Car Czar Says Auto Bailouts a “Great Deal” for Taxpayers

First of all, apologies for the long delays since my last post. I am moving into my new home in Singapore, and it's been keeping me busy, along with day to day job and hanging out with some new and some old friends of mine.

Anyway, back to business, here's another amazing outcome and statement from the US Gov: the Car Czar is saying that the auto industry bailout was a "great deal" for Taxpayers. One can wonder how bailing out union workers and incompetent lenders with money taken out of the pockets of the tax-payers children can be a good thing. But now, it's better than good, it's great. And of course, pro-government and self-congratulating politicians will never admit an mistake, not even Afghanistan's or Irak's invasion...

Here's a quote from Yahoo Daily Ticker:

Based on GM's current share price, the entire auto industry bailout will end up costing U.S. taxpayers $10 to $12 billion; that's money well spent, according to Steven Rattner, the former head of the government's automotive task force and author of Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry.

"As an economic recovery matter, the $10 billion plus or minus the auto intervention will cost was a great deal for American taxpayers and a critical part of the economic recovery," Rattner says. "We saved 2 or 3 million jobs, at least in the short run, because the entire industry would have shut down had we not helped these two companies because of the interlocking nature of the suppliers."

This deservers some very easy, yet very needed debunking:

1. A $10-$12 billion loss in an over-optimistic forecast is not a great deal. Loss making investments are not good investments, even if lunatics at the government think the opposite.
2. Economic recovery? Which economic recovery?
3. They didn't save 2-3 million jobs and the entire industry wouldn't have shut down. Quite the opposite. The bankruptcy process is quite effective in the sense that creditors and shareholders most often get wiped out, but buyers comme and take parts of the company and restart with a new blank sheet and no debt on the balance sheet. Moreover, union contracts and pensions would have disappeared, so the companies would have more competitive and might have survived on the long run.