Friday, January 27, 2012

3 companies, 2 bail-outs, trillions of dollars of tax-payer money SAVED

I just saw a very interesting story on CBS Sunday Morning for 22 January 2012 on the auto industry of the United States and what happened. First, some background

The year is 2008 and every American manufacturer have mostly been building monster cars that are the size of tanks, thousands of cars go unsold (according to Sunday Morning) and their net revenue collapses. Millions of Americans are at risk of losing their jobs, 100 years of heritage, down the drain. President Obama proposes to bail out a number of corporations who have paid back the money (don't tell CBS, FOX, NBC, or ABC by the way, that makes the government look good) to the present date. The act known as TARP spent $17,400,000,000 on Automotive manufacturers. They were loans, not gifts. All corporate media is clearly against our government by misreporting this fact.

Assuming every unemployed worker got $10,000 for unemployment per year had the companies failed, the government would have paid that to every worker, using 2010 employment numbers, adding over $516,230,000 for Chrysler, $2,020,000,000 for General Motors, or $2,536,230,000 for both companies. I could stop here, but that wouldn't be enough, these 253,623 Americans also had earning potential. Assume they worked at $10 per hour on average (Union and non-Union workers, they get different wages, the benefit of representation and the cost of not having those protections) at 40 hours per week, 50 weeks per year, comes out to $25,362,300,000 lost income per year for the United States for a few years, which is a dollar value higher than that which the government spent to keep car companies afloat, meaning in other words, a net gain to the economy of $7,937,700,000, which is a low-ball figure.

 I believe in representing money without scientific notation, because scientific notation gives the wrong impression, the difference between 10 million and 10 trillion don't look very different to the average you write $10,000,000 and $10,000,000,000,000 when the difference becomes obvious to everybody, because of that I put no scientific notation in this post to keep perspective intact.

All American manufacturing companies have received new management that are more responsible and in-tune to what Americans actually want, as Honda and Toyota have been for years.

I understand what the people who claim this was an irresponsible thing to do are saying, but they are not looking long-term. They are seeing the immediate cost of $17,400,000,000 and say it is too much, without realizing that the amount of money that would have been spent on unemployment, and the amount of taxable income is a savings for the government, given the unemployment.

The same sort of analysis can be done for the bailout of the big four banks. President Obama had a choice, spend $17,400,000,000 dollars to keep them afloat or spend several trillion dollars fulfilling the government's promises to pay on the insurance through the FDIC and NCUA to every bank that collapsed. Presidents Bush and Obama and Congress made the right decision saving trillions of dollars in national debt to pay out the insurance to every American that has a bank account in a bank that sputtered, or keeping them afloat. Granted, it would have been prudent to divide them up into regional banks to prevent their influence, but the Republicans wouldn't go along with that so there was no use in trying because of the filibuster. So they did the least of all evils. If Americans want to break them up (which is a good idea given the amount of influence they have) than they would have to tell Congress in an election that they want to see it, we didn't, so it isn't going to happen with our voter turnout.

As I have proved in this point the government made the right decision to bail out these companies and replace their management, and saved trillions of dollars. They also avoided a great depression which was inevitable if we had lost our financial system, it would have taken a decade to recover. We did it in three years. Trillions of dollars and millions of jobs saved.

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