Writing on the wall - Common sense reigns inside the Beltway

[Jim in Idaho]

The highest tax rate in the 1950's was over 75%, yet we had great economic growth where all the participants were able to benefit. A single bread winner could support a family. So suggesting tax rates are holding back our economy is simply political rhetoric. They are at all time lows! And please, don't confuse the levied rates with the effective rate, which is what is actually paid in the end.

Sure...but we were the only manufacturing economy left after the war. Tax rate had nothing to do with that. If high taxes helped, why do countries, states, and municipalities give tax BREAKS to attract businesses? Even democratic governments do that. Economies are helped by LOW taxes. The reason....selfish interest. The more of the money that people earn that they get to keep, the harder they work. Absent other factors, that helps the economy. It ain't rocket science.
Jim

 

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[Native Floridian]

NF; "A positive economy will eventually bail us out."

And the best way to do that is impede the wealthy from investing in business and new ventures by raising the taxes to confiscatory levels.

It is a simplistic explanation that only works in a short sound bite.
Even Kennedy was opposed to that.

Maybe a look at economic history will help you understand why you are wrong. Give it a shot.

 

[Native Floridian]

Would have, could have and probably does not equate to evidence. No facts involved here.

OK, Dave, tell us what would have been the consequence of a GM default?

 

[Native Floridian]

If GM had gone through the channels available to them, restructured and gotten rid of some of the onerous encumbrances they labor under, it is highly likely they would have emerged as a stronger sleeker powerhouse.

We will never know.

WE do know. You refuse to accept it because it's something that this president did that worked.

Let me tell the part your Tea Party Hotline news letter left out. GM did work it out. A plan for a lean mean car making machine designed to turn a profit! They needed X billions of dollars to stay afloat and make it work. But no one would finance the plan for them. They took the new leaner slimmer GM and trotted it around Wall Street and around the world. They got not one bite on anyone willing to give them a dime! Nothing NADA!!! Thus the U.S. Government was their financier of last resort.

Without the government it was goodbye GM!

 

[Limitool]

OK, Dave, tell us what would have been the consequence of a GM default?

I'm not Dave... but here goes. A GM default would have meant the present business model they operated under would have collapsed. Many the laborers would have lost their jobs and then let the ripple affect begin. First the UAW would have lost a LOT MORE MEMBERS because of their demands of GM for all the past years. And rightfully so. And all the other fallout would have changed their business models also. Kind of like the bank with all these foreclosures. I worked for GM 31 years with a High School education only and could SEE a lot of the flaws and misuse of equipment and resources going on. On my 24th year of service I took a stand and started to point out some flaws. Within 3 years GM was mandating the methodology across North America I and a partner came up with. I went from assembler to engineer overnight and was flown across the county a lot. I received a patent in 2005 for it. This company is a joke and so is its union... And now its back to business as usual for GM and its Union.

 

[pippinwhitepaws]

that is new...never saw someone marry unions an management into one unit before. wow.

unbelievable.

 

[Limitool]

that is new...never saw someone marry unions an management into one unit before. wow.

unbelievable.

Sir... Nobody is marrying a large company and the union it deals with into "one unit". My union is very corrupt I believe as many others believe also... GM got to do business as usual because of taxpayer dollars and the union and its members get "special treatment" which I am NOT PROUD OF AT ALL. I'm ashamed. And if you support there them send them some money... they'll except it!!!!

 

[Treasure_Hunter]

I am drawing an IBEW union pension..In 2 years I will get back ever dime I paid in 10 years of union dues....:thumbup:

We will NOT go quietly into the night!

 

[Dave44]

WE do know. You refuse to accept it because it's something that this president did that worked.

Let me tell the part your Tea Party Hotline news letter left out. GM did work it out. A plan for a lean mean car making machine designed to turn a profit! They needed X billions of dollars to stay afloat and make it work. But no one would finance the plan for them. They took the new leaner slimmer GM and trotted it around Wall Street and around the world. They got not one bite on anyone willing to give them a dime! Nothing NADA!!! Thus the U.S. Government was their financier of last resort.

