Government Invests in Private Companies

"The marvel of all history is the patience with which men and women submit to burdens unnecessarily laid upon them by their governments". William H. Borah

I keep reading news stories that the government loans to big companies will be owed to the taxpayers. The government on Monday provided a new $150 billion financial package to troubled insurance giant American International Group, including $40 billion for partial ownership. "All told, the moves boost aid to the company to more than $150 billion. Fed officials, however, expressed confidence that the money would be repaid to 'taxpayers'."

"The government is buying preferred shares of AIG stock, giving 'taxpayers' an ownership stake in the company."

If the money will be repaid to the taxpayers, which I am one, when will I get my money? As a taxpayer the government says I will own a stake in the AIG company. If that is so, can I sell my shares? No! Because the government is prevaricating. The government mob will own those preferred shares. They will collect the dividends to use for sustaining their perks and lifestyles.

The government is about to loan money to the auto manufactures. I say the auto manufactures should go bankrupt and follow the cost reductions necessary to make their business model work. Reduce labor cost and executive compensation. That's why the United Auto Workers do not want bankruptcy. Neither does the Pension Benefit Guaranty Corporation, PBGC, who would have to take over the pensions of the auto workers, active and retired. There are over 700,000 retired auto workers. This would bankrupt another government program. Government doesn't work.

The over 700,000 retired auto workers might also lose their health coverage in bankruptcy. These reasons are why government people say the auto makers are too important to fail. The burden for pension and medical care would fall on the government. The companies and their workers always knew they could keep wages high and always hide behind the "too big to fail mantra". A million votes have a lot of power for extortion.

If the government is going to buy $40 billion of shares of preferred stock from AIG, shares that pays a dividend. At $20 per share, that equals to two billion shares. That would be 100 shares for 200 million people. They should give 100 shares of those preferred shares to 200 million citizens, starting with the oldest citizen. Most of the millions of new owners would sell their shares, after a freeze or for special circumstances, and spend the money, $2000, which would help the economy.

Charles Tolleson

"Why Government Doesn't Work" 1995, by Harry Browne. Book text in pdf format here. http://www.jrbooksonline.com/PDF_Books/why_govt_doesnt_work.pdf

Charles Tolleson