Government Motors: As GM shares near record low, taxpayer loss on bailout rises to $35 billion

Investors.com ^ | July 3,2012 | Andrew Malcolm

[Hojczyk]

To quote Lando Calrissian, this deal's getting worse all the time.

General Motors(GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.

Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.

Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.

But that's not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.

Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.

Toyota(TM) still enjoys a price premium over similar GM vehicles, the U.S. auto giant needs a labor cost advantage, not near-parity. And Toyota has relatively high costs. Volkswagen(VLKAY) pays workers at its new Tennessee plant only about half what GM does.

[scooby321]

outsourcer in Chief GM employs over 50% overseas as a loser

[Red Badger]

I think FaceBoob is doing better than that........................

[tacticalogic]

We just keep sinking deeper and deeper into recovery......

[Mr. K]

wait until Obozo lowers the price of GM cars so much that every idiot will buy one-

which will put Ford and all the others out of business

then he achieves his real goal - 100% takeover of the US auto industry

he didnt need to do it all at once, just ake over ONE of them- and use tax dollars to drive the others out of business

he already drove Republican-owned GM dealership out of business- if they were successful money makers or not (and they all were)

[yoe]

Apparently the news that GM is now China Motors did not get around....better look that up Freepers and do your research...you were told how this was coming down...didn’t resonate huh? Couldn’t happen here etc. etc.

[immadashell]

But that's not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes. Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.

The number of accounting, legal and finance rules and precedents violated by this deal is staggering. I hope they go belly up as a lesson to the central planners (i.e. Commies).

[sickoflibs]

RE :”General Motors(GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.
....Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.
Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.
But that's not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes. “

A few notes to add:

1) Last year Biden came out claiming that GM fully paid back it's debt to the Feds, not including the bailouts referenced above as part of the ‘debt’
2) In spite of this ripoff to taxpayers this massive handout is popular in Michigan and Ohio where it is helping Obama and hurting Romney. Obama is also playing the Bain ads there to build that narrative that Obama saves jobs, Romney lays off workers.
3) Romney's strategy appears to be to claim that he proposed the bailout before Obama did, not to be critical of it. This doesn't appear to be working for him.

[nascarnation]

Do you really think ANY car company could survive on just the declining American market?

Every car company is trying hard to expand in China and India.

Another 4 years of Baraq and US auto sales will be about equal to those in Kenya.

[Eric in the Ozarks]

Stunning.

[preacher]

In April of 2010 there was a story carried prominently in the MSM that GM had paid pack all of the
bailout money loaned by the US government. This story was debunked in this Reason article:

GM's Phony Bailout Payback
http://reason.com/archives/2010/04/27/gms-phony-bailout-payback

[KittenClaws]

My boss just sent this to me, re: China & GM

http://www.youtube.com/watch_popup?v=Lvl5Gan69Wo

[scooby321]

Bain ads should be replaced with this as a Ad

[Terry Mross]

I know people, including relatives, who will argue up and down that GM has paid off 100% of the debt.

[KittenClaws]

Even the Bain ads serve no purpose. There is not a &%$#@ liberal nut that would change their minds as a result.

This I know. The bailout money went to China, our stores are filled with Chinese goods from groceries to garters.

China is our enemy.

Our Government is in bed with our enemy and we are paying the prostitutes fees.

/semi-rant off

[GOPJ]

1) Last year Biden came out claiming that GM fully paid back it's debt to the Feds, not including the bailouts referenced above as part of the ‘debt’

Holding their lying feet to the fire matters... Thanks for the ping.

[gaijin]

Shocking...! Wow. Good link.

[dalebert]

Isnt’ it Romney’s and Obama’s idea that communal living is what is best for us little people..only they deserve the higher life since they are so god like?It’s only our money they are making vanish.

[nascarnation]

General Motors (GM) shares jumped more than 6% in midday trading after the company said its U.S. sales rose 16% in June to 248,750.

Passenger car sales rose 12%, as Chevy Malibu sales rose 32%. Truck sales were up 11% and crossovers saw 30% sales growth. Car buyers even gave the Chevy Volt a try, as the company sold 1,700 in the U.S., three times as many as a year ago.

[stephenjohnbanker]

” 3) Romney’s strategy appears to be to claim that he proposed the bailout before Obama did, not to be critical of it. This doesn’t appear to be working for him. “

Gee, I wonder why ?