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Taxpayers will lose on auto bailouts

735 Views 2 Replies 2 Participants Last post by  Houdini
Much of the money given to General Motors and Chrysler to prevent them from collapsing will never be recovered, according to a report released Wednesday by the Congressional Oversight Panel.

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Somehow, Someway some politician will tell us why it is good for the taxpayers to lose on this....How it was the right thing, right?
I found this on and it may help explain how it was the right thing to do.

...The primary causes of the current U.S. auto-industry crisis are threefold: a financial freeze in which even well-qualified borrowers are denied credit to buy vehicles; fluctuating oil prices that have driven the price of gasoline from less than $2 per gallon to more than $4 and then back to $2, all in less than 10 months; and a consumer panic that has cut retail sales to 15-year lows.

The failure of the U.S. Treasury Department and Securities and Exchange Commission to monitor, let alone regulate, Wall Street has created today's financial wreckage and the resulting consumer panic.

And despite the obvious need for a far-sighted energy policy, the last four presidents and Congress have done little but encourage more drilling.

The longer-term inability of America's auto industry to export competitive products has its origins in U.S. trade policies that accept closed foreign auto markets and the payments of massive export rebates by other governments to their automakers. How can U.S. automakers be expected to compete in a world where German producers get a 19 percent export subsidy on every vehicle sold in the United States, China undervalues its currency by up to 50 percent, Japan keeps its auto market tightly closed, and the U.S. government allows South Korean automakers to sell more than 700,000 subsidized vehicles in this market annually, but tolerates Korea's restriction of U.S. imports so tightly that fewer than 7,000 American-made vehicles are sold there each year? The Big Three and the UAW are not at fault for these distortions of competition...

...According to reports in Japan's local media, Toyota is in talks to borrow a little over $2 billion from the state-backed Japan Bank for International Cooperation(JBIC) to secure funds for its U.S. operations... ...But Toyota is just the latest Japanese automaker to ask for government assistance. Last month, Nissan (NSANY) and Mitsubishi Motors both signaled their intent to ask for loans from the Development Bank of Japan. Meanwhile, Toyota's European arm is planning to request funding from the European Investment Bank to finance research and development into clean technologies... ...Analysts responded positively to the news that Toyota is talking with JBIC, saying automakers should tap easily available government funds at a time when credit at reasonable interest rates is otherwise so tight....
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