Well, yesterday made it official: it is going to be a long slog getting the “Government” out of Government Motors:
Factbox: Taxpayers in deep water on GM investment
Wed, Nov 17 2010 Analysis & Opinion GM IPO gives little reason for celebration
(Reuters) – General Motors Co may have the world’s biggest initial public offering, but U.S. taxpayers were more than $9 billion underwater on the government-funded restructuring at its current share price on Thursday.A breakdown of the paper loss follows.
* The U.S. Treasury loaned GM about $49.86 billion from late 2008 through 2009 to restructure the company and finance its move through bankruptcy and beyond.
* Before accounting for the Treasury proceeds from the IPO, GM had repaid about $9.74 billion to the government. Those repayments included unused loans, the purchase of Treasury preferred shares, and dividends and interest. That left taxpayers owed a little more than $40.1 billion.
* Including overallotments, Treasury will recover more than $13.6 billion by selling 412.3 million common shares, leaving taxpayers owed about $26.5 billion. Treasury would need to sell its remaining 500.1 million share-stake at an average price of about $53 for taxpayers to be repaid.
* With GM shares trading at $34.50 Thursday afternoon on the New York Stock Exchange, taxpayers were facing an $18.50 per-share deficit on their remaining stake, or about $9.25 billion.
Source: Reuters
Sorry to quote the whole thing, but there really was no good breaking point. You kind of need to see the whole thing to take it in. This is what Obama calls a successful Government intervention. Was it necessary? Probably not. Ford didn’t take the proffered candy, so Ford hasn’t had to undergo the Government sexual assault TSA Screening that GM and Chrystler have (no word on when or if we’ll see a red cent back from Chrystler).
What is worse, though, is that neither GM nor Crystler have been restructured. There is no real reason to expect that their long-term viability has changed. The structural problems are still there, and tyhe structural problems have a name: the United Auto Workers Union. Union labor contracts have made it to where it is nearly impossible for American automobiles to be manufactured at competitive rates, and the quality of the Union labor is such that people prefer Japanese for good reasons. Had the government not intervened, GM would have had to take bankruptcy protection, which would have allowed them to re-negiotiate with the Unions, or maybe even ditch union labor all together. I’m not sure if that is possible. Where, oh where, would they ever find workers to turn the screws in their plants if it weren’t for the UAW? We have such a labor shortage in this country. Too many jobs, and not enough workers, right?
All this bailout really was was a protection of the Labor Unions. They UAW swings a big hammer in the Democrat Machine, and there was no way a Democrat President was going to let his peeps take that big a hit when all he had to do was rob the treasury to the tune of a few tens of billions of dollars to help a brother out. