Does anyone else see how perverted this story is? A company which is 60% owned by the U.S. Treasury, in other words, 60% owned by taxpayers -- not voluntary shareholders, but TAXPAYERS, has hired a private investment banking company to take the company public. That is, to be sold to public stockholders. For a profit. Which is going to be distributed to whom? The government. Who took the company over by edict, essentially by force, ignoring lawfully binding financial contracts in the process. Oh, yes, technically G.M. went through a "banktuptcy," but when one of the two involved parties is the federal government -- the one who makes up the rules of the game -- then it isn't a game anymore. It's "do it, or else!"
- GM Headquarters
Absolutely unbelievable. This IPO should not be happening. The bailout should not have happened. None of this should have happened. If the company cannot generate a profit in the marketplace, then it should go bankrupt and its resources freed up to be used where they are most valued by the marketplace.
Perhaps GM should have gone bankrupt. But the government faced large issues if they had. They are an exceedingly large employer whose workers would have had to collect unemployment insurance, which would have had to been paid by the government. The cascade to dealers, suppliers, etc. would have made the problem even worse.
The government did a few things right:
- It got rid of management.
- It forced a reorganization.
I am not a GM fan, but the country is (should be) about more than capitalist economic purity. It is about the people who live here. Would they have been better off - in concrete terms - if GM had simply failed? If so, how?
Posted by: Andrew | June 03, 2010 at 05:19 PM
Yes they would be better off if GM had failed. The assets would have been redistributed to companies that created products and services that society values enough to keep them in business without a government bailout. We gain nothing by propping up a company that is destroying wealth. With a bailout the company has no incentive to make the tough choices to stay in business through competing.
Yes, the country is about more than capitalist economic purity: it involves private industry, government, and religious or charitable organizations. The role of private industry is to create economic wealth; the role of government is to make and enforce laws and to defend the country; and the role of charity is to help one's neighbors and families and communities.
Posted by: Sherry Jarrell | June 09, 2010 at 12:16 AM