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

[Geee]

Investors Business Daily:

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.

Of course, there's no chance that the Obama administration will sell off its GM stake before Election Day. That would force Obama to recognize actual losses, which would remind voters that the bailout was a massive transfer from taxpayers to unions.

Union workers did make sacrifices in bankruptcy, but not nearly enough. GM only narrowed the labor cost gap vs. what Japanese automakers pay their workers. Given that Toyota 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.

The Volt hybrid was supposed to provide a green veneer to GM's entire lineup, like the Prius has done for Toyota. Instead, the Volt has been a p.r. disaster following fires and anemic sales that led to a temporary production halt earlier this year.

GM's market share and profits got an artificial boost in 2011 as Japan's earthquake and Thailand's massive floods wrecked havoc with supply chains for Toyota and other Japanese automakers. But with Toyota back on track and VW and Hyundai aggressively expanding in America, GM is rapidly losing share in 2012.

[NCTexan]

 

Chevy Volt

 

It's not just a car....

 

It's a statement that you really care (but only if your neighbors pay for your huge rebate).

 

GM is spending millions advertising with the crazy government support of GM and taxpayer subsidized incentives... this dog don't hunt.

 

 

California residents can save big on the purchase of a new 2012 Chevrolet Volt with the Low Emissions Package by combining a federal tax credit of $7,500 with a state of California rebate of $1,500. Plus the Volt with the Low Emissions Package is currently eligible for California's HOV lanes.5

[clearvision]

I thought Obama already said we made money on GM or some such?

[NCTexan]

I thought Obama already said WE made money on GM or some such?

 

What he said was.... HE made money on GM though their union payoffs to his campaign chest.

[clearvision]

From February...

 

 

General Motors (GM) went bankrupt in 2009. But thanks to President Barack H. Obama, it restructured itself and emerged from bankruptcy. GM’s record profit for 2011 vindicates Obama’s action.

 

As the positive U.S. economic signals mount and the Republican nominees go to Michigan to help them forget they opposed Obama’s rescue of GM, it’s becoming obvious to more Americans that he will get their re-election nod come November.

 

With all three U.S. automakers now solidly profitable and 1.5 million jobs saved by Obama’s move, Romney’s prediction does not seem to be coming true. Not only that, but Romney is pushing the U.S. to dump its stake in GM — a move that would require taxpayers to take a nearly $27 billion loss.

 

These two opinions suggest that Romney is either a bad businessman, a lousy politician, or both. Based on his net worth — estimated at no less than $250 million — it’s safe to conclude that he has business talent.

 

So the conclusion that he opposes the GM bailout and wants the U.S. to sell its stake confirms Romney as a poor politician. After all, what is the political logic of trying to win votes in your home state by being factually wrong in your opposition to a plan that helped save 1.5 million jobs for that state’s workers?

LINK

[RandyM]

I am so disgusted with GM. If I had known in 2001 what GM and the government were going to do, I would have made different choices. I own a 2001 GMC Yukon and 2001 GMC Sierra. As with any other vehicle I have owned, they are long since paid for and I will drive them till the wheels fall off.

 

But when it comes time to replace them, GM and the other union-controlled auto manufacturers will be at the bottom of the list for consideration.

[Geee]

I am so disgusted with GM. If I had known in 2001 what GM and the government were going to do, I would have made different choices. I own a 2001 GMC Yukon and 2001 GMC Sierra. As with any other vehicle I have owned, they are long since paid for and I will drive them till the wheels fall off.

 

But when it comes time to replace them, GM and the other union-controlled auto manufacturers will be at the bottom of the list for consideration.

 

I'm due next year and it will be Ford or Toyota for me!