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Friday, November 18, 2011

GM Loses Recalculated - $10 Billion More, Please

GM Losses Recalculated - $10 Billion More, Please

$14.33 billion Suddenly Becomes $23.6 billion

By Dell Hill

And the price of poker keeps going UP.

It seems there was a slight miscalculation at the Treasury Department when they were trying to determine the total amount of Americans tax dollars were lost when Barack Obama decided to change General Motors to Government Motors.  No biggie, though.  Just an additional $10 Billion - with a “B” - of your dollars.

Let’s allow Shikha Dalmia to say “I Told You So”.

The Treasury Department yesterday revised its loss estimate for the Government Motors bailout from $14.33 billion to $23.6 billion, thanks to the company’s sinking stock price. GM’s Sept. 30 closing price, on which the new estimate is based, was $20.18, about $13 less than its December IPO price and $35 less than what is needed for taxpayers to break even.

The $23.6 billion represents a 25 percent loss on the feds $60 billion direct “investment” in GM. But that’s not all that taxpayers are on the hook for. As I explained previously, Uncle Sam’s special GM bankruptcy package allowed the company to write off $45 billion in previous losses going forward. This could work out to as much as $15 billion in tax savings that GM wouldn’t have had had it gone through a normal bankruptcy. Why? Because after bankruptcy, the tax liabilities of companies increase since they have no more losses to write off.

This means that the total hit to taxpayers, who still own about a quarter of the company, could add up to $38.6 billion. That’s even more that the $34 billion on the outside I had predicted in May.

Although GM will never, ever make taxpayers whole, taxpayer losses could be mitigated if GM’s stock price rises before the Treasury sells its remaining equity, something it was supposed to do by year-end but has postponed under the circumstances. But right now at least the prospects of a serious upward move in GM’s stock don’t look too good for reasons at least partly beyond GM’s control.”

Dell’s exit question:  If we own 25% of GM, why can’t we all get a substantial discount on our own vehicles??


  1. Thank you, Dell, for speaking out for us! AMEN to every word you said! God Bless, Naomi

  2. Thanks for taking the time to comment, Nomi. I appreciate ya', Darlin'!