I guess a lot of bubbly was raised over the GM initial public offering. Who would have thunk?
Jeff Carter over at Points and Figures provides a take I agree with. He says that the Chinese took down 18% of the offering. Hey, we have to borrow from them to buy their goods, and they have to buy something of ours besides Treasuries - it may as well be our car companies.
It bothers me that this transaction is seen as a success. Besides how it evolved, there is the danger that, the next time an extremely inept industry (it wouldn't surprise me if it was the auto industry again) gets to the brink of bankruptcy, a bailout along the lines of GM will be more easily proposed. Hey, "It worked last time."
It's very possible that we are morphing from the bailout of the financial sector every decade to bailing out other sectors on a regular basis. How long before we try the same thing with the airlines?
When Wall Street makes a lot of money via a huge wealth transfer, anything is possible. If you're snickering, then you don't understand the housing crisis.
When Hayek penned "The Road to Serfdom," he didn't envision the road veering into the capital markets. After all, the capital markets were supposed to be the bastion of free market economics.
As it stands, the road is being repaved and widened.
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