Without the government it was goodbye GM!

It is laughable. Economic insight is not your forte, I guess? Do you know how business works at all?

Here is the short version. Say I had a business and needed money( after being in Bus for 75 years I forgot how to make money, and I let my employees dictate their own pay and benefits to the point that my product can't compete at the price point I would have to sell it for. Meaning my sales suck.)

Well I go to any bank or investment company,, they want to know;
A. Am I credit worthy,, doubtful, my expenses are still too high, my sales sliding.
B. Am I trying to work toward a workable model.. Nope
C. Do I at least show a business plan that could work in time... Nope
D. Will I be able to pay for the privilege of using someone else's money? No,, Matter of fact, I will be out of business soon.

If I were on wall street or a banker,, even if I had a little investment company,, No way would I give a company money that was sliding into oblivion.
**** Matter of fact, the Gov made the poor suckers who did invest in the unworkable model eat dirt, or worse!****

So you say that the leaner meaner was better? Not Even Close,, the proof is like you said, noone would touch them.

And the government was the only entity stupid enough to give them money,, Because money means nothing to them. How much did we lose?

You need to learn economics sir.

 

[Dave44]

NF- I put this out here so that you don't have to ignore how many people were hung out to dry with the fabulous bailout deal. How much would you loan them?


Creditor Lawsuit Could Undo Elements of 2009 GM Bailout - Deal Journal - WSJ

By Joseph Checkler

General Motors is worried that a little-noticed lawsuit could reopen the books on its massive 2009 federal bailout, a deal touted by President Barack Obama during this year’s election season as one of his chief first-term achievements.
The lawsuit, filed by a trust representing “old” GM’s unsecured creditors, attacks a “lockup agreement” that sent hundreds of millions of dollars to a group of hedge funds to get them to drop their claims against GM’s Nova Scotia unit. The deal helped keep the unit’s parent, GM Canada, out of bankruptcy, but the unsecured creditors trust says it was unfair, and, more importantly, not disclosed properly to a bankruptcy judge.

The trust, which is recovering money for old GM’s unsecured creditors, says the deal was completed after GM’s bankruptcy filing, meaning it should have been reviewed by Judge Robert E. Gerber of the U.S. Bankruptcy Court in Manhattan. If the suit is successful, the deal could be undone, putting “new” GM on the hook for at least $1.3 billion in claims.

The proceedings are continuing this week, with GM Chief Financial Officer Daniel Ammann set to take the witness stand Thursday. While working at Morgan Stanley, Mr. Ammann advised GM during its restructuring.
The hedge funds, creditors of the Nova Scotia-based GM subsidiary, agreed in June 2009 to waive $1.3 billion in claims in exchange for a $367 million payment. The payment came from GM Canada, which borrowed $450 million from old GM to make that payment. GM, which is vigorously fighting the suit, has said it will prove during the trial that the loan was made before it sought bankruptcy protection and not “backdated” after the fact, as the trust claims.

Judge Gerber has already made it known that the deal at least should have been run by him and that he is worried the entire sale might have to be reopened.
Even if the trial doesn’t come down to a redo of the entire 2009 restructuring deal, GM could be forced to come up with $1 billion or more to compensate the unsecured creditors at a time when its stock price is languishing and it is lobbying to get the U.S. government to sell its remaining stake in the auto maker.

“The litigation encompasses issues which, if decided adversely to GM, could impair the 2009 resolution of certain indebtedness by GM Canada,” said GM spokesman James Cain. “We are defending those interests in the Bankruptcy Court and believe we should ultimately prevail.” In a recent regulatory filing, GM said that while it is impossible to estimate how much it could lose if it doesn’t win the case, a “reasonable” maximum loss estimate could be about $918 million. That doesn’t appear to take into account creditor lawsuits that could spring up as a result of a loss.
Last Thursday, a former employee from one of the hedge funds involved in the original transaction Fortress Investment Group LLC (FIG), testified at the trial. A lawyer for the trust tried to show that the hedge funds had great incentive to keep the details of the deal from the court: 35 cents on the dollar in “cash money,” as the witness, Bao Truong, put it in a May 2009 email read to the court. Many other creditors stood—and stand—to get much less.
Mr. Truong, who now works as a managing director at Centerbridge Partners, listened as the lawyer read June 2009 emails between Mr. Truong and his colleagues preparing to get beers to “celebrate” how great a deal the hedge funds got.

