Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: J_F_Shepard who wrote (598461)	1/18/2011 4:53:04 PM
From: HPilot	Read Replies (1) \| Respond to of 1578015

I could be wrong here, but doesn't GM still owe Uncle Sam, Or rather Uncle Sergei? If so then they didn't pay off their loan but made a substantial payment.

To: J_F_Shepard who wrote (598461)	1/19/2011 6:21:40 AM
From: Taro	Respond to of 1578015

...now Obama may get some credit which is burning the ass of the RW... The credit Obama thus gets as compared to the deb(i)t he so far has run up is no more than a miniscule drop of water on an enormously big hot stone. Thus i doubt it's burning the ass of anybody but himself and those sorry lost souls who gave him their vote. /Taro

To: J_F_Shepard who wrote (598461)	1/19/2011 8:48:40 PM
From: TimF	Respond to of 1578015

"GM "paid off" its loan with other money and special targeted tax breaks from the feds. That's not very meaningful." You would rather they didn't pay off? No, I'm saying they didn't really pay it off, at least not in a sense that means anything useful. If I loan you $1000, and then give you ten hundreds, and you use this to pay off the debt, you didn't really pay back all the money I gave you. Similarly GM didn't pay back the bailout. Well, it is a bit trickier since much of the additional money is tax breaks, not additional direct subsidies, so the government didn't really give that money to GM, it just took less of it than it otherwise would have. So in a sense GM did pay back the money. But the effect for budget balance and for the other tax payers, of a highly targeted tax break and a direct subsidy is close to or even exactly identical. GM stock which the government owns about 90% of will soon be sold at a large profit No it won't be, not unless GM become the next bubble growth stock. The cost of the various government bailouts to GM (adding both actual subsidies and the targeted tax breaks) is large enough that the government won't make an overall profit without unrealistically high (at least in the short run) prices for GM stock. As for AIG it paid the government back with a conversion of the preferred stock to common stock. If the government can dump that all on the market for enough to cover the government's cost (ideally including the time value of money costs as well) then at that point it could be said to be paid back, but not yet. "Is that like saying they paid off with 20 dollar bills instead 100 dollar bills?" No its like saying they paid off a debt with stock. $20 bills and $100bill are just different version of the same thing. Paying off the debt with the issuance of new stock, can work for the creditor if the stock can actually be sold for enough to cover the cost of the debt. If it can't be the creditor takes a loss. If it hasn't happened yet, then the creditor hasn't really been made whole yet, even though the debtor was released of the obligation by the creditor. If an when the government can sell the stock for enough to cover its total cost, then it can be said to be paid back (and I'd include time value of money costs as part of the total cost). That hasn't happened. Your response to the point about the tax cut isn't very coherent so its hard to respond to. I will respond to "and now you say it doesn't make any difference anyway", no I'm not saying it doesn't make a difference only for many (particularly those who are only "rich" and not "mega-rich") the actual tax cut is smaller than its made out to be. "Smaller" isn't "zero" or "doesn't matter anyway". And for those way up in the income scale, tax rates matter even if they don't pay the increase. The extra steps they take to avoid paying higher taxes are costly, and distort investment.