Greece and GM: Too weak to fail

The Washington Post ^ | 13 May 2010 | George F. Will

[Palter]

To understand the pertinence to America of events in Greece, notice General Motors' most recent misbehavior. A television commercial featuring CEO Ed Whitacre demonstrates the institutional murkiness and intellectual dishonesty that result when the line between public and private sectors disappears.

In the commercial, Whitacre says GM has "repaid our government loan in full." Rep. Paul Ryan (R-Wis.) noted that GM used government funds to pay back the government: It "simply transferred $6.7 billion from one taxpayer-funded TARP account to another." The government still owns 60.8 percent of GM's common equity, and the Congressional Budget Office projects that the government will lose about $34 billion of the $82 billion of TARP funds disbursed to the automotive industry.

When Ryan and two colleagues asked the Treasury Department for clarification, they got this careful reply: "Treasury has never suggested that the loan repayment represented a full return of all government assistance." A Treasury news release did say "GM Repays Treasury Loan in Full." The loan is, however, a small part of taxpayer exposure. Under crony capitalism, when government and corporate America merge, both dissemble.

Now American taxpayers also own a little bit of a small nation. They provide the U.S. contribution of 17 percent of the assets of the International Monetary Fund, which is giving Greece $39 billion (the IMF also is contributing $321 billion to a "stabilization" fund for other eurozone nations with debt problems). So the U.S. government, which would borrow 42 cents of every dollar it spends under the president's 2011 budget, is borrowing to rescue Greece and others from the consequences of their borrowing.

Greece, whose gross domestic product is below that of the Dallas-Fort Worth metropolitan area, is "too big to fail," meaning too inconveniently connected to too many big banks.

[Arthur Wildfire! March]

Adding this to Obama-nomics & Greece research. [Link in profile.]

[SmokingJoe]

So the U.S. government, which would borrow 42 cents of every dollar it spends under the president's 2011 budget, is borrowing to rescue Greece and others from the consequences of their borrowing

That's insanity right there.

[jwparkerjr]

I can’t think of a single problem that government has seen, and then solved. Anything they get involved in ends up worse than when they decided to help. No problem is ever solved, just worsened by government intervention.