General Motors

[DACrowe]

It comes down to this...you say the economy would recover on its own. You're right, it would. But if the government had done nothing it likely would have led to another lost decade. Government intervention is one of the lessons learned of the Great Depression. You can mention his critics, but WWII (massive government spending) is obviously what got us out and the New Deal prior to 1936 was having a similar effect. The gov. blew a lot of money for its mistakes in the last 10 years. But if it had sat by andd done nothing we would be falling into the abyss instead of expanding. You either accept a huge depression or you avoid it, like so.

 

[chaseter]

http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx

http://online.wsj.com/article/SB123353276749137485.html

What is crazy is how much that mimics today. That second link is very enlightening.

 

[Paradoxium]

It comes down to this...you say the economy would recover on its own. You're right, it would. But if the government had done nothing it likely would have led to another lost decade. Government intervention is one of the lessons learned of the Great Depression. You can mention his critics, but WWII (massive government spending) is obviously what got us out and the New Deal prior to 1936 was having a similar effect. The gov. blew a lot of money for its mistakes in the last 10 years. But if it had sat by andd done nothing we would be falling into the abyss instead of expanding. You either accept a huge depression or you avoid it, like so.

Of course if you are going to work on that theory, Obama failed. Remember that theory and it's proponents required that he spend twice as much and at twice the speed. IN ONE YEAR. If it doesn't work, they need to go at this rate for every year. Otherwise you are going to get the lost decade. At least in their theory.

Both the do nothing camp and giant fiscal stimulus camp are radically different. There is no compromise. Outside of getting the worse of both worlds in theory. The debt, the do nothing people keep pointing to. And the lack of a recovery, the giant fiscal stimulus people point to. It's the equivalent of trying to find a compromise between murder and non-murder.

Japan spent more than Obama did in 2009 and still failed. Japanese debt is now 200% of their GDP. American federal debt is 100%. If you include all debt, the percent is ludicrously higher. I suspect if you were to implement that theory, it would require at least 2 years. In other words, probably 400% of current debt levels. Also remember the Japanese are bigger savers, they can pay for the debt. America is known for the opposite, and their idea of a sign of "recovery" is greater consumer spending. Aka citizens getting into more debt.

The idea the Lost Decade is lack of spending IMO is a twisted take. It's like saying a drunk needs to sober up by drinking more booze. I see it as an empirical example of too much spending. The symptoms are all there. They had all the credit destruction occurring (commercial and real estate bubble popping) and thus like the deflation we had in 2008 (hence giant spike in the dollar index). Then they tried to inflate this away with fiscal spending and low interest. EXACTLY what we are doing now. Only to result in making things even more worse. Most of their "infrastructure" hardly gets used and produced nothing economically productive.

Capital flow from infrastructure spending doesn't mean it goes into anything "productive in the economy" when you take it away from somewhere that desperately needed the capital. And especially if the capital goes into basically malinvestments like ******** green company that continually lose money and eventually outsource the jobs internationally to save money from unions Obama shills for. In other words, using the capital to build a bridge is not that same as investing capital in a sustainable company. Government can never really invest because they do not have a mechanism to differentiate something that is profitable to a money loser. In a way, getting people to dig holes to fill it up is a "investment".

 

[Paradoxium]

http://www.forbes.com/2010/04/23/ge...-opinions-columnists-shikha-dalmia_print.html

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn’t, the company, which couldn’t raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, “The GM Bailout: Paid Back in Full,” most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate–a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company–arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

As it turns out, the Obama administration put $13.4 billion of the aid money as “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money–government money–to pay back the government loan.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government’s tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new–and bigger–DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM’s government debt–not pay it back!

 

[Hobodeluxe]

Of course if you are going to work on that theory, Obama failed. Remember that theory and it's proponents required that he spend twice as much and at twice the speed. IN ONE YEAR. If it doesn't work, they need to go at this rate for every year. Otherwise you are going to get the lost decade. At least in their theory.

That is no proof that anything failed. How do you know that if there were more done that the job recovery and other lagging indicators wouldn't have recovered even faster? And we're far from being out of the woods. Especially on job recovery. Look at all the budget cutbacks and the problems they're having with police and schools. That paragraph was pure derp.

Both the do nothing camp and giant fiscal stimulus camp are radically different. There is no compromise. Outside of getting the worse of both worlds in theory. The debt, the do nothing people keep pointing to. And the lack of a recovery, the giant fiscal stimulus people point to. It's the equivalent of trying to find a compromise between murder and non-murder.

actually the stimulus bill was a compromise containing several tax cuts (and some pork) from amendments put in the bill by republicans. neither side got everything they wanted out of it. As for lack of recovery...

http://www.google.com/finance?chdnp...chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0

I'm going to have to disagree with you on a lack of recovery.
and I'm not alone. Most of the leading indicators agree with me.

