We buy GM

[Blog]

I'm sure they'll build the cars doubly well now that they have no incentive to.

[Snrrub]

Originally posted by Gaviani

You're:

1) Ignoring the next best possible expenditure or investment of that, say, 2 billion dollars that could have been done by its original, private owners (remember, taxes don't get created sui generis by the government - they're wealth confiscated by the citizenry);
[snip remainder]

The warranty guarantee is a backstop. If GM doesn't run out of money and can continue to pay for warranty related expenses on its own, then the government spends no money related to warranties. Hence my statement, "If GM doesn't fail, then this additional propping up won't cost anyone a dime."

Furthermore, the warranty guarantee may very well be necessary for GM to enter Chapter 11 bankruptcy rather than Chapter 7. There has been analysis and/or speculation - on the part of both Wagoner and others in the financial news, that by merely filing for Chapter 11, it will scare away enough customers (concerned with warranties, parts availability, etc.) that liquidation will be the ultimate result. Therefore the backstop, even if never employed, bolsters GM's viability.

[xaxer]

Originally posted by Gaviani
\6) Ignoring the probability GM will go bankrupt in the meantime anyway.

Personally I think the Gov't went about this all wrong Throwing $ at big Corperations, the Trickle down effect does not work( look at the Bonus Fiasco)

Housing caused this Housing would have fixed it

Let all homeowners refinance their PRIMARY home at it's current Value.
This will reduce mortgages by 25-30% that is $ the avg joe can use to stimulate economy( buy car, take trip ect)
Let the Banks write off these losses on THEIR taxes and gov't can cover those, little oversight needed there ,GO IRS!!)

I could go and Buy a better house right now with what I am paying in Mortgage but cant because I cant get out from this one as its worth 1/2 what I paid for it.
Why alot of people are just buying a bigger house and just walking away from other afterwards...

sorry to get off GM but fact is that, the banks and AIG or Auto builders were NEVER the right fix!

[Aristotle]

I have to agree that a better solution would have been something to help PEOPLE rather than poorly managed corporations.

What if they let people liquidate their Roth IRAs for no tax penalty?

What if they used that money to subsidize the mortage market in some way - perhaps the way Xaxer suggested?

It seems to me that putting the money in the hands of people at large is more likely to multiply faster through the economy.

[Snrrub]

The Canadian federal government has followed suit and announced a backing of warranties for new GM and Chrysler vehicles sold in Canada. (link)

The guarantee begins Tuesday and could remain in place until restructuring by the two automakers is resolved, [Industry Minister] Clement added.

He said the maximum "downside risk" for the federal government is $185.3 million "at the absolute worst-case scenario" for covering warranties.

[Leshrak]

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