# So we own GM. Now what? **URL:** \ **Category:** Great Debates\ **Created:** [June 3, 2009, 8:28am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559 "2009-06-03T08:28:25Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Blake](https://avatars.discourse-cdn.com/v4/letter/b/a9a28c/32.png) [@Blake](https://boards.straightdope.com/u/Blake)\ **Post date:** [November 17, 2010, 12:49am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/61 "2010-11-17T00:49:32Z")
> [@DSeid](#): > > Anyone care to revisit their statements from 17 months ago? No, I stand by what I said. It should be sold ASAP. I said it then and I said it now. It’s bad if it fails and it can be worse if it works. Governments making money from businesses that they also heavily regulate is a bad, bad idea. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [November 17, 2010, 12:59am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/62 "2010-11-17T00:59:01Z")
Democrats should be against this marriage of government and business just on principle. It’s what leads to the real abuses of corporate power, and transfers money from taxpayers to the wealthy owners of those businesses. And I wonder if it’s a coincidence that GE, a company which was one of the most vocal proponents for Obama’s economic plans and one of the largest corporate recipients of stimulus funds, bought 12,000 Chevrolet Volts just before the IPO… What’s that, about a third of the entire production run? ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 17, 2010, 2:52am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/63 "2010-11-17T02:52:44Z")
> [@Blake](#): > > No, I stand by what I said. It should be sold ASAP. I said it then and I said it now. It’s bad if it fails and it can be worse if it works. Governments making money from businesses that they also heavily regulate is a bad, bad idea. Actually **Blake** the administration seemed to listen to you: > [@](#): > > At best they do things right and make the company profitable. That then leads to all sorts of conflicts of interest with laws concerning regulation of the industry. It also leads to a perception (and usually a reality) of unfair competition with private industry. > > More usually the government makes complete hash of things. They use the organisation for their own partisan agendas such as “work towards an affordable hybrid vehicle to wean us from gas”. The organisation becomes a massive funding black hole, then it either goes belly up anyway or it is sold at a massive loss to the private sector. > The most critical thing to do is to to get the company into the black, but\*\* the longterm aim should be to increase the value of the company to the point where we can recoup the money for the buyout, and then sell it as fast as possible with minimal profit\*\*. Get the government out of it as soon as possible. > > At the moment it’s hard to know how to do that. (bolding added) The Feds made none of the operational decisions of the company and I have heard no complaints of unfair competition with “private” industry. The company has paid of the loan portion and by the completion of the IPO the government will decrease its stake from 61 to 41%. The goal is to see the rest of the investment through to a point at which “we can recoup the money for the buyout, and then sell it as fast as possible with minimal profit” The cost of doing this intervention turns out to have been minimal, if anything at all; the cost of not having done it would very likely have flipped a bad recession into a great depression as entire supply chains would have gone belly up. **Sam** , my first principal, as a Democrat and as an American, should be to avoid that. Also **Sam** , instead of implying some conspiracy, why don’t you just make your accusation straight up? GE has a strong self-interest in having the EV segment take off, and apparently sees their PR interest served by giving initial orders to a US company. If there is anything behind the scenes my suspicion is that it is GE getting an assurance that GM will throw future battery business (either locally or via their Chinese divisions) to A123 (which is 17% owned by GE). Nissan will end up getting some business too, as will Ford. And oh, an [update](http://www.reuters.com/article/idUSTRE6AB43H20101117?pageNumber=1): > [@](#): > > General Motors Co GM.UL is boosting the size of its common stock offering by more than 30 percent to $15.5 billion, two people familiar with the matter said, potentially making its landmark IPO the largest U.S. offering ever. > > The expansion comes in response to surging demand from investors, who had put in orders worth $70 billion for GM’s common shares by late on Tuesday, the sources said. > > GM’s initial public offering, which will reduce the U.S. Treasury to a minority shareholder in the top U.S. automaker, could raise nearly $23 billion if underwriters exercise the full overallotment option on both common and preferred shares. > > The deal could also pay back over $15 billion to the U.S. government, assuming that shares price at the high end of the range and all of the common stock on offer is sold. > > That would take the Obama administration closer to break-even on a still controversial bailout that some critics had predicted would be a financial quagmire for taxpayers. … Based on a diluted share count of 1.9 billion, $33 per share would give GM a market value of about $63 billion. > > That approaches the roughly $66 billion value that GM needs in order for U.S. taxpayers to break even, based on the U.S. Treasury’s remaining common stock holding and a share price projection by the Treasury’s special inspector general. > > Whether taxpayers are made whole will hinge on subsequent share sales by the U.S. government and how the newly listed GM shares perform. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [November 17, 2010, 4:27am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/64 "2010-11-17T04:27:19Z")
