Image by Mike Licht, NotionsCapital.com via Flickr
I need to put on a hat just so I can take it off to GM’s spin doctors. They are clearly among the best in the world. What other company can claim that losing $1.2 billion in a mere 3 months while planning to use government money to repay a government “loan” is a sign of a healthy and recovering enterprise? Read the full article here.
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If George Bush can claim to be a stalwart supporter of the free market, then by comparison I see nothing wrong with GMs claims.
And never mind the billions used in the cash for clunkers program. I figure that will cover part of the government loan, and that will never be repaid to taxpayers. BTW, “losing”, not “loosing”.
It’s not just losing it, it’s loosing it. It let $1.2 billion loose in 3 months so it wants to let even more money loose. If you’re too big to fail, you can’t be let loose by everyone else but you can let everyone else’s money loose.
Fixed…thank you Shay
I was reading this article about Geithner and the AIG bailout and it occurred to me that what happened last year was this …
Imagine there is a boy who delivers groceries to senior citizens all over town. But he also ran up gambling debts with bookies all over town. When his debts reached the point where his house and his bicycle will have to be seized by his creditors and sold off (at a great loss to the bookies), the City government is asked to step in. “His services are too important to lose.” So the City is persuaded to use taxpayer money to pay off the bookies, and both the delivery boy and the bookies remain in operation, but this time subsidized by tens of thousands of dollars of taxpayers’ money. The government makes a big show of taking “equity” in the grocery delivery and gambling operations and pretends to be outraged about the amount of tips and bonuses that the delivery boy and the bookies receive, but essentially what they have done is underwritten a massive and ongoing waste of money based on the absurd premise that if malinvestments are not made good and unprofitable activities are not subsidized, then positive investments and profitable activities will also be harmed.
The phrase really should be, “Too big to bail out”.
I guarantee I can lose $1.2 billion better than GM can.
In Ohhh Henry’s story, what if the town didn’t step in, the boy got his assets seized and perhaps was given a temporary limp. True, his services would be interrupted, but someone else could just step in to take up the slack. There would be some down-time and readjustment, but perhaps the buyers of the services would be more critical of the new provider’s stability. By bailing out the careless delivery boy, they make it more difficult for a careful one to compete. They in effect make it more profitable to be excessively risky (or just unresponding to the market, as in the case of companies that deliver inferior products).
And Syrin, how about “Too big to bail.”
If it’s too big to fail, why is it in trouble. It can’t really be that big then.
G M
Gigantic Malinvestment!
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