Government Motors Costs Taxpayers $35 Billion
Tell me more about Mitt Romney’s failures in the private sector again, Mr. President?
General Motors (GM) shares closed down 1.5% to 19.02 on Monday, hitting 18.85 intraday. That’s the lowest since the U.S. auto giant came public again in November 2010 at 33 a share. Update: GM shares early Tuesday fell 1.4% to 18.76, hitting a new low.)
That raises the taxpayer loss on the GM bailout to just shy of $35 billion. Here’s the math:
GM doesn’t have to pay back anything else, but taxpayers are still out $26.4 billion in direct aid. The Treasury still owns 26.5% of GM — 500 million shares. The stock would have to rise to about 53 to break-even on that direct aid. At the current price, the Treasury’s stake is worth just $9.51 billion. (Taxpayers lose $5 million for each penny that GM stock falls).
That would leave taxpayers out $16.9 billion. But the true cost is much higher.
President Obama let GM keep $45 billion worth in past losses to write off future earnings. These carry-forwards are typically wiped out or severely cut along with debts as part of bankruptcy. But in this case, the administration gifted huge tax breaks with an $18 billion book value. (That’s how GM avoided taxes last year despite a bumper $7.6 billion profit.)
Including those tax write-offs, taxpayers are sitting on a bailout loss of $35 billion.
When the government buys stock in private industry, everybody wins!
Ding.
Patterico (feda6b) — 7/25/2012 @ 7:41 amThe cost in the loss of reputation of the US as a place that business can count on the rule of law? Incalculable.
SPQR (26be8b) — 7/25/2012 @ 7:45 amThat doesn’t include the rapings of the secured creditors on behalf of their union allies either.
JD (b22d65) — 7/25/2012 @ 7:45 amSo we bailed out the unions and retired autoworkers, bailed out teachers and janitors, bailed out transportation workers and DMV clerks.
And our beloved caretakers worry we can’t meter our salt and sugar:
http://pjmedia.com/michaelwalsh/2012/07/24/mike-bloombergs-suicide-cult/
We give second cities Chicago and LA too much disapprobium. The sickest reprobates in the western hemisphere reside in NYC.
They can’t even graduate 50% from high school and they demand to be considered sophisticated?
gary gulrud (dd7d4e) — 7/25/2012 @ 8:17 amSo, GM’s “record profit” was one-fifth of the taxpayers’s loss.
Nice.
Icy (fdf16c) — 7/25/2012 @ 8:32 amSocializing Loss, and Unionizing Profit.
Whatacountry!
AD-RtR/OS! (b8ab92) — 7/25/2012 @ 8:41 amKevin Williamson at NRO:
SPQR (26be8b) — 7/25/2012 @ 8:49 amWell, Math (like History) was never the Progs’ strong suit.
AD-RtR/OS! (b8ab92) — 7/25/2012 @ 8:58 amMore than $18 billion in tax breaks to prop up a $9 billion stake in the company.
— A 200% loss? Well, one must give our CEO-in-chief a mulligan on this one. After all, it’s the first time he’s ever run a business . . .
Into the ground.
Icy (fdf16c) — 7/25/2012 @ 8:59 amNot GM, but when the Chrysler bondholders sued because per US bankruptcy law the Obama administration ran roughshod over their rights in their haste to put the unions first the law be damned.
The judge hearing the suit seemed to agree with them but likened their chances for success to that lone Chinese protester standing up to the communist tanks at Tiananmen Square.
As many wags at the time pointed out, whereas earlier in his administration it was unclear what you had to do to get called a terrorist, you knew after that. You merely had to be a creditor to a US company and expect the US government to follow the law when it came to the order in which claims were settled.
That’s now the image of doing business in the US; if you invest in US corporate bonds and expect the government to respect your rights under US law, you’ll be called a terrorist, ignored, and you’re standing up to the communist tanks if you try to do anything about it.
Plus, in its zeal to taint Romney with the stink of wrongdoing for engaging in perfectly legal and ethical business practices, the press is making his efforts to attract foreign investment in the US economy (as well as these foreign investors themselves) as somehow shady and underhanded. Compounding the situation.