> [@Sam\_Stone](#): > > Democrats should be against this marriage of government and business just on principle. It’s what leads to the real abuses of corporate power, and transfers money from taxpayers to the wealthy owners of those businesses. It also keeps a major industry afloat and saves hundreds of thousands of jobs. By the way, aren’t we getting some of that money back? > [@](#): > > And I wonder if it’s a coincidence that GE, a company which was one of the most vocal proponents for Obama’s economic plans and one of the largest corporate recipients of stimulus funds, bought 12,000 Chevrolet Volts just before the IPO… What’s that, about a third of the entire production run? Yeah, it’s a real mystery why a major energy company would buy some electric cars. No reason a major energy company would want electric cars to do well. Why won’t someone tell us why _General Electric_ thinks electric cars becoming more popular is in the best interest?!? Do you have any more batshit insane innuendo you’d like to roll out? Was 911 space aliens? Do the Mormons control cable television? Is Austrian economics real? 😃 ---
**Author:** ![Blake](https://avatars.discourse-cdn.com/v4/letter/b/a9a28c/32.png) [@Blake](https://boards.straightdope.com/u/Blake)\ **Post date:** [November 17, 2010, 5:07am UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/65 "2010-11-17T05:07:57Z")
> [@DSeid](#): > > Actually **Blake** the administration seemed to listen to you:(bolding added) Well \*of course \*they are. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [November 17, 2010, 3:44pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/66 "2010-11-17T15:44:50Z")
Nope, the bailout was always a bad idea. The Obama administration nakedly shoved aside investors who should have paid first, ponied up enough money to have just paid off the workers many times over, handed the company over to the union, and harmed Ford (a much sturdier company). GM should have gone under completely. It would have emerged a much leaner company, and probably spun off several good units, which would have far better for the economiy itself. The leftist love of giant corporations is one of the most mystifying things I have ever encountered. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 17, 2010, 3:54pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/67 "2010-11-17T15:54:55Z")
Yeah, we’re all about giant corporations. Can’t get enough of them. :rolleyes: What planet are you on? ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [November 17, 2010, 3:59pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/68 "2010-11-17T15:59:54Z")
> [@Stranger\_On\_A\_Train](#): > > _snip_ > Ultimately, the government needs to limit involvement and cashflow into GM, and divest itself of the responsibility of running a major industry. > > Stranger I agree, they should have done this from the get go and not even gotten involved. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 17, 2010, 5:52pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/69 "2010-11-17T17:52:24Z")
> [@smiling\_bandit](#): > > Nope, the bailout was always a bad idea. The Obama administration nakedly shoved aside investors who should have paid first, ponied up enough money to have just paid off the workers many times over, handed the company over to the union, and harmed Ford (a much sturdier company). > > GM should have gone under completely. It would have emerged a much leaner company, and probably spun off several good units, which would have far better for the economiy itself. The leftist love of giant corporations is one of the most mystifying things I have ever encountered. I see that when your article of faith that the government can do no right is falsified, you lose touch with reality. First, how has Ford been hurt? It is doing very nicely also, and the collapse of the supply chain would have hurt it badly. Second, GM is a smaller and leaner company. You might recall them getting rid of product lines and lots of dealers. It tried to spin off Saturn. It failed. Smaller car companies have been swallowed up by the big guys for decades (except for niche makers like Tesla - so far) so why do you think this trend will reverse itself? And as for the left loving large corporations - you’re trying to whoosh us, right? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 17, 2010, 5:55pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/70 "2010-11-17T17:55:07Z")
> [@Kearsen](#): > > I agree, they should have done this from the get go and not even gotten involved. You did notice his quote was from 2009, right? Do you think the economy would be better if the government had not gotten involved? Let’s ignore the money the government is going to make, the more important thing is that we avoided a ton of costs in unemployment benefits and attempts to shore up what would have been an even more devastated economy. ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [November 17, 2010, 6:03pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/71 "2010-11-17T18:03:16Z")
> [@DSeid](#): > > (And I am thrilled that I bought a few shares GM bonds at pennies on the dollar as old GM was folding. They’ve increased in value almost four-fold so far.) So now they’re worth pennies on the quarter? 😃 ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [November 17, 2010, 6:04pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/72 "2010-11-17T18:04:41Z")
