Bar Stool Economics

[Conan71]

I am happy to say that $5 every other week doesn't make the difference between food on the table or being hungry.  Unfortunately, it's not even beer money.  Give me a stimulus that I can actually buy something with.

Especially considering a Marshall's bomber is close to $6 a bottle now.  I did manage to get some El Cucuy and Big Jamoke over the weekend down in Norman, uh not with my stimulus funds.

[TulsaMoon]

Funny, for sure.
And like so much revisionist history, GM was bailed out by Obama (when in reality, it was Bush that started it).  And we actually are gonna make money on that deal.

And the fact that 50% of the people in this country don't MAKE enough to pay taxes.

And the 700 billion stimulus that Obama was about 45% in the form of tax breaks for everyone that makes under 250k.  $290 billion of it.  And it is still working through the economy.  And the FACT that for all the bailouts of banks and auto companies, no improvement was seen for about a year, while the relatively small stimulus that got into the working peoples hands actually DID start to show results in less than 3 months.  March to June.

And the banks that were bailed out even earlier in the Bush administration.  Actually gonna make money on that deal, too.  (Boy was I wrong in being so against the bank bailout!)

And those richest ARE the richest because they are literally riding on the backs of that lowest paid 50%.

Hilarious article.  Kind of like Steve Martin for rich guys?  

I am not sure how we have made or are going to make money from GM when you look at what they received and what they have paid back. Here is a CNN Follow the Money link. After looking at this in total it really is scary.

http://money.cnn.com/news/storysupplement/economy/bailouttracker/

[Hoss]

Especially considering a Marshall's bomber is close to $6 a bottle now.  I did manage to get some El Cucuy and Big Jamoke over the weekend down in Norman, uh not with my stimulus funds.

How is the EC?  I keep meaning to get out and get some but I've restricted myself to Ranch Acres (although it likely is carried closer to me, but I KNOW RA has it).  Plus I need to stock up on the Jamoke.

You and FMC need to get to hockey game; a friend of mine plays on a league with Eric (maybe Eric sponsors the team, not sure he plays) and they now have sweaters (jerseys/uniforms for you non-hockey types) with the Jamoke label on them.  Not sure you can buy them unless you're on his mens league team though.

[Conan71]

How is the EC?  I keep meaning to get out and get some but I've restricted myself to Ranch Acres (although it likely is carried closer to me, but I KNOW RA has it).  Plus I need to stock up on the Jamoke.

You and FMC need to get to hockey game; a friend of mine plays on a league with Eric (maybe Eric sponsors the team, not sure he plays) and they now have sweaters (jerseys/uniforms for you non-hockey types) with the Jamoke label on them.  Not sure you can buy them unless you're on his mens league team though.

Not sure how timing will work for FMC to be here for a game, but I want to go when I can get the time.  She's generally only here on weekends.

EC is some good stuff.  It's sort of like a porter, but with almost some fruity cru-like overtones if that makes sense.  It's a complex flavor, Eric is really showing his chops as a first rate brew master with this one.

[Conan71]

I am not sure how we have made or are going to make money from GM when you look at what they received and what they have paid back. Here is a CNN Follow the Money link. After looking at this in total it really is scary.

http://money.cnn.com/news/storysupplement/economy/bailouttracker/

I couldn't find anything out of your link to suggest what has been repaid by GM.  All I managed to find so far is an article which states they have repaid or intend to repay $9.5 bln from earnings and repay the remaining $40 bln from the IPO.

Interesting note from Politifact regarding the ads GM ran last spring claiming they had repaid their debt ahead of schedule:

"Aside from the outstanding stock issue, Whitacre's announcement has come under fire from Sen. Chuck Grassley, R-Iowa, who notes that the loans were repaid not with GM earnings (in fact, SEC filings show GM expected to have negative net cash flows in the fourth quarter of 2009) but rather from GM tapping into a multi-billion-dollar TARP-funded escrow account.