Japan spent more than Obama did in 2009 and still failed. Japanese debt is now 200% of their GDP. American federal debt is 100%. If you include all debt, the percent is ludicrously higher. I suspect if you were to implement that theory, it would require at least 2 years. In other words, probably 400% of current debt levels. Also remember the Japanese are bigger savers, they can pay for the debt. America is known for the opposite, and their idea of a sign of "recovery" is greater consumer spending. Aka citizens getting into more debt.

The idea the Lost Decade is lack of spending IMO is a twisted take. It's like saying a drunk needs to sober up by drinking more booze. I see it as an empirical example of too much spending. The symptoms are all there. They had all the credit destruction occurring (commercial and real estate bubble popping) and thus like the deflation we had in 2008 (hence giant spike in the dollar index). Then they tried to inflate this away with fiscal spending and low interest. EXACTLY what we are doing now. Only to result in making things even more worse. Most of their "infrastructure" hardly gets used and produced nothing economically productive.

Capital flow from infrastructure spending doesn't mean it goes into anything "productive in the economy" when you take it away from somewhere that desperately needed the capital. And especially if the capital goes into basically malinvestments like ******** green company that continually lose money and eventually outsource the jobs internationally to save money from unions Obama shills for. In other words, using the capital to build a bridge is not that same as investing capital in a sustainable company. Government can never really invest because they do not have a mechanism to differentiate something that is profitable to a money loser. In a way, getting people to dig holes to fill it up is a "investment".

Infrastructure does too add to the economic power of a society. Transportation,energy and other utilities are vital to industry and if we can provide cheaper electric,water and transportation then we invite business and investment.
what doesn't add to jobs is all this derivative trading and speculating on the next bubble to inflate and cash in on.

 

[Paradoxium]

That is no proof that anything failed. How do you know that if there were more done that the job recovery and other lagging indicators wouldn't have recovered even faster? And we're far from being out of the woods. Especially on job recovery. Look at all the budget cutbacks and the problems they're having with police and schools. That paragraph was pure derp.




actually the stimulus bill was a compromise containing several tax cuts (and some pork) from amendments put in the bill by republicans. neither side got everything they wanted out of it. As for lack of recovery...

http://www.google.com/finance?chdnp...chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0

I'm going to have to disagree with you on a lack of recovery.
and I'm not alone. Most of the leading indicators agree with me.




Infrastructure does too add to the economic power of a society. Transportation,energy and other utilities are vital to industry and if we can provide cheaper electric,water and transportation then we invite business and investment.
what doesn't add to jobs is all this derivative trading and speculating on the next bubble to inflate and cash in on.

That's my point, the fact that it was a compromise defeats the purpose of what advocates of a stimulus want. Their intent is to increase aggregate demand. That is the cliff's notes version of Keynes' justification for intervention. Tax credits (as per the stimulus) is insufficient. In effect, we gotten the worst of both worlds by compromising. It's either you go all in or pull out of the game all together. The two theories simply don't jive at all.

The indicators your experts are telling you are based on stuff like consumer spending and confidence. This does not deal with debt levels which are a source of all defaults and underwater positions in the first place. They also base on stuff like on rising American equities (DJIA). Equities that is being pumped sky high from low interest; people borrowing at the low interest to speculate more. That is - like your point - not a real economy. This parallels all the bubbles like the NASDAQ and Housing.

And overpaying to and inefficiently maintaining certain infrastructure does not mean they are cheaper, you've deferred and cloaked surface cost. Note the transport system in Hong Kong is private, it is cleaner, more efficient, more modern and faster than any of the public transport in North America. All you've accomplish is give yourself a blood transfusion from your left arm to your right arm... with a leaky tube. As I noted, Japan spent far more (percent wise) than America did on infrastructure and they hardly recovered. They propped up / bailed out their bad banks and real estate, again nothing good has come of it. The Keynesian still think Japan did not spend enough.

All the budget freezes by Obama is far too little and far too late.

 

[Marx]

GM SET TO OPEN UP SHARES TO THE PUBLIC
http://money.cnn.com/2010/08/18/news/companies/gm_ipo/index.htm?hpt=T1&iref=BN1

 

[Marx]

It looks like GM is scheduled to go public again tomorrow. (This will effectively bring government ownership of the company from sixty percent down to thirty percent.)

 

[doih]

GM IPO doing very well

http://www.businessweek.com/news/2010-11-18/general-motors-shares-climb-after-20-billion-ipo.html

http://www.google.com/finance?q=NYSE%3AGM

http://finance.yahoo.com/q?s=GM

Personally I'm not touching this stock, but hey, more power to those who want in.

 

[Marx]

It definitely looks like the stock release is a big hit...I'd still be cautious though.

 

[Paradoxium]

GM to Pay $400M in Worker Bonuses
Still haz not paid back loan, unless you count using your credit card to pay your other credit card's bill as repayment. But let's getz some bonus taxpayer money. t:

 

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