Paulson & Co., which bought its bonds later and isn’t on the hook to pay back any money, said in court papers that the hedge funds gave up a lot when they signed the deal, including the right to go after the full $1.3 billion in claims.

The deal was beneficial to GM, too. Wiping out the hedge funds’ claims helped keep GM Canada out of bankruptcy, a key goal during GM’s restructuring because of Canada’s complicated and lengthy insolvency process. The unsecured creditors trust has said that the money didn’t go to the hedge funds until late June, a few weeks after GM filed for Chapter 11 protection backed by tens of billions in aid from the U.S. government.
If the deal with the hedge funds was completed after GM sought Chapter 11 protection on June 1, 2009, it could be classified as a “post-petition” transaction that would have required approval from Judge Gerber.
“When I heard about that, it wasn’t just a surprise, it was a shock,” Judge Gerber said in July.
He added, “When I approved the sale agreement and entered the sale approval order I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs. It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all.”
The judge has been careful to say that he doesn’t know if he would have rejected the sale altogether if he knew about the deal, which was disclosed in a U.S. Securities and Exchange Commission filing the same day GM sought Chapter 11 protection. But he said he might have added a provision that made it clear he wasn’t approving the transaction with the hedge funds.
The $367 million payment was divvied among several well-known hedge fund managers, including Fortress, David Tepper’s Appaloosa Management LP and Paul Singer’s Elliott Management. Appaloosa has since sold its bonds and is no longer involved.
The GM bailout has been touted by the Obama campaign as one of the triumphs of his first term. At the Democratic National Convention in Charlotte, N.C., earlier this month, many attendees sported buttons and stickers with the slogan, “Bin Laden is dead! GM is alive!”
Those following the trial, including several people who wouldn’t speak on the record for this article, think it is unlikely Judge Gerber would rule on the matter before the November election.

 

[Old Bookaroo]

Dave44:

Since there was no financing available, just how would that GM bankruptcy with no Federal government financing worked?

As for "...gotten rid of some of the onerous encumbrances they labor under..." you mean shifting the future pension obligations to the American taxpayers? There's a bright idea.

We, the taxpayers, came out even to ahead on TARP. Why is that such a terrible thing? Ford and GM remain in business and it didn't cost the Federal government.

Good luck to all,

~ The Old Bookaroo

 

[Old Bookaroo]

Limitool:

Fed announced it's cutting back. Dow went up a couple of hundred points.

Good luck to all,

~ The Old Bookaroo

 

[Old Bookaroo]

Jim in Idaho:

Personal Federal income taxes are the lowest they have been in decades. The top 1% - heck, the top 5% - pays less than 25% of AGI. Half the corporations in America pay NO Federal income tax each year. How much lower can taxes get than that?

During the time Mr. Obama has been in the White House we had a $700 Billion stimulus package - 40% of which was tax cuts, including the largest tax cut for working middle class families in our nation's history. Then came the renewal of the Bush-era tax cuts (Two wars and lower taxes! That was a formula for disaster!). If tax cuts were the magic bullet our economy would have come roaring back.

The Federal government is about the size it was when Mr. Obama took office. Local and state governments are much smaller. The Federal deficit has been cut in half in five years.

Good luck to all,

~ The Old Bookaroo

 

[Dave44]

Dave44:

Since there was no financing available, just how would that GM bankruptcy with no Federal government financing worked?

As for "...gotten rid of some of the onerous encumbrances they labor under..." you mean shifting the future pension obligations to the American taxpayers? There's a bright idea.

We, the taxpayers, came out even to ahead on TARP. Why is that such a terrible thing? Ford and GM remain in business and it didn't cost the Federal government.

