Rent to Own
April 28, 2009
Today’s Wall Street Journal reports on GM offering a majority stake to the U.S. Government. Taxpayers will own a bit of Chrysler as well, although the United Auto Workers will get the lion’s share.
Of course, the government also now has stakes in many of the large banks, e.g. Citigroup (NYSE: C) and Bank of America (NYSE: BAC). Not to mention AIG (NYSE: AIG). Or Fannie and Freddie (NYSE: FNM, FRE). Who’s next, I wonder? What company or industry in dire straits will turn to the government for aid, in return for preferred stock or something similar?
Somehow I don’t think this is what they meant by the “Ownership Society.”
Disclosure: I hold no position, either long or short, in any stocks mentioned here.
Entry Filed under: Market, Miscellaneous. Tags: AIG, Band of America, Citigroup.
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by Michael Mauboussin
1.
Pozycjonowanie | June 17, 2009 at 2:50 am
Well I know we’d all want the big corporations to be on their own but look at it this way – if we ignore them now, during the recession and they fail, the effects in the future might be terrible.
2.
Noclegi Gory Stolowe | July 28, 2009 at 7:53 am
We need those companies. They provide emplyment for hundreds of people all over the country. You can’t ignore that.
3.
Scott Berry | July 28, 2009 at 8:02 am
If you believe the main purpose of companies it to provide employment for people, you and I probably won’t agree on much.
Still, I understand your sentiment. I’d rather let such companies fail. They have not successfully competed in the market, and should step aside to make room forthe emergence of companies that can. Hayek called this “Creative Destruction”.
Should the government insist on pouring money on the problem, let them subsidize the unemployed directly instead of interfering in the marketplace.