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Thursday, June 2, 2011

So $14 billion isn't real money anymore?

  President Obama is going to take a "victory lap" in Toledo over at the Chrysler plant.
  But it seems like a victory lap should entail, well, victory. 
  The taxpayers ("government") are losing almost 20% of their "loan" to the auto industry, yet this is being touted as "victory." Toledo Blade:
  The President's National Economic Council said the government will lose less than 20 percent of the $80 billion used to bail out the U.S. automobile industry, or about $14 billion. The report says the Treasury Department first thought the government would lose about 60 percent of the taxpayer funds.
  Not only that, but the "government" still owns shares in the auto industry. Again at The Blade (whose website has recently been revamped and looks pretty darn good these days):
Chrysler took $10.5 billion from the U.S. government to survive two years ago, and had repaid some of the money. Last week, it retired a $5.9 billion balance on the U.S. loans and $1.7 billion to the governments of Canada and Ontario. The U.S. Treasury still owns 6.6 percent of Chrysler, part of the original stake it got in exchange for the bailout.
The U.S. government still has a 33.3-percent ownership stake in GM and is hoping to recoup its $50 billion taxpayer investment
  Bush was roundly criticized for taking the premature "mission accomplished" victory lap, yet with GM still owned primarily by the taxpayers, the debt is certainly NOT repaid.
  From Politifact:

But as with Marchionne, Whitacre didn't tell the full story.  The Obama administration -- through the Troubled Asset Relief Program (TARP) -- committed approximately $52.4 billion to help right GM.
Only a fraction of that, $6.7 billion, was in the form of loans. Most of the government's GM investment was converted to an ownership stake in the New GM, the company that emerged from bankruptcy: $2.1 billion in preferred stock; and 60.8 percent of the company's common equity. The jury is still out on how much return the government will get on that investment.
  And over at Yahoo/AP, we see the headline: "Govt to lose $14 billion of auto bailout funds." 
  So it's pretty obvious that lies are being told about the money taxpayers "loaned" to the auto industry. All the money has NOT been repaid, and yet the administration and the auto industry, whose profit comes primarily from trucks and SUVs, are running around the country claiming it has.
  Maybe we've just gotten to the place where a billion dollars (or $14 billion) isn't real money anymore.
  God help us if that's true because it looks like we're printing even more money soon.

1 comment:

  1. I hope we don't see QE3 and I'm hopeful it won't happen. The downside of all the printing of money is it drives up prices to the point they begin to erode purchasing power causing less not more consumer spending.

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