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- Ford to Invest $135 million into Electric Car Jobs and Development
- Toyota Suspends Sales Of Lexus LS On Recall
- Toyota Issues New Recall
- Bailouts: Solving the Problem or Shifting the Debt?
- GM Posts $865 Million Net Income in Push for Public Offering
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- Terminal Leadframes for the Automotive Industry...
Posted on 1/28/2009
Automotive Metal Stamping
Bailouts: Solving the Problem or Shifting the Debt?
On Monday, the Treasury Department said that they were going to lose $1.6 billion on a loan they made to Chrysler in 2009. Taxpayer losses from bailing out Chrysler and General Motors are expected to rise as high as $34 billion, congressional auditors have said. Also on Monday, General Motors posted a profit for the first quarter in hopes of going public later this year to end government ownership. However, are the bailouts actually helping anything or is the debt just being shifted to taxpayers?
Treasury officials said that the government had no plans to boost its stake in the new Chrysler to cover those losses. So my question is, if they aren't going to increase ownership to cover those loses, who is covering them? It also acknowledged another $1.9 billion in potential losses from a separate loan that had been made to the company that went through bankruptcy proceedings. I think the old saying comes to mind, "you can't get blood out of a turnip". So that's another $1.9 billion passed onto tax payers. The Treasury indicated they didn't have much hope in recouping that money either. But heck... why do you need someone to pay back the money they loaned when you can just print more of it?
This seems to be and has been the crux of the matter with the auto and bank bailouts. Bad business practices are being awarded great sums of money while it's the little tax payers and the generations to come that are going to be paying for these bailouts. What makes anyone really think that either GM or Chrysler are going to end up profitable for the long term when they already have proven for over a decade that they don't know how to be profitable? Why not lend money to companies that have a track record of success to stimulate the economy?
After GM Chrysler got their bailout money, they didn't create more jobs... the CUT jobs, closed factories and instead of selling Hummer, Saturn and other brands, they simply said a deal couldn't be reached and made them disappear. Last time I checked, the purpose of liquidating assets was to get ANY money at all that you could get. It's not about turning a profit or even getting the assets perceived worth. It's all about cash flow. However, then I have to think about who we are talking about here. GM and Chrysler have proven over a decade that turning a profit and cash flow are not their priority.
Sorry for being so pessimistic about this whole bailout. But until every bank and automaker pay back every penny they borrowed from the American people with interest, it's all just smoke and mirrors. Pushing corporate America's debt on the American people. My last question is... who's bailing us out?
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