Posted on 11/19/2010 5:35:03 PM PST by Kaslin
Bailouts: Is General Motors, after its splashy initial public offering, really on the way to "becoming a success story," as President Obama says? As usual with politics, it depends on your definition of "success."
Yes, last week's GM IPO did fetch $33 a share, somewhat north of what was expected. But was it a success, really? And is the revived GM positioned to regain lost market share by pioneering a booming new industry for green cars?
The answer to both questions is no.
Start with the IPO. American taxpayers ponied up $50 billion to bail out GM, in exchange for which we got a 61% share in the company. In the IPO, we cut our government holdings to 33%, netting an estimated $13.6 billion or so.
Good deal? Check the math. The U.S. lost an estimated $9.4 billion on the deal. In fact, for taxpayers to be made whole, GM shares will have to trade at about $53 a share. Not what we would call "success," at least for taxpayers.
Moreover, GM operates under a virtual guarantee that it will be bailed out should it again go bust. So why wouldn't its IPO be a "success"? Many would buy stock in a company if they knew it had a government guarantee for its mistakes, as GM's IPO shows.
Worse than this is the claim GM made earlier that it had paid back its bailout "in full, with interest, five years ahead of the original schedule." As Reason's Nick Gillespie pointed out, GM "repaid" its loan with other taxpayer-provided bailout funds.
(Excerpt) Read more at investors.com ...
“GM “repaid” its loan with other taxpayer-provided bailout funds”
that says it all, for me. obamanation has them in his vice.
I wouldn’t drive a government motors vehicle if someone gave it to me..
Well, I have one but I bought it in 2006, and I can not afford to buy a new one
I would do the same thing as you... when all is said and done, the best car is the “paid off” car.... :)
Where is the class action lawsuit (or individual suits) from the creditors and bond holders who were screwed illegally by the Gov’t?? Are they just too rich to care; paid off by TARp funds; threatened by Obama’s Chicago mafia? < crickets >
There’s more math to be figured. The emphasis has been on Miles per Gallon. Calculate what I call “Dollars per MILE”.
Cost, even with taxpayer subsidy, depreciation, repairs, local taxes, gas (still needed), re-charging fees, INSURANCE, battery changes and more. I bet my “Dollar per Mile” cost for my Olds Custom Cruiser will be a whole lot less.
And I can drive from the middle of Mass. to lower Maine to visit the kids in one long trip, no stops. Up and back on one tank of gas.
General Moters seems to think it has sufficient funds to make political contributions, mostly Democrats, according to FoxNews. http://www.foxnews.com/politics/2010/09/23/general-motors-resumes-political-contributions/
Ultimately the price will rise and the shares will be sold to the public. However soon after that happens Wall St. will realize the government won't bail this out again , especially if Husein's numbers keep tanking. Those who got in late (the retail investor) will again be left holding the bag.
The final thing that nobody's mentioning in all the hype is the original bondholder who got $0.25 on the dollar (and was called greedy by Husein) and the owner of the old shares who rode it down hoping it would turn around, they get bupkus. Please feel free to point out where I'm wrong.
My son in law, who is in the finance industry, says that there’s a government fund to help retirees of companies whose own retirement plans failed to deliver. In other words, GM screwed their retirees and our government partially bailing them out. GM is one of the companies whose retirees are tapping into this government fund. Wonder how much that’s costing us?
FUGM and Obama too!
House money. The company, the unions and the government distort the business model and we, the taxpayer mainly in the private sector pay it back, with interest.
What a SCAM! Bernie would be proud!
What a SCAM! Bernie would be proud!
It’s purely un-American that other auto companies are having to compete against GM with the unfair advantage of a new $40 billion taxpayer-subsidized tax break.
Still leaves out all the tax payers money that was piss away before the reorganization,
“Any new factories will be built in China , so new jobs will be created, only not in the US.”
Since GM is selling more Buicks in China than here, maybe they should be made there. Then we’d be rid of greedy union line workers earning a middle class living.
The down side to shunning `our’ own investment—if GM doesn’t pay us back then we execute on their plants, equipment and inventory. If that happens, with spending this year of 3.5 trillion and only 2.2 in revenue, well, if we don’t get our deficit under control we’ll be assigning any proceeds and auctioning off federal assets as well to our foreign creditors.
With all respect to Nick Gillespie and his open border liberaltarians—and to Zero-haters (I’m one)—what’s good for GM in 2010 is good for America. Buy American.*
[Where is the class action lawsuit (or individual suits) from the creditors and bond holders who were screwed illegally by the Gov’t?]
I was wondering that myself. Found this:
http://blogs.wsj.com/marketbeat/2010/11/09/gm-bonds-ipo-range-is-too-low/
In short, there is no green future based on plug-in cars. Only losses for the indoctrinated suckers who buy them — and for the taxpayers who are fleeced to subsidize such economic folly.
I like it.
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