GM, So do I own the equivalent of a Pontiac G5 in stock now, or what?

[Brendan]

Seriously, I've spent a couple weeks now scouring wikipedia, watching a few news shows and I have no idea wtf happened, what is happening, or what is going to happen.


Here's what I know:

1) Years ago, GM and Chrysler agreed to outrageous demands made by the UAW union.

2) Due to the incredible overhead costs that this incurred, they shifted their manufacturing resources to SUV's and light trucks, due to higher profit margins, which allowed the company to stay afloat.

3) Consumer perception of such brands plummeted, and rising fuel costs drove customers to seek reliable, fuel efficient vehicles, mostly from foreign manufacturers.

4) GM and Chrysler reap what they sew, and now, to keep GM from failing altogether and Chrysler from failing altogether AGAIN, our government sinks... What was it, like $130 billion into these companies?

5) GM and Chrysler fail altogether anyway, so our solution is to USE PUBLIC MONEY TO BUY STOCK IN THESE COMPANIES?


What.
The fuck.


Do I have the gist of it?

[nozflubber]

1-5 are great to mention when gaining a perspective on why the US automakers are tanking in general, but you forgot to mention the motivation behind using public money to make bad/mediocre companies stay afloat:

Depression-era economy.

This just isn't about keeping GM or chrysler afloat, its about not having all the "miniature" markets and economies, the mechanics shops, the "mom and pop" tool engineers, and everyone else that depends on the auto sector, sink into oblivion:

Why Asian automakers want a federal bailout of U.S. industry - Dec. 15, 2008 (http://money.cnn.com/2008/12/15/news/companies/overseas_automakers/?postversion=2008121609)

Japan even wants their autoworkers, that is JAPANESE autoworkers, to take salary cuts so they can curb productionof Toyotas, just so the big 3 can stay "around" in some capacity: Toyota Wants Japan Workers To Take Pay Cut (http://www.manufacturing.net/News-Toyota-Wants-Japan-Workers-To-Take-Pay-Cut.aspx)

This isn't as simple as you put it.

[Brendan]

That makes sense, but why put taxpayer money into buying stock? What's the logic there? Will I be paid dividends? Is the company now nationalized?

[nozflubber]

oh..... no idea on that rationale lol. I think puting taxpayer money into stock is kind of retarded because if that stock does poorly, taxpayer money will disappear, only to be replaced by, you guessed it, more taxpayer money!

I would presume, if anything, they just had to support these companies somehow and chose stocks. I dunno why though

[Prototype]

We are being taken for a ride.

[lowtech redneck]

Do I have the gist of it?

You forgot the part about violating established lending law, thereby risking long-term damage to the economy at the worst possible time, as well as screwing over pensioners all over the country as a political favor to those same fucking unions.

Its a good thing I had already planned on drinking tonight...