GM "Success"...Read on...

"The heart of the case against the bailout is that it saps the life-blood of entrepreneurial capitalism."

 - Don Boudreaux, George Mason University economist

I've had this in my "TO BLOG" pile for ten days...but the holidays are upon us...I'm too busy having fun!!  I hope you are too. Despite our country's woes, it's okay to be happy. You are not a bad person if you are finding daily happiness. Sometimes I think our government thinks happy people are bad people...but that's not the case - we are just happy!

But back to my point...

This article by The Heritage Foundation is eye-opening and important for anyone who sincerely believes the GM bailout was a "success".  It's a quick read, but it will clarify what happened, and what would need to happen for taxpayers to get a return in full...even though it's not completely about getting a return on our investment (as my initial quote suggests). 

Direct quote...this is where we are on the money:

"Before this week, taxpayers put a net $40 billion into GM and held a majority stake in the company. The IPO allowed the Treasury to sell about a quarter of their share at $33 per share, raising $13.6 billion. That leaves taxpayers, post-IPO, with $35.9 billion “invested” and about a 37 percent stake in the company. At $33 per share, that leaves taxpayers still almost $10 billion in the hole. The shares would have to jump to $51 for taxpayers to break even, a price level considered by most analysts to be unlikely."

Direct quote...this is why bailouts are not the answer:

But perhaps the biggest danger of all is the prospect of the GM “success” being used to justify future bailouts of other firms. That would be the true catastrophe. As George Mason University economist Don Boudreaux wrote:

The chief economic case against the bailout was not that huge infusions of taxpayer funds and special exemptions from bankruptcy rules could not make G.M. and Chrysler profitable. Of course they could. Instead, the heart of the case against the bailout is that it saps the life-blood of entrepreneurial capitalism. The bailout reinforces the debilitating precedent of protecting firms deemed “too big to fail.” Capital and other resources are thus kept glued by politics to familiar lines of production, thus impeding entrepreneurial initiative that would have otherwise redeployed these resources into newer, more-dynamic, and more productive industries. The “success” of the bailout is all too easy to engineer and to see. The cost of the bailout—the industries, the jobs, and the outputs that are never created—is impossible to see, but nevertheless real.

Source: Morning Bell: Our Economy Can't Afford More GM "Success" Stories, James Gattuso