"Therefore, it is unclear how GM and the Administration could have accurately announced yesterday that GM repaid its TARP loans in any meaningful way," Grassley wrote in an April 22, 2010, letter to Geithner. "In reality, it looks like GM merely used one source of TARP funds to repay another. The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity-swap is not a repayment."

Grassley's claim about the origin of the money used to repay the loan was acknowledged by company and government officials.

In an April 21, 2010, interview on the Fox Business Network, GM's vice chairman, Stephen Girsky, was asked if GM is just paying the government back with government money.

"That is, in effect true," Girsky said. "But a year ago, nobody thought we'd be able to pay this back. They gave us five years to pay it back, we're paying it back in nine months. ... This is one step along the way in the road to recovery here.''

http://www.politifact.com/truth-o-meter/statements/2010/apr/27/ed-whitacre/ceo-says-gm-has-repaid-government-loans-full/

GM raised $20 bln on the IPO, so the government still has quite a bit of money at stake, at least 1/2 of their $40 bln.  Today's market cap shows $50bln at ~$34/share, but you can't simply dump all the shares held at once and I'm not 100% certain how much of the market cap is based on common and preferred shares.  I think the gov't owned 60% of the company prior to the IPO.   

Even though I'm very fiscally conservative and generally against the gov't picking winners & losers, I think there was a good served by the jobs and associated businesses which were saved by the bailout of automakers.

[nathanm]

Even though I'm very fiscally conservative and generally against the gov't picking winners & losers, I think there was a good served by the jobs and associated businesses which were saved by the bailout of automakers.

I'm not very fiscally conservative, but I still hate government subsidizing business and I also am happy it seems to have saved quite a few jobs and probably the future viability of Ford, who would have been screwed had all their suppliers gone out of business due GM being liquidated.

[Conan71]

I'm not very fiscally conservative,

That's good news, I'm accepting hand outs from people who are fiscally liberal

[guido911]

That's good news, I'm accepting hand outs from people who are fiscally liberal

Good luck with that...

[nathanm]

That's good news, I'm accepting hand outs from people who are fiscally liberal

Perhaps if I were more fiscally conservative, I'd have money to give you.

Although what I meant was that I don't think deficits matter one whit. I think I mentioned before that Cheney was right and I was wrong on that one.

[Red Arrow]

How is the EC?  I keep meaning to get out and get some but I've restricted myself to Ranch Acres (although it likely is carried closer to me, but I KNOW RA has it).  Plus I need to stock up on the Jamoke.

The Crossing at 101st & Memorial had both last Friday.  (We can issue a one time Passport if needed.)

[Hoss]

The Crossing at 101st & Memorial had both last Friday.  (We can issue a one time Passport if needed.)

I'm afraid upon providing my proof of the age of 21 that I will be assessed an import tax once my address is revealed.  Need something closer.

[TulsaMoon]

I couldn't find anything out of your link to suggest what has been repaid by GM.  All I managed to find so far is an article which states they have repaid or intend to repay $9.5 bln from earnings and repay the remaining $40 bln from the IPO.

GM received $49.9 billion of which they have repaid $361 million. GMAC received $13.5 billion of which zero has been repaid.

Automotive Industry Financing Program

General Motors     $49.9 Billion
(paid back)          $361 Million
Chrysler              $12.8 Billion
(paid back)          $280 Million
GMAC                 $13.4 Billion
Chrysler Financial $1.5 Billion
(paid back)         $1.5 Billion

[Red Arrow]

I'm afraid upon providing my proof of the age of 21 that I will be assessed an importexport tax once my address is revealed.  Need something closer.

You may also be assessed an import tax upon re-entering mid-town.

[Conan71]

Perhaps if I were more fiscally conservative, I'd have money to give you.

Although what I meant was that I don't think deficits matter one whit. I think I mentioned before that Cheney was right and I was wrong on that one.

Cheney was dabbling in neo-keynesianism. 

Deficits don't matter if it's a temporary situation.  The idea is that it will create growth in recessionary times.  Slight problem though: We've been doing this going on 30 some years.  Year after year of deficit spending coupled with more and more debt and greater debt expense eventually becomes unsustainable.  Now we find ourselves $14 trillion in debt, but I guess that doesn't matter since we can simply eventually print the money to pay it back. 

Opinion piece on why they matter:

"Of all the reasons to be concerned about the so-called "twin deficits," the long-term effect on the dollar as a global store of value and medium of exchange is by far the most serious....

"There is a discomforting contrast to be drawn between the economy today and in 1985, when many were already proclaiming the U.S. current account deficit "unsustainable." Twenty years ago, when the U.S. current account deficit stood at 2.8 percent of GDP, foreign governments owned 8.4 percent of U.S. government debt outstanding. At the end of 2004, with the current account deficit at 5.2 percent of GDP, foreign governments owned a much higher 27.6 percent of the total debt outstanding. This is a cause for concern, as it represents a much greater concentration of holdings among a group that is prone to herding....

"The dollar has since fully supplanted gold as the foundation of the world's monetary system; a feat unprecedented in world history for a completely uncollateralized fiat currency. But should the dollar continue an extended decline, under pressure from unprecedentedly high trade deficits, there is every reason to believe that central banks will seek greater diversification in their reserves, most likely into euros. As central banks bailed out of gold in the 1990s, their herding out of dollars will accelerate the dollar's decline. 

If the Bush administration persists in projecting an image of insouciance over the dollar's long-term fate, this will undermine the currency's hard-earned role as the world's preeminent standard of value...."

http://www.cfr.org/publication/11422/why_deficits_matter_condensed_version.html

More of a layman's look at how it's beneficial.

WHEN DICK CHENEY SAID, "Deficits don't matter," economists took that as proof of the economic illiteracy of the Bush administration. But it turns out there is a case to be made that Cheney was onto something.

On the deepest level, the vice president was echoing, in slightly exaggerated form, an idea put forward a few years ago by Irving Kristol, the Godfather of the neoconservatives who have had such a wide-ranging effect on Bush administration policy. Kristol wrote then, and still believes, that "We should figure out what we want before we calculate what we can afford, not the reverse."

On the political level, treating deficits as a non-issue also proved a successful strategy. After all, despite the torrent of red ink that splashed across the national budgets during his first term, George W. Bush was reelected by a substantial margin. Among John Kerry's other failures was his attempt to saddle the president with the label "profligate."

Which brings us to the economic level. The deficits that Bush ran up in the years in which the country was teetering on the verge of a serious recession had the beneficial effect of righting the economy. In that sense, deficits not only didn't matter, but were a force for economic good.

But that was then, and this is now. The economy, growing at an annual rate of 3.5 percent to 4.0 percent, is hardly in need of further fiscal stimulus. Yet the budget that the president sent to Congress last week promises deficits as far ahead as the eye can see--if the eye is practiced in reading these massive documents.

http://www.weeklystandard.com/Content/Public/Articles/000/000/005/245esggv.asp

[Gaspar]

GM received $49.9 billion of which they have repaid $361 million. GMAC received $13.5 billion of which zero has been repaid.

Automotive Industry Financing Program

General Motors     $49.9 Billion
(paid back)          $361 Million
Chrysler              $12.8 Billion
(paid back)          $280 Million
GMAC                 $13.4 Billion
Chrysler Financial $1.5 Billion
(paid back)         $1.5 Billion

But . . . if you are talking to sheeple, you can simply take money from your left pocket and put it in your right pocket and your debt is erased?  Right?

Explanation From Reason Magazine:

Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7 percent interest rate—a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8 percent equity stake in the company—arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7 percent equity stake. The U.S. and Canadian government together own 72.5 percent of the company.)

But when Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion—the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money—government money—to pay back the government loan.