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This might be a bit technical, but the company that received a bailout went through bankruptcy and re-structuring. https://en.wikipedia.org/wiki/General_Motors

This might be a bit technical, but the company that received a bailout went through bankruptcy and re-structuring. https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reor... So they didn't get a bailout that they are now using to "wildly speculate on tech startups" because all that capital has been restructured. Many companies did get bailed out in a market where raising capital was near impossible and as a result recovered and are involved in investing in tech companies both equity and debt. Although I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business?

kbenson 11y ago
> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.
- adevine 11y ago
  GM's financial arm was GMAC, which, while bailed out during the financial crises, eventually rebranded and IPO'ed as Ally Financial. The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment: https://www.treasury.gov/press-center/press-releases/Pages/jl9727.aspx https://www.treasury.gov/press-center/press-releases/Pages/j...
  - aaardvark 11y ago
    On a risk-adjusted basis, that's a pretty mediocre return.
    - kbenson 11y ago
      Considering the profit was at most a secondary goal of the investment, I wouldn't consider it bad at all.
  - kbenson 11y ago
    Sure (I was aware of most of that in general, but not the specifics), which only slightly alters my point, which is that major automakers have lots of experience in finance at certain levels. GM may have sold off a large portion of the division that handled this for them, but I would be surprised if there's not still a lot of people with quite a of of experience in finance embedded somewhere in their org. My real objection is to thinking of automakers as not having finance as core to their business. The vast majority of new car purchases are financed in some manner[1], and many of those are through the financial divisions of the automakers[2]. To my eyes, finance incentives are core to their marketing, and marketing is core to their business. 1: http://www.consumerreports.org/cro/news/2013/09/car-financing-on-rise-loans-and-leases/index.htm http://www.consumerreports.org/cro/news/2013/09/car-financin... 2: http://www.reuters.com/article/us-autos-financing-insight-idUSKBN0ER0E820140616 http://www.reuters.com/article/us-autos-financing-insight-id...
  - MajorLOL 11y ago
    >The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment Factor in the interest USA would have saved by paying down the national debt instead. Additionally, consider what private investors would have returned with the same investment and what they would have paid in tax on personal income if they had never been taxed that $17.2b instead. They won on this one, we can point at the various Solyndras the USA has bet on and lost while we are at it. This ignores the fact that we don't mail taxes in for government to act like a massive VC. We send the cash in so they can fix the 'crumbling roads and bridges', service debt and help the poor we are always hearing about.
    - criley2 11y ago
      >Factor in the interest USA would have saved by paying down the national debt instead. The average interest rate on the debt is 2.43$, we have around $17 trillion debt, and you're talking about a $17 billion paydown (0.1%). The amount of interest saved would be around $400 million per year. The profit on the GM bailout was $2400 million, so it would have taken 6 years for the decreased interest to total 2.4 billion. >we can point at the various Solyndras the USA has bet on and lost while we are at it. Can you point to the value of the hundreds or thousands of engineers and employees of failed new energy startups that received invaluable real world training and experience who are lending those talents to other companies. Think about NASA and the 18 billion we "piss away" down that black hole every year, and the huge benefits that we derive from their work and the experience that those who work there gain. Not every investment the government makes has a return in next-year-dollars.
      - MajorLOL 11y ago
        Debt: 6 years to realize the savings on the interest? It nearly took GM that long to repay the debt they took on. It's sounding like a worse investment all the time. OTJ Experience: I think it's less speculative and lines less wealthy billionaires pockets to invest directly into education and industry beyond private market money to provide great learning experiences for people.
        11y ago
  - tedmiston 11y ago
    I made some pretty unreasonable but convenient assumptions with the basic compound interest formula in back-of-the-envelope math to arrive at ~2.25% annual interest rate. http://www.wolframalpha.com/input/?i=compound+interest&a=*C.compound+interest-_*Formula.dflt-&a=FSelect_**PresentValueFutureValueDates-.dflt-&a=*FS-_**PresentValueFutureValueDates.i-.*PresentValueFutureValueDates.PV-.*PresentValueFutureValueDates.FV--&f4=19%2C600%2C000%2C000&f=PresentValueFutureValueDates.FV_19%2C600%2C000%2C000&f5=17%2C200%2C000%2C000&f=PresentValueFutureValueDates.PV_17%2C200%2C000%2C000&a=*FP.PresentValueFutureValueDates.compoundingfreq-_Monthly&f7=29+Dec+2008&f=PresentValueFutureValueDates.ID%5Cu005f29+Dec+2008&f8=17+Oct+2014&f=PresentValueFutureValueDates.MD%5Cu005f17+Oct+2014 http://www.wolframalpha.com/input/?i=compound+interest&a=*C.... Assumptions: - I know the amount was not dispersed all at once at the start - I have no idea what compounding frequency seems appropriate - Does not account for inflation - Time frame: 12/29/2008–10/17/2014 per the linked pdf [1] Aside: $17.2B 2008 dollars adjusted for inflation becomes $18.89B 2014 dollars. https://www.wolframalpha.com/input/?i=17%2C200%2C000%2C000+2008+dollars+in+2014 https://www.wolframalpha.com/input/?i=17%2C200%2C000%2C000+2... That makes the return a bit less exciting. I'd love to model this in a more accurate way if others know how that might be done. 1: https://www.treasury.gov/press-center/press-releases/Documents/Ally%20Financial%20Timeline.pdf https://www.treasury.gov/press-center/press-releases/Documen...
- whistlecrackers 11y ago
  You get it. Some times the automotive side takes a backseat to the financing.