Good luck to all,

~ The Old Bookaroo

Why should a bad plan have worked book? The current model is still a failure, it has just been prolonged. Don't forget, the people that believed in the company originally (and financed them) got taken to the cleaners. It does not set a good example.

A workable plan would have found financing. A change needed to be made.

 

[Dave44]

Jim in Idaho:

Personal Federal income taxes are the lowest they have been in decades. The top 1% - heck, the top 5% - pays less than 25% of AGI. Half the corporations in America pay NO Federal income tax each year. How much lower can taxes get than that?

During the time Mr. Obama has been in the White House we had a $700 Billion stimulus package - 40% of which was tax cuts, including the largest tax cut for working middle class families in our nation's history. Then came the renewal of the Bush-era tax cuts (Two wars and lower taxes! That was a formula for disaster!). If tax cuts were the magic bullet our economy would have come roaring back.

The Federal government is about the size it was when Mr. Obama took office. Local and state governments are much smaller. The Federal deficit has been cut in half in five years.

Good luck to all,

~ The Old Bookaroo

Now that is a delusional post.
Don't look now book,, but the facts get in the way of your rants.
[SIZE=+3]U.S. N[/SIZE][SIZE=+2]ATIONAL[/SIZE] [SIZE=+3]D[/SIZE][SIZE=+2]EBT[/SIZE] [SIZE=+3]C[/SIZE][SIZE=+2]LOCK[/SIZE] The Outstanding Public Debt as of 20 Dec 2013 at 03:04:49 AM GMT is:

The estimated population of the United States is 317,274,286
so each citizen's share of this debt is $54,407.39.
The National Debt has continued to increase an average of
$2.69 billion per day since September 30, 2012!
Concerned? Then tell Congress and the White House!

 

[Limitool]

O.B.... "Ford and GM remain in business and it didn't cost the Federal government." I still don't know how you STILL think it didn't cost taxpayers a lot to save GM. And what did Ford get out of any deal?

N.F...."Without the government it was goodbye GM!" That's my whole point... Nobody else would help them.... let'em sink and all the people who work there. And then watch the ripple effect of doing bad business.

 

[Old Bookaroo]

Dave44:

Happy Birthday!

Good luck to all,

~ The Old Bookaroo

PS: There's a difference between the Federal debt and the Federal deficit. The only way to reduce the debt is to pay it down while reducing the deficit(s).

 

[Old Bookaroo]

Limitool:

Because many suppliers depend on business from both Ford and GM, if GM had gone BK they would have been OOB, and that would have been the end of Ford.

Across the board, TARP was a push to a profit. That's why I say it didn't cost the taxpayers to save GM.

If a life insurance company pays a $100,000 death benefit, but all its other policy holders remain alive, did it lose money on the business it wrote? TARP had winners and losers. On balance, more winners. The risks were spread, and the program worked.

As for letting GM go BK and so what? The best analogy I read went like this: Suppose your neighbor's house catches on fire because he was smoking in bed. Do you not call the fire department because he was doing a bad thing and deserved to lose his home? What do you do when the whole neighborhood goes up in smoke?

Good luck to all,

~ The Old Bookaroo

 

[Dave44]

Book. Your misinformed post tells us that you thought the plan GM came up with was the only possible solution. As I said, the plan is a loser, it has only been postponed.

 

[Jim in Idaho]

Now that is a delusional post.
Don't look now book,, but the facts get in the way of your rants.
[SIZE=+3]U.S. N[/SIZE][SIZE=+2]ATIONAL[/SIZE] [SIZE=+3]D[/SIZE][SIZE=+2]EBT[/SIZE] [SIZE=+3]C[/SIZE][SIZE=+2]LOCK[/SIZE] The Outstanding Public Debt as of 20 Dec 2013 at 03:04:49 AM GMT is:

The estimated population of the United States is 317,274,286
so each citizen's share of this debt is $54,407.39.
The National Debt has continued to increase an average of
$2.69 billion per day since September 30, 2012!
Concerned? Then tell Congress and the White House!

You're wasting your time, Dave. He's on my ignore list. I don't have time to argue with stupid people. The country is full of them....it's the reason we're in the mess we're in.
Jim