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You're only counting the dollar return. As a social institution of government, you'd want to price in the upside of not having the US auto manufacturing industr
by adventured 7y ago
You're only counting the dollar return. As a social institution of government, you'd want to price in the upside of not having the US auto manufacturing industry implode, with vast unemployment, lost manufacturing that would never return, and GM itself collapsing along with its jobs. It's considerably beyond your figures.
Alternative, nationalize it? Now that's a real disaster, having the US Government in the auto manufacturing business.
Regardless it's extremely low on risk in fact. That's partially magic printed fun dollars paid for via the Fed's obese balance sheet.
And that's exactly where the latest monster stimulus is going to come from. We most certainly are not paying down any of that debt, it only rolls one direction for the past ~18 years. We'll plop trillions more onto the Federal debt, push interest debt yields lower over time to compensate, and wake up tomorrow to a bright sunny day like it never happened (rinse and repeat until some day, 20 or 30 years into the future, when we can't keep doing it).
- Scoundreller 7y agoI'm not saying the government made a bad decision, but they should have rigged the deal more in favour of the people instead of the company if things succeeded. Getting a 3.5% return over that time period didn't account for the risk that they took. They should have ended up at least doubling their money at the cost of the shareholders/equityholders that remained.
- greglindahl 7y agoYou're pretty confused if you think "the company" won if the taxpayer didn't. In the GM case, "the company" was owned by shareholders who lost 100% of their equity. The bondholders lost a lot, too.