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Economist Peter Morici on the Administration’s decision to auction $18 billion in AIG shares and GM’s losses on the Chevy Volt.
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Taxpayers are still on the hope tonight for our nation's failed government bailout programs.
News today the treasury plans to -- a big chunk of the AIG stock announced later this month.
Eighteen billion dollars to be exact which is more than half of its current stake.
Meaning the government will now become a minority investor for the first time since -- rescue the world's largest insurer.
Back during the height of the financial crisis of course the timing of all this -- raising a few eyebrows less than sixty days before the election.
And while -- may be a step in the right direction let's not forget we're all taxpayers on the hook for these bailout recipients take a look at these folks including.
More than 300 small banks joining me now University of Maryland economist Peter Murray chief.
So -- I can't we can hear what you gonna say about this is this a political move here.
Absolutely look at the timing a week after the Democratic Convention mr.
Obama wants -- come up with something to talk about every week.
To keep our focus away from the terrible jobs numbers this sorry state of the economy and frankly all the nonsense that continues to go on on Wall Street.
Well nonsense is right.
But the good news here at the government is cutting its stake at a it would -- more than 50% it's gonna that's taken half now that's certainly good news.
Will this lead ultimately how soon can we entangle the rest of the stake.
Well -- think that over the next year -- two they can do that AIG is doing quite well and always had very solid insurance businesses it just got into the terrible habit of and ensuring these mortgage backed securities through a sort of a separate entity.
And and I think that AIG has a bright future as an independent company.
Well we just show analysts the companies that still at a federal government money that we've not been made whole line they include a number of banks.
-- the including ally financial 300 small banks still owe us money.
Fannie and Freddie of course the biggest of these.
This is to me the big Kahuna -- -- we get out of this one.
Well it's going to be very difficult you know look at General Motors it's producing cars to make mr.
Obama.
Happy in the form of the vault losing it out.
Probably more than 101000 dollars -- -- easily.
And you know it's very difficult to see how will ever get -- -- General Motors by the white you know I think this politically motivated why isn't the president trying to sell shares of General Motors today.
And the answer is he can't get his money out of -- does try.
But absolutely true let's talk about that Chevy Volt because this -- you know hey this is the USA car right we backed did it's all about us it was for us.
And nobody wants to buy -- Peter what does this tell you about the government picking winners and losers.
Well the government is picked a succession of -- whether it's Solyndra with -- solar panels Windmills.
Ethanol.
The vault all these things cost us money because -- the things that private sector won't do.
Not because it's been an evil but because they don't make economic sense.
-- General Motors had gone -- -- kind of Chapter Eleven they say Bethlehem steel it went through another steel companies did.
During the Bush Administration without government subsidies they wouldn't be making the -- today.
And they'd be a lot healthier you know they look like Ford making sensible -- at a profit.
-- -- I mean you know you mention the news today that this machete is losing.
Almost 50000 dollars for every -- cells and -- GM is pushing back on that today saying it's not true but I have to tell yet.
Almost every journalist who covers this even well no -- like Mickey Maynard at Forbes is saying yeah that is true they are losing a ton of money on each and every one of these cars.
Which brings up the thought here which is that.
Why should you do the right thing as a CEO of a major American company when you know it -- big enough you're gonna get bailed out.
Well that's exactly at a point you know if you look at that banking sector we've actually made the big banks.
Bigger and more difficult to let them fail.
And I don't know that anything is really change -- General Motors if we have another recession in 2013.
Which is you know more than -- 0% probability.
Can General Motors make cars -- a profit.
I'll tell you this I'm very confident the Ford Motor Co.
even though it is burdened by debt because -- didn't have the -- that General Motors had.
Can make a profit at a much reduced market.
I don't know the General Motors can't do that and that's what comes with you know this hothouse industry this industrial policy they nanny state.
And frankly bailing out the union because it puts feet on the ground for mr.
Obama what he's running for office.
Well Peter I need to -- speak your mind I was worried about that thanks for coming on tonight take care.
