Thursday, December 20, 2012

Taxpayers about to be screwed on GM bailout.‏



The Treasury plans to sell its remaining stake in General Motors over the next 15 months, allowing the automaker to shed the stigma of being partly owned by the U.S. government.  Yes because anyone really care if GM is owned by the government.

GM said Wednesday it will spend $5.5 billion to buy back 200 million shares of its stock from the Treasury by the end of this year. The government, in turn, plans to sell its remaining stake of 300 million shares on the open market over the next 12 to 15 months. 

GM will pay $27.50 for each share, about an 8 percent premium over Tuesday's closing price of $25.49. The shares shot up more than 8 percent in premarket trading to $27.57.   So they aren’t really paying a premium if the stock has now risen above the selling price and the taxpayer is getting less money.

The deal almost certainly means that the government will lose billions on a $49.5 billion bailout that saved GM from being auctioned off in pieces during the financial crisis in 2008 and 2009. GM's buyback will cut the Treasury's stake to 19 percent from 26.5 percent. For it to break even, Treasury would have to sell the remaining 300 million shares for average of about $70. 

"This is fundamentally good for the business," he said at a hastily called news conference Wednesday morning.   Good for business but sh*tty for the taxpayer.

Treasury said it will have recovered more than $28.7 billion of its investment through repayments of loans, sales of stock, dividends, interest and other income after GM buys back the 200 million shares. But that leaves Treasury about $21 billion short of recouping its investment. 

The move was approved by the GM board on Tuesday evening.  I bet that was a tough discussion.

a ban on corporate jet ownership and requirements on manufacturing a certain percentage of GM cars and trucks in the U.S. will be lifted.

So when GM went into bankruptcy they unloaded their healthcare and retirement expenses onto the union.  The Union agreed to future pay cuts for all future hirees.   The Government came in with truck loads of money they were suppose to get back (Wink wink).  Now the expenses are gone.  The money will never be paid back.  Jobs no longer have to be in America.  The executives can fly around on their fancy private jets again.  The stock price will go up to help out Wall Street.  Everyone wins except the taxpayer and the American workers.  What a shock.  GM will point out how well they are doing.  Wouldn’t everyone be doing well if they received 21 Billion Dollars and then never had to pay it back?

No comments:

Post a Comment