Under what conditions would the government liquidate its proposed stake in the car companies? In short, what's the exit strategy.
Should the companies become profitable again, there may be considerable pressure for the government to stay in the game and collect dividends. And even if the car companies wanted to buy out the government, it might never be to their financial advantage to do so. If the shares are over-valued, it's to GM's advantage to let them drop before buying. If undervalued, GM's move to buy would be interpreted as such, and the government might well choose to them the shares appreciate.
But the real threat here is regulatory. The Big Three would find themselves with a friend in government, more able than ever - and with a profit motive to boot - to muck around with the rules to the benefit of rent-seeking auto companies, and with a proven disinclination to defer to market discipline.
Our own Diana DeGette, Congressman for Denver, is Chief Deputy Whip, thus a part of leadership. She's also the outgoing Vice Chairman of the House Energy and Commerce Committee, so will exercise considerable oversight of this monstrosity.
I just placed a call to her office for clarification (1:15 PM Denver time), and am awaiting a reply.
Should the companies become profitable again, there may be considerable pressure for the government to stay in the game and collect dividends. And even if the car companies wanted to buy out the government, it might never be to their financial advantage to do so. If the shares are over-valued, it's to GM's advantage to let them drop before buying. If undervalued, GM's move to buy would be interpreted as such, and the government might well choose to them the shares appreciate.
But the real threat here is regulatory. The Big Three would find themselves with a friend in government, more able than ever - and with a profit motive to boot - to muck around with the rules to the benefit of rent-seeking auto companies, and with a proven disinclination to defer to market discipline.
Our own Diana DeGette, Congressman for Denver, is Chief Deputy Whip, thus a part of leadership. She's also the outgoing Vice Chairman of the House Energy and Commerce Committee, so will exercise considerable oversight of this monstrosity.
I just placed a call to her office for clarification (1:15 PM Denver time), and am awaiting a reply.