Auto industry bailout did not ‘work’

Editor:

Father Robert J. Gregorio writes in the July 31issue of the Catholic Star Herald (“Really, what is best economically for the U.S.?”) that the federal bailout of the auto industry “worked.” “Car makers have returned to profitable quarters. They paid back or are paying back what they borrowed from Washington, at interest.” This is less than the truth.

Using the same bailout money borrowed at 7 percent to pay back the loans and getting other money at 5 percent from the government is hardly a boon to the taxpayers.

Shikha Dalmia, writing for Forbes.com states, “In short, GM is using government money to pay back government money to get more government money. And at a 2 percent lower interest rate at that. This is a nifty scheme to refinance GM’s government debt — not pay it back!”

Let’s not forget those who were hurt in the demise of GM and Chrysler. The article “What Does the Auto Bailout Mean for Bondholders?” on the website Ehow states, “Bondholders lost most of their investment in the companies.” The bondholders are a mix of investors from pensioners to investment funds to financiers. They are the ones who lost most of their investment in GM and Chrysler. It is nice to have the slate wiped clean and have the government finance the “new” companies using the assets that rightly belong to the investors that lost out. But why squabble over details. Justice is in the eyes of the beholder. The capitalists’ battlefield often is littered with the corpse of peons and pawns as well as the captains of industry.

Father Gregorio sees issues the color black or white. Sadly there are shades of gray and justice falls short when more facts are revealed.

Joseph Krause

Woodbury