Senator Lamar Alexander has introduced a bill that would give every tax payer shares of stock in Government Motors and Chrysler, once they emerge from bankruptcy. This makes so much sense, since it gets the government out of the business of running a car company (having failed at governance, they are trying something else) and putting the value that the tax payers have made back into the hands of the tax payer. We should do the same thing with AIG, Citibank and all the rest of the pots that the government has been meddling in.
Of course, this idea makes too much sense to ever come to pass.
3 comments:
In so far as General Motors is concerned, this is such a hugely ridiculous idea that I do not know where to begin.
First, I sold my GM stock years ago to some Greater Fool. Eventually, the US Government and the UAW became the Greater Fools. You must understand that GM was a publically held company that the public rejected and sold down the drain. Now you are telling us that it is a “brilliant” idea if the same public gets some new shares of GM?
What do you think I would do if I were given some new shares in GM? And what would be the commission when I sold those shares the next day? Do that times 120 million.
GM was a badly managed company because it gave the UAW everything it wanted. The new GM will be even worse off with the UAW owning 20 or 25 percent of the company, which would be the controlling interest if the government distributed its shares to the public.
Max, you miss the point. We have already bought the company throough the government takeover. This system would flood the value back into the hands of the taxpayers, who could then keep or sell them.
This would allow someone to make some money off of it and get the government out of the private sector.
I agree that GM was poorly managed at all levels. But since we bought it, I would like the opportunity to sell my share to someone else and get the money back.
I did not miss the point. If anything, you missed the point; namely, your money is already lost.
1. A distribution of the government-held shares to 120 million taxpayers would give them each stock worth only a few dollars, if not pennies.* The likelihood of this new “Peoples’ Car Company” succeeding in the future would be very low, so the stock would probably sink further after the distribution.
2. The cost to sell the shares through a discount broker would be about $10 per taxpayer. That means the stock brokerage houses will make most of the money on this deal.
3. Once the shares were distributed to the taxpayers, the UAW would gain effective control of the company because they would own a block of 20 to 25 percent of the voting shares. You would be better off having the government control about 70 percent of the shares because at least it is a single entity, so to speak, and there is a chance new political leadership (Republicans) might be able to do something productive with the company.
The way I see it, the UAW is going to end up operating GM one way or the other, either by default because a leftist government will defer to their wishes, or in fact because a leftist government will give them the company. But anyway you look at it, all is lost for GM. The company has no future so long as the US Government and the UAW control it.
I understand you want to pull a few bucks out to limit your loss as a taxpayer. I have no problem with that. But if you, or anyone else, think distributing GM shares to the taxpaying public is going to change anything, you are probably wrong.
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* A recent liquidation study placed the value of GM at only $10 billion. See: "Imagining a G.M. Fire Sale," The New York Times, 06/05/09.
http://dealbook.blogs.nytimes.com/2009/06/05/imagining-a-gm-fire-sale/?ref=business
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