So what about the rest of our money?
Today General Motors is running ads patting itself on the back for repaying its taxpayer loans.
“We’re proud to announce: We’ve repaid our government loan. In full. With interest. Five years ahead of the original schedule.”
Absolutely true. As far as it goes.
GM has paid back $6.7 billion in direct loans way ahead of the 2015 deadline for repaying those loans.
But there’s still the little matter of the other $45 billion in taxpayer money that went to GM. This cash got converted into shares in the company—a 61% ownership stake in fact—and none of that money has been paid back so far.
And even with the recovery in GM’s fortunes it doesn’t look likely that taxpayers will get all of that back, much less earn a profit on that investment. For us to break even on our GM investment, GM would have to go public again and fetch a value of somewhere north of $70 billion.
How likely is that? Well, Ford Motor (F), which didn’t go into bankruptcy and is at the moment more profitable than in GM, gets a market cap of just under $50 billion today.
I think taxpayers are going to have to wait a tiny bit longer for the rest of their money.
Maybe GM should have skipped spending that money on its self-congratulatory ads and just cut us all a check.
twoyrfixed
You are correct. GMAC became a US bank holding company in 12/08 to give it access to billions of governmnet aid. In that month the US Treasury gave GMAC 5 Billion from the 700B TARP program. On 5/21/09 the Treasury announced it was investing additional funds of 7.5B giving the US government the controlling stake in the company which is now known as Ally Bank. The name is chnged presumably to protect the guilty. Keep this in mind as you consider what car to buy.
I laughed at the ads as well but for a different reason. Doesn’t GM (USA) still have liabilities for the GMAC mess?
viwi
How are people in the US going to buy Chinese cars? What are we going to use for money? We are producing less and less wealth in the form of goods to market as manufacturing takes more of a back seat. So we’ll import cars and the oil to run them? With what?
Frank
What a joke, unfortunately it is on the public. The bailout gave the UAW and others the chance to gain a controlling interest in GM. Ironic, since their never-ending demands actually made this company non-competitive in the automotive world. What exactly will a public offering do for the taxpayer besides give us a chance to lose even more money. Until the unions and the federal government get out of the business it will never succeed.
Right on..
There’s no easy way to do it. But look at the top address bar. Click on it once, then right click on it, left-click on Copy. Then in your email, right click where you want the link, then left click on Paste.
How do we e-mail this article to a friend—I don’t see a link to do it? Thanks
By the time GM decides to go back to 100% public, the market will be flooded with Chinese cars. Indeed, Chinese car manufacturers have reached the point where Korean car producers were 15 years ago, but they are progressing at a faster rate. Since mass produced cars are all in a non-luxury market category, in 5-7 years we will be mostly driving Chinese cars.
Who needs GM?
I don’t buy stocks or products of companies bailed out by tax payers or infested by unions. I call it stay out of trouble.
My sentiments exactly on the TV advertising. I think most taxpayers would be appalled if they ever found out what GM spent for those spots.
It is unfortunate, but indeed what is actually said is true. Most people in the country will have NO IDEA that there is nearly 10X outstanding with the US government (as proxy to the US TAXPAYER) and that we most likely won’t ever see even HALF that amount. I also don’t like the fact, that this AD ran about 2 hours AFTER the official announcement and that reporters like CNBC Phil Lebau made no comment of the fact that while this small LOAN has been paid back, there is still a HUGE position in equity. Pandering at the least if not simply poor reporting IMHO.
Will we get profit sharing as a 70% holder? Not sure, I think GM WILL go public in the next 12-18 months and that its market cap could indeed surpass Ford. GM is ALMOST in a better position than Ford with respect to loans and obligations. I think they also have a better foothold and future strategy for Asia, China, India and Brasil. If they can make the vehicles more interesting, value oriented and future focused they TOO can be a winner.
Government really missed the boat on this one. Only way they could have helped GM become profitable again and protect the taxpayers investment would have been to kill some of its competition. They should have never helped Chrysler. It is not a publically traded company. Should have let its private investors take a huge loss and forced them into bankruptcy thus helping GM
The only American brand I would consider is Ford, and also Cadillac.
Jim I couldnt agree with you more on this. I thought the same thing when I saw these signs being put up at dealerships. It’s a shame one of the most iconic companies in America has turned into such a mess.
Off Topic
Jim any news on Yara it’s been dropping hard for the past couple of weeks. Any insight that I might have missed?