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.
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.
$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
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.
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??