The banks vs GM: the difference from Obama's POV (as I understand it):

[smoogatz]

Taxpayer dollars invested in the bank bailouts will, eventually, return the banks to profitability and return a substantial profit to the taxpayers. Krugman and other economists/critics of note doubt that those bailouts will succeed, but that's the premise Obama's operating under. For GM and Chrysler, the argument is that basically no amount of tax-payer assistance will succeed in restoring profitability: the product lines are too weak, the infrastructure too antiquated, the debt and pension burdens too high, and the balance-sheets too far in the red as you project current trends forward for any further loans or bailouts to make a difference, except in keeping operations afloat in the short term. More money for GM or Chrysler would be throwing good money after bad; not so, perhaps, with the banks. Also, there's a matter of scale involved: if the banking system is allowed to collapse, the entire economy will basically shut down--no lending means no manufacturing, no mortgages, no consumer goods bought or sold, no crops planted, no transportation of goods, no fuel, no food, no communications, on and on. If GM shuts down a lot of people lose their jobs, but it's not armageddon. I'm getting more and more socialist as I get older, so I'd actually like to see Obama nationalize the big banks, at least temporarily. Let's nationalize GM while we're at it and let Al Gore turn it into a model for green car manufacturing. The wingnuts would howl, but who gives a shit what they think?

[Romulox]

1. Your argument makes no sense.

In the first instance, we have forwarded $3 TRILLION to Wall Street thusfar; less than $20 billion has been loaned to GM and Chrysler. To say that the bank industry is "profitable" because of this infusion of cash is idiocy of the first order.

[smoogatz]

2. Two things.

First, it's not my argument. Second, most of the money that's been pumped into the banking sector has been used to buy bank shares and underwrite assets. Those assets may or may not be worth what the government paid for them (they're probably not), but at least on paper they have some value. If the government loans GM 20 or 40 or 60 billion and GM goes under anyway, the money's gone--most likely not recoverable. And the amount of money isn't really the issue: again, it's a matter of scale. I think people are reacting very emotionally here, but I guess that's what we do on DU most of the time.

As I said, if I had my way, I'd nationalize all of them, at least for the near term.

[Oregone]

3. Error: "Taxpayer dollars invested in the bank bailouts will, eventually, return the banks to profi"

No, its meant to provide *liquidity* to banks, not profit in itself (allows them to again realize profit if they can invest finally). The current plan holds no promise to directly profit the taxpayers at all.

The theory is that if banks are liquid, they will feel more happy about making loans or investing in the worst economic climate in decades that has a promised negative ROI.

The theory seems fucking retarded. If you pay off my house, I will happily live there and breathe easy. I won't buy a new one right now.

[smoogatz]

4. By purchasing bank shares, you add liquidity.

Yes, it's a direct infusion of cash, BUT we also now own percentages of the banks we've bailed out. If they do well, the shares we own increase in value, which means profit for the taxpayers down the line. Note the "if," though--it's a big one.

[Oregone]

5. Very little of his plan involves government ownership

Have you read through the Geithner plan?

A tiny equity stake for a massive share of the liability? Thats not an investment, its a handout. There will be NO, and I repeat, NO, profit, at all, whatsoever, from the bank plan. The banks may get liquidity, if and only if, the toxic assets aren't all absolute shit. The investors are also guaranteed an additional profit (that wouldn't be a factor in plans not involving the private market). But this leaves no, and I mean none at all, profit left for the government. There will be massive, massive losses from the Obama/Geithner bank bailout plan.

Their theory is that it is alright for the people to shift their wealth to the private investors in this deal, because the sub-human, incompetent stupid people are not smart enough to drive the economy. We must give wealth to private investors, and restore wealth to the banks, such that these superior humans that inherited their position (and genetics) will feel benevolent to help us survive again.