General Motors and the federal government, or how taxpayers will lose big image

We all know that back in 2008 General Motors was bailed out by the federal government. At that time the feds came with $49.5 billion; yes, a lot of money.

In 2010 “new GM” goes public and pays back $23.1 billion. 49.5b minus 23.1b = $26.4 billion debt still owed to the U.S. government for 500 million shares.

Now, GM officials are telling that they will buy back 200 million shares as soon as next month. Yes not a problem. The problem is at what price. Well GM is telling us that they will pay $5.5 billion. If we do the math it results $27.50 per share. But again! The total debts for those for 500 million shares are $26.4 billion; it results about $53 per share.
Therefore, GM should pay $10.4 billion not $5.5 billion.
So Scam #1. Taxpayers lose about $4.9 billion from this maneuver.

Okay, let’s move on. What the feds are telling us. Oh yes, “As early as January, the government plans to begin selling off its remaining shares through various means in an orderly fashion” over the next year to 15 months; the remaining 300 million shares.
Now let’s take a look at GM’s share prices. Yesterday GM has closed with $25.49. Today the shares shot up more than 8.5 percent to $27.18. Of course, this was following the announcement. So let’s do the math for the remaining 300 million shares at $27.18 per share ( which is false however, because most probably they will move back to $25 ). 300 million shares x $27.18 per share = $8.1 billion.

So scam #2. They will sell the remaining 300 million shares at approx. 8 billion dollars instead of almost $16 billion.

So at the end, here is the result. The government bailed out GM with $49.5 billion, and they will get back approx. 36.7 billion. Total loss ~ $12.8 billion.
That’s great!

  • menotu

    Why is anyone surprised that big business, Wall Street, Bankers are all low life scum killing this country

    • getaclue

      it is the liberal federal government in bed with the corrupt unions causing this not "Wall Street"

  • Thefacts

    Go with Ford. They did not get bailed out. better product, especially over chevrolet. GM should have folded, tax payers will pay again as long as companies like GM get bailed out.