vegita wrote:
Isn’t Saturn American made? They also get great gas mileage, and have good overall customer satisfaction scores. I currently drive an Ion and have an older SL1 for use as a winter rat. I’m pretty sure they were not bailed out.

V[/quote]

Saturn is a GM brand, like Chevrolet, Buick, etc. They will be phased out like previous GM brands (Oldsmobile, Pontiac), I believe in '12.


#10

[quote]SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.
[/quote]

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers.


#11

[quote]koffea wrote:
SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers. [/quote]

Arent Most hondas and toyotas made like 75% in the US now?

V


#12

Foreign automakers are laughing at the American Auto Industry, they are the victim of their own demise. At some point, American automakers felt it was more cost effective to make a car as cheap as possible, and that included quality. But when these cheap cars started breaking down left and right, people felt it wiser to go with a foreign car that is better made.

No one can argue that the Japanese and Germans make the best and most reliable cars, and their sales records can prove it. People continually go back to Toyota, Nissan, BMW, Mercedes, Lexus because you cannot kill those cars.

No one wants to deal with car trouble, and if spending a little more money secures that then people go for it. I think Ford and Chevy have gotten better, but their reputation is pretty tarnished.


#13

[quote]Vegita wrote:
koffea wrote:
SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers.

Arent Most hondas and toyotas made like 75% in the US now?

V[/quote]

yes, but the profits still role back to Japan


#14

[quote]koffea wrote:
Vegita wrote:
koffea wrote:
SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers.

Arent Most hondas and toyotas made like 75% in the US now?

V

yes, but the profits still role back to Japan[/quote]

Shouldn’t they? I mean if we are still paying workers here and only fucking over the rich fucks who ruined OUR car industry, then it seems like a good deal to me. It’s not like the line workers were getting the profits here anyways right? Maybe the Japanese will use the money to make strides in better porn or Godzilla movies or something that will in turn benefit us all.

V

V


#15

[quote]koffea wrote:
Vegita wrote:
koffea wrote:
SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers.

Arent Most hondas and toyotas made like 75% in the US now?

V

yes, but the profits still role back to Japan[/quote]

Except for all those profits made by factory workers in the US and parts suppliers. This is like trying to argue that all the profits from illegal Mexican labor stay in the US, since they work for US companies.


#16

[quote]koffea wrote:
yes, but the profits still role back to Japan[/quote]

You should understand that profits earned in dollars are typically spent here because they cannot be spent back in the original country and exchanging currency is expensive. The result is that the money is invested here and more jobs are thus created.

If it means even cheaper and better quality cars in the future because the foreign owners will reinvest it in their companies isn’t that a good thing for us as consumers in the US? There are many people in the US who own stock in these companies and will receive dividend returns because of profits. Foreign owners employ people in the US to manufacture automobiles.

Why is this a bad thing that the owners happen to be foreigners? It is a fallacy of economic reasoning to think because the owners are foreigners that somehow US consumers and workers do not benefit from foreign entrepreneurship. Trade always makes people better off no matter who “profits” from the risks taken. And I should add, profits only come after the work has already been done. In this regard it is earned.

The Japanese and Korean manufacturers receive profits because they deliver a product a typical US consumer wants. In that regard, so what if profits go overseas? It makes the dollars remaining here that much more valuable to consumers.


#17

[quote]Vegita wrote:
koffea wrote:
SteelyD wrote:
This “bailout” basically ensured that none of my money will (ever) go to Chrysler or GM.

with people so angry over the bailout and the cash for clunkers program and essentially voting with their moolah, its interesting how this has actually turned into subsidization program for foreign automakers.

Arent Most hondas and toyotas made like 75% in the US now?

V[/quote]

Parts made overseas and put together in the US primarily in the south without AWU.

Toyota or Honda are good choices, Nissan was bought by a french company and cars after 2006 are seeing more issues.

Subaru is a also very good but no trucks, and they have a plant down south.

Ford has been doing a very good job at improving their vehicles as of 2007-08 with there new plant in south america again minus the union. They also recruited some engineers from toyota.

I am looking at getting a honda ridgeline or honda pilot with third row seating. Bot only will honda, toyota or subaru last you, they will hold their resale value unlike almost any other car company. (in those I am including lexus and acura since they the high end lines)

I have a nissan now too, but the customer service has gone down since they were bought out.

My best friend is really big in cars, his grand father owns a BMW, a volvo , a Mercedes, a Lexus and a saturn dealership in multiple states. He would recommend to us never buy a saturn. He drives a subaru and a BMW. And his father has a toyota and a honda dealership.

just my 2 cents though.


#18

http://www.bloomberg.com/apps/news?pid=20601087&sid=avUhpIZLrXXI

They might get a couple billion back…

by screwing the financially responsible.


#19

[quote]DoubleDuce wrote:
http://www.bloomberg.com/apps/news?pid=20601087&sid=avUhpIZLrXXI

They might get a couple billion back…

by screwing the financially responsible.[/quote]

That’s why they have to be punished…because they WERE financially responsible. It is the ultimate realization of the principle ‘I am my brother’s keeper.’


#20

[quote]Vegita wrote:
Shouldn’t they? I mean if we are still paying workers here and only fucking over the rich fucks who ruined OUR car industry, then it seems like a good deal to me. It’s not like the line workers were getting the profits here anyways right? Maybe the Japanese will use the money to make strides in better porn or Godzilla movies or something that will in turn benefit us all.

V

V[/quote]
they absolutely should get the profits, they are making a superior product (well not their porn, but in a lot of other things). the government bail out was not supposed to help other countries, or subsidize their trade. It was supposed to help American companies get back on their feet while injecting money into the system.

[quote]LIFTICVSMAXIMVS wrote:
You should understand that profits earned in dollars are typically spent here because they cannot be spent back in the original country and exchanging currency is expensive. The result is that the money is invested here and more jobs are thus created.

If it means even cheaper and better quality cars in the future because the foreign owners will reinvest it in their companies isn’t that a good thing for us as consumers in the US? There are many people in the US who own stock in these companies and will receive dividend returns because of profits. Foreign owners employ people in the US to manufacture automobiles.

Why is this a bad thing that the owners happen to be foreigners? It is a fallacy of economic reasoning to think because the owners are foreigners that somehow US consumers and workers do not benefit from foreign entrepreneurship. Trade always makes people better off no matter who “profits” from the risks taken. And I should add, profits only come after the work has already been done. In this regard it is earned.

The Japanese and Korean manufacturers receive profits because they deliver a product a typical US consumer wants. In that regard, so what if profits go overseas? It makes the dollars remaining here that much more valuable to consumers.[/quote]
i am not arguing that there is no bleed off that ends up helping some Americans. That obviously happens. You seemed to go all over the place in your arrangement first stating that money stays in the US, then ending with so what if it goes over seas. Money absolutely goes back to the mother country. If there was no profit to be made why would the company/existing stake holders go overseas at all? The laws of economics state that they would not do the endeavor.

My argument is that the government should stop taking my money and using it for ridiculous spending programs, especially those that end up subsidizing foreign companies/countries. The bailout and the cash for clunkers program hurt American companies more than it helped them.