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An EASY TO FOLLOW Flow Chart For Those Who Wish To Understand That GM's Failure Is "Good Business"

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Orwellian_Ghost Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:03 PM
Original message
An EASY TO FOLLOW Flow Chart For Those Who Wish To Understand That GM's Failure Is "Good Business"

The failure of General Motors is good business for lots of selected
financial friends of the administration and beyond. It's estimated
that at least 35 billion dollars worth of credit default swaps (CDS)
have already been paid against GM bonds through the conduit of AIG
using taxpayer monies out of the approximately 180 billion given
to AIG. As soon as the administration refused to give GM any more
money, Goldman and the other banks began getting their payouts.
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Skink Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:06 PM
Response to Original message
1. This could be the shadow banking system.
Or the shadow Government.
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Orwellian_Ghost Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jun-04-09 08:10 AM
Response to Reply #1
7. Mostly
the natural operating systems of capitalism.
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JVS Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:07 PM
Response to Original message
2. Moral hazard
This entire system is morally unjustifiable when you have huge bets riding on either side of any economic intervention and each side lobbies to improve its chances. They should have all been allowed to fail because their ongoing existence threatens the country.
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Skink Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:14 PM
Response to Reply #2
3. Thank you Henry Paulson.
:evilgrin:
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JVS Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:25 PM
Response to Reply #3
5. The funny think is that the pukes were all moral hazard out the ass about bailing out joe homeowner
but there never seemed to be an inkling that the government propping up a bunch of failed financial institutions to be our masters forever might have a moral hazard. If you can't pay bills and the government coughs up $16,000 it's a moral hazard. If AIG collapses from making bad decisions and the gov gives $160,000,000,000 it's all hunkydory.
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Boojatta Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:24 PM
Response to Reply #2
4. Good point.
"huge bets riding on either side of any economic intervention and each side lobbies to improve its chances."
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JVS Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-03-09 09:33 PM
Response to Reply #4
6. Back during the Irish potato famine, the crown did try to take some steps to help.
Have you ever heard of digging a ditch one one side of the road and filing it in on the other? People think that's from the depression, but it's from Ireland. The reason that this social project had to be devoted to something so useless was that although the British government (no friend of the Irish people, but having a desire to at the very least stop a crisis that was leading to dislocation of subject, including from Ireland to England) wanted to provide some source of income for the people to be able to buy food, the landlords argued vociferously against the digging of a ditch, road, or other improvement on the grounds that it gave an unfair advantage to the landlord who got the use (estates were so large that a new road or ditch was likely to be completely within the holdings of a single landlord) of the new ditch, road, or whatever would be getting an unfair advantage. The government accepted the argument that by making economic decision, unequal treatment was being shown and went with useless make-work projects. The capitalists fear the crowding out effect and won't let there be progress.
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