kbenson 11y ago

> I'm guessing your particular objection here is that they're a non-financial company and it doesn't seem to be part of their core business? Although I'm pretty sure every major automaker is also a financial company, and has been for quite a while. All those special 0% down or cash back deals don't come from the dealer.

adevine 11y ago
GM's financial arm was GMAC, which, while bailed out during the financial crises, eventually rebranded and IPO'ed as Ally Financial. The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment: https://www.treasury.gov/press-center/press-releases/Pages/jl9727.aspx https://www.treasury.gov/press-center/press-releases/Pages/j...
- aaardvark 11y ago
  On a risk-adjusted basis, that's a pretty mediocre return.
  - kbenson 11y ago
    Considering the profit was at most a secondary goal of the investment, I wouldn't consider it bad at all.
- kbenson 11y ago
  Sure (I was aware of most of that in general, but not the specifics), which only slightly alters my point, which is that major automakers have lots of experience in finance at certain levels. GM may have sold off a large portion of the division that handled this for them, but I would be surprised if there's not still a lot of people with quite a of of experience in finance embedded somewhere in their org. My real objection is to thinking of automakers as not having finance as core to their business. The vast majority of new car purchases are financed in some manner[1], and many of those are through the financial divisions of the automakers[2]. To my eyes, finance incentives are core to their marketing, and marketing is core to their business. 1: http://www.consumerreports.org/cro/news/2013/09/car-financing-on-rise-loans-and-leases/index.htm http://www.consumerreports.org/cro/news/2013/09/car-financin... 2: http://www.reuters.com/article/us-autos-financing-insight-idUSKBN0ER0E820140616 http://www.reuters.com/article/us-autos-financing-insight-id...
- MajorLOL 11y ago
  >The US Treasury made a ~ $2.4 billion profit on a $17.2 billion investment Factor in the interest USA would have saved by paying down the national debt instead. Additionally, consider what private investors would have returned with the same investment and what they would have paid in tax on personal income if they had never been taxed that $17.2b instead. They won on this one, we can point at the various Solyndras the USA has bet on and lost while we are at it. This ignores the fact that we don't mail taxes in for government to act like a massive VC. We send the cash in so they can fix the 'crumbling roads and bridges', service debt and help the poor we are always hearing about.
  - criley2 11y ago
    >Factor in the interest USA would have saved by paying down the national debt instead. The average interest rate on the debt is 2.43$, we have around $17 trillion debt, and you're talking about a $17 billion paydown (0.1%). The amount of interest saved would be around $400 million per year. The profit on the GM bailout was $2400 million, so it would have taken 6 years for the decreased interest to total 2.4 billion. >we can point at the various Solyndras the USA has bet on and lost while we are at it. Can you point to the value of the hundreds or thousands of engineers and employees of failed new energy startups that received invaluable real world training and experience who are lending those talents to other companies. Think about NASA and the 18 billion we "piss away" down that black hole every year, and the huge benefits that we derive from their work and the experience that those who work there gain. Not every investment the government makes has a return in next-year-dollars.
    - MajorLOL 11y ago
      Debt: 6 years to realize the savings on the interest? It nearly took GM that long to repay the debt they took on. It's sounding like a worse investment all the time. OTJ Experience: I think it's less speculative and lines less wealthy billionaires pockets to invest directly into education and industry beyond private market money to provide great learning experiences for people.
      - 11y ago
- tedmiston 11y ago
  I made some pretty unreasonable but convenient assumptions with the basic compound interest formula in back-of-the-envelope math to arrive at ~2.25% annual interest rate. http://www.wolframalpha.com/input/?i=compound+interest&a=*C.compound+interest-_*Formula.dflt-&a=FSelect_**PresentValueFutureValueDates-.dflt-&a=*FS-_**PresentValueFutureValueDates.i-.*PresentValueFutureValueDates.PV-.*PresentValueFutureValueDates.FV--&f4=19%2C600%2C000%2C000&f=PresentValueFutureValueDates.FV_19%2C600%2C000%2C000&f5=17%2C200%2C000%2C000&f=PresentValueFutureValueDates.PV_17%2C200%2C000%2C000&a=*FP.PresentValueFutureValueDates.compoundingfreq-_Monthly&f7=29+Dec+2008&f=PresentValueFutureValueDates.ID%5Cu005f29+Dec+2008&f8=17+Oct+2014&f=PresentValueFutureValueDates.MD%5Cu005f17+Oct+2014 http://www.wolframalpha.com/input/?i=compound+interest&a=*C.... Assumptions: - I know the amount was not dispersed all at once at the start - I have no idea what compounding frequency seems appropriate - Does not account for inflation - Time frame: 12/29/2008–10/17/2014 per the linked pdf [1] Aside: $17.2B 2008 dollars adjusted for inflation becomes $18.89B 2014 dollars. https://www.wolframalpha.com/input/?i=17%2C200%2C000%2C000+2008+dollars+in+2014 https://www.wolframalpha.com/input/?i=17%2C200%2C000%2C000+2... That makes the return a bit less exciting. I'd love to model this in a more accurate way if others know how that might be done. 1: https://www.treasury.gov/press-center/press-releases/Documents/Ally%20Financial%20Timeline.pdf https://www.treasury.gov/press-center/press-releases/Documen...
whistlecrackers 11y ago
You get it. Some times the automotive side takes a backseat to the financing.