> [@smiling\_bandit](#): > > Nope, the bailout was always a bad idea. The Obama administration nakedly shoved aside investors who should have paid first, ponied up enough money to have just paid off the workers many times over, handed the company over to the union, and harmed Ford (a much sturdier company). > > GM should have gone under completely. It would have emerged a much leaner company, and probably spun off several good units, which would have far better for the economiy itself. The leftist love of giant corporations is one of the most mystifying things I have ever encountered. I am struck by hw totally divorced from reality some who post here are. “Harmed Ford”??? As GM was floundering [Ford](http://finance.yahoo.com/echarts?s=F+Interactive#chart1:symbol=f;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined) was below $2. As it became clear that the government was _not_ going to let the whole supply chain collapse and have the country go into a Great Depression, Ford went up threefold in two months, and since then up to near $17 a share! Hardly harmed. ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [November 17, 2010, 6:05pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/73 "2010-11-17T18:05:16Z")
> [@Voyager](#): > > You did notice his quote was from 2009, right? Do you think the economy would be better if the government had not gotten involved? Let’s ignore the money the government is going to make, the more important thing is that we avoided a ton of costs in unemployment benefits and attempts to shore up what would have been an even more devastated economy. I think the economy wouldn’t be much worse off than it is now. We threw money at a failing business because of unsound business practices in the hopes that whatever jobs we saved would maybe outweigh the potential for unemployment costs. Is that the stance? If so, boy do I have a business I’d love to sell. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [November 17, 2010, 6:09pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/74 "2010-11-17T18:09:45Z")
[Failure of Big Three could cost 3 million jobs, CAR says - Nov. 5, 2008](http://money.cnn.com/2008/11/05/autos/auto_job_losses/) The decision was made that saving the big 3 would be best for the economy. Letting it go would result in the loss of millions of jobs. The country was not in a position to take that kind of hit. Just GM is estimated to have saved about 3 million jobs. The government is getting it back. The government is collecting taxes. The periphery businesses are being helped. Restaurants, bars, clothing stores and all the others are benefiting. Saving GM was an easy decision. Our capitalistic system is not just competing with other capitalistic enterprises around the world. But they are fighting with state capitalism which is new and more difficult to win against. China will certainly not allow their corporations to fail. Why should we be holding on to outdated unworkable philosophies? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 17, 2010, 6:12pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/75 "2010-11-17T18:12:02Z")
> [@Kearsen](#): > > I think the economy wouldn’t be much worse off than it is now. We threw money at a failing business because of unsound business practices in the hopes that whatever jobs we saved would maybe outweigh the potential for unemployment costs. Is that the stance? > If so, boy do I have a business I’d love to sell. I think the stance might be more sensibly summed up as, “allowing the largest employer in the State of Michigan to go belly up will lead to a chain of follow-on bankruptcies, economic chaos and mass privation.” ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [November 17, 2010, 6:15pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/76 "2010-11-17T18:15:48Z")
> [@Really\_Not\_All\_That\_Bright](#): > > I think the stance might be more sensibly summed up as, “allowing the largest employer in the State of Michigan to go belly up will lead to a chain of follow-on bankruptcies, economic chaos and mass privation.” How is that any different from my company? If I make unsound business decisions, can I then ask the good ole merican gubmint to save me too? What kind of precedent is being set? To be fair, they said the same things about banks. What did the banks do with their money? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 17, 2010, 6:38pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/77 "2010-11-17T18:38:24Z")
Nothing, as it turns out. The problem with the banks wasn’t that they might go under, though. It was that they stopped lending in the short term to make sure they didn’t go under, which could have caused thousands of small businesses to go under instead. ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [November 17, 2010, 6:42pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/78 "2010-11-17T18:42:33Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Nothing, as it turns out. The problem with the banks wasn’t that they might go under, though. It was that they stopped lending in the short term to make sure they didn’t go under, which could have caused thousands of small businesses to go under instead. They still stopped lending… ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [November 17, 2010, 6:46pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/79 "2010-11-17T18:46:59Z")
The current credit crunch is caused by mid- and long-term loans; the sort businesses take out to buy equipment, or expand facilities, or whatever. The worry was that banks would contract short-term lending- the sort that businesses need to make payroll. ---
**Author:** ![Kearsen](https://avatars.discourse-cdn.com/v4/letter/k/82dd89/32.png) [@Kearsen](https://boards.straightdope.com/u/Kearsen)\ **Post date:** [November 17, 2010, 6:50pm UTC](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559/80 "2010-11-17T18:50:29Z")
Making payroll over the short or long term is a product of bad business decisions. My stance doesn’t change. [Previous page](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559.md?page=3) [Next page](https://boards.straightdope.com/t/so-we-own-gm-now-what/498559.md?page=5)