Obama twitter: Resurgence of Auto Industry.

Economics Economics Questions
1

http://www.whitehouse.gov/blog/2011/06/01/resurgence-american-automotive-industry

This links is a follow up from President Obama’s twitter account the the U.S’s auto industry resurgence. As the article points out in the beginning, GM filed for bankrutcy on June 1st 2009. Of course they were bailed out at the cost of $30 billion of tax payers wasted money. The article also has a chart which shows how GM progressed through the quarters from Q1 2007-Q1 2011. We see positive results from the time the govt bailed out GM, but i know that in the end it was economically and morally wrong to bailed out the company. In a free market an industry is free to not only be successful but to also fail.

I know that the bailout will only compound the problems of GM because of govt intervention which will always lead to the usual “unintended consequences”. Being new to Austrian economics, i would like a LOT more clarification as to why GM will still fail in the end and what is going to happen?

2

You can answer your own question, why should job growth in a subsidized industry surprise anyone?

3

The bailout was a failure from the point of view of those that didn’t want their money to go to GM. (Whether in the form of taxation or inflation.) The results of the bailout are irrelevant.

4

GM is not only in business because of tax payer largess but also because GM had a “Organized Bankruptcy” in Obama’s words, mine are that not only did the stock holders get stiffed, but also the bond holders. And if you are dependent on the pension systems of several Midwestern Automobile manufacturing states then you got stiffed as you were a bond holder.

As for GM doing well, it made a profit because it paid off a loan from the government by taking a longer term loan with a lower interest rate from the government.