One has to ask, when so few thought it was a good idea to bailout AIG last year, why does the federal government continue to do it? A failing company is likely to fail regardless of how much extra money is thrown at it. The extra money just delays the inevitable. Under strong leadership, a faltering company could use extra money to help it along and get back on its feet the way Apple did when Bill Gates gave the company money for Research and Development. Under weak leadership, a faltering company becomes a failing company. When a company reaches the level of failing, it has been historical for the company to seek out new leadership. In this new era of government bailouts however, at least one company is not doing that.
GMAC has petitioned the Treasury department for its third bailout. "Everybody in Washington thinks GMAC is a mess. But nobody wants to stop funding it to find out just how big a mess it is — especially when the taxpayer will keep it going." (From WSJ blogs)
At what point does Congress tell a company no? At what point should a company fail? Prior to AIG, if a company was about to fail, and leadership within that company did nothing to stop it, the company failed. That's how its supposed to work. Now, apparently, if your company is big enough, you don't have to do anything. Just petition Congress every few months and get some more money. Is this the new business model in America?
So far, taxpayers have unwillingly thrown $13.5 billion dollars at this company. And now, the company is seeking an additional few billion. (the actual number has not been determined yet.) GMAC has also received approval to sell $2.9 billion dollars of federally backed loans. (data from bloomberg.com) To that end, when do we, the taxpayers, say, "enough Congress. Stop spending my money."
The fact of the matter is, if we were to look at buying stock and saw the numbers for GMAC, or had seen the numbers for AIG last year, not one person would have invested in them. At this point, we have been forced to invest in failing companies, again and again, without our consent. Yet another tax on the already overtaxed American people.
In a recent interview, Michael Moore said it best when he compared the taxpayer reactions of Americans to that of France. The French, whose taxes are significantly higher then ours, do not complain about their taxes. Why? Because they actually see a return on their investment. In America, we pay our taxes, and maybe, just maybe, we will see a pot hole fixed in front of our house. See the video below.