Then there’s Obama’s complete failure to understand what bankruptcy is. In his untutored, untutorable child-like marxist view of how-things-work, he thinks all those factories along with all those jobs would have gone away as a result of bankruptcy.
No, Mr. President. US jobs don’t disappear if a car company like GM is restructured or broken up under US bankruptcy law and its assets and product lines sold off to other investors and manufacturers.
US jobs disappear when you invest in a car company like Fisker Automotive. Those auto manufacturing jobs are all in Finland.
Barack Obama, Oakland CA, July 23, 2012.
Hmm. Huge GM losses, investing in Finnish car companies. It worked so well, no wonder Michigan may now be in play.
Steve57 (386607) — 7/25/2012 @ 9:19 amIt wasn’t the last. If he gets reelected he’ll run the rest into the ground.
Barack Obama, socialist.
Steve57 (386607) — 7/25/2012 @ 9:21 amObama should appear in an ad for the U.S. Chamber of Commerce:
“Come and invest in the USA; we’ll charge you out the yen!”
Icy (fdf16c) — 7/25/2012 @ 9:25 amObama blew $35 billion on GM? No problem, at lease his heart was in the right place.
AZ Bob (7d2a2c) — 7/25/2012 @ 11:31 amOh, and of the Stimulus II purse, $134 Billion set aside to weeward Donk supporters, $100 Billion was laundered thru Green enterprises. Guaranteed loans to bundlers faking it for a few, erecting big footprints, only to go bust before re-election of the gravy train.
Damned capitalism. Can’t even trust it to pay for a transforming Amerikkka.
gary gulrud (dd7d4e) — 7/25/2012 @ 11:36 amOh remember the housing market, up in May, sun dawning for Ogabe?
http://money.cnn.com/2012/07/25/real_estate/home-sales/index.htm?iid=HP_LN
May averaged with June same old flatline trolling bottom. Random noise.
Resign and GTFO.
gary gulrud (dd7d4e) — 7/25/2012 @ 11:47 amOopsie. Via zerohedge, Egan Jones just downgraded Italy to CCC+, outlook negative.
“Look for the “reputable” raters such to follow suit in downgrading Italy in 2-3 months.”
After Japan and France guess who’s number comes up when the lame duck Congress punts?
S&P expects to downgrade US a notch in September.
gary gulrud (dd7d4e) — 7/25/2012 @ 12:14 pmWell that’s not the Change Pelosi & Co. were Hoping for.
AD-RtR/OS! (b8ab92) — 7/25/2012 @ 12:28 pmCorrect. It was in the office safe at UAW headquarters.
Steve57 (386607) — 7/25/2012 @ 3:04 pmWhile none of these many, many stories of abject failure are getting universal coverage in the State Media, it seems Donks are hearing something:
http://sayanythingblog.com/entry/democrat-voter-enthusiasm-is-down-republican-enthusiasm-is-up/
Urkel is the bomb.
gary gulrud (dd7d4e) — 7/25/2012 @ 6:49 pmTrouble?
http://hotair.com/archives/2012/07/25/scott-walker-to-romney-this-election-cant-just-be-a-referendum-on-obama/
We know Ogabe is a pant load.
But what will Willard do, WWWD? Repeal and Replace, the hell you say. The repeal part is Ok, replace with what? Are those Tarot cards in your vest pocket?
Tort reform and nothing else might work for me. I’d just like to hear anything substantive. For the jollies.
gary gulrud (dd7d4e) — 7/25/2012 @ 7:33 pmI call my new dishwasher, almost useless from the beginning due to govt-imposed energy standards, The Yugo, after the car created by the socialist committee in Yugoslavia.
Maybe I should call it the Volt instead. It hasn’t burst into flames yet, but it’s only 3 months old.
Patricia (e1d89d) — 7/26/2012 @ 8:17 amFWiW, it has climbed to 19.28 for the ‘common s’ stock as of the eod-after-hours trading.
IGotBupkis -- "Faecies Evenio", Mr. Holder? (8e2a3d) — 7/26/2012 @ 9:49 pmNo, that was his dick. Why do you think Michelle is such a bitch?
Smock Puppet, 10th Dan Snark Master and CRIS Diagnostic Expert (8e2a3d) — 7/26/2012 @ 9:51 pm