If you're one of those who believes the government can't do anything right, this might be a good time to buy General Motors. Reason: the government wants to sell it. Serious paranoids about the competence of government in market transactions will assume that they're operating on a principle of "buy high, sell low,"--and that we can expect the stock, once sold to go up.
They might find support for their view from the attitude of GM CEO Ed Whitacre who is telling anybody who will listen that he wants "the government, out period." Aside from warm touchy feelings about not staying in bed with Satan, there's really only one obvious reason why as GM executive would care so much about who holds the equity. That is: he or his pals in the executive suite would like to buy some for themselves. After all, is there anybody better equipped to understand the long-term prospects of the company and the appropriate price structure?
[Oh, and by the way, if you care about the public fisc, the Detroit Free Press reports that the magic number is $114 Per the Freep, that's the price we would need to make the government whole on its invetment.].
Investors of such a skeptical bent might gain force for their convictions from the briefing paper on "picking winners" in this week's Economist. Or maybe not. For a magazine with a long history of hospitality to market solutions, the Economist presents itself, predictably, as generally hostile to government industrial policy. The remarkable thing is that even The Economist is willing to identify instances (outliers?) where picking winners has apparently worked pretty well--Israeli venture capital, for example, Chilean retooling. The really interesting question--which The Economist does not address, except perhaps backhandedly--is: how, exactly do governments get it right? How can we bottle and merchandise that particular brew? Of course, too careful scrutiny of that issue might lead to the conclusion that we never should have put money into GM in the first place.
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