The Michael Moore Solution

Moore’s latest comment on the auto industry bailout is well worth reading, which you can do if you click here.

You’ll see that Moore is pretty skeptical about the auto industry and also scathing about the treatment Congress handed out to the leadership of that industry at the hearings.

“Two weeks ago, the CEOs of the Big 3 were tarred and feathered before a Congressional committee who sneered at them in a way far different than when the heads of the financial industry showed up two months earlier. At that time, the politicians tripped over each other in their swoon for Wall Street and its Ponzi schemers who had concocted Byzantine ways to bet other people's money on unregulated credit default swaps, known in the common vernacular as unicorns and fairies."

What particularly caught my attention was one of his suggested solutions to the crisis.

"You could buy ALL the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You're going to demand collateral anyway if you give them the "loan," and because we know they will default on that loan, you're going to own the company in the end as it is. So why wait? Just buy them out now." 

Of course this is not a complete solution, since buying only the extant stock leaves the companies, particularly GM, on the brink of financial collapse.  Ownership of voting stock, rather than simply Warrants, gives you greater corporate control through seats on the board of directors. Yes, the tax payers still have to invest billions in GM, but they are investing in a company they own. If the nation's wisdom comes to be that the company should go public then the shares can be sold.