GM Declares Bankruptcy; Government Owns 60%
June 1st 2009 17:05
This is what we get when bad economics/politics trumps good economics. Consumers decided that GM no longer provided cars they wanted to buy. As a result, GM could not maintain profitability. This is how the free market signals a "loser." What should have happened was GM should have declared bankruptcy before any of the bailouts and GM should have been reorganized or liquidated. The other car companies would have expanded to meet consumer demand, hiring a portion of those employees who lost their job in the GM failure.
Instead, billions of tax dollars were pumped into GM and nowthe public Obama's Auto Task Force owns 60% of GM. While Obama's smooth talk of "saving" jobs and making a viable GM that will be good for the American economy sound good, they are false. The resources pumped into keeping GM alive are taken from other car companies (i.e. Ford) and other more-valuable industries where consumers would have used the GM-bailout money to buy other products. Unemployment insurance for the employees that lost their jobs at GM would have been a cheaper and more economically sound way of easing the transition than propping up an entire company. Yes, this move is good for GM, at least in the short-run, but it comes at the expense of the rest of society and the economy as a whole.
Instead, billions of tax dollars were pumped into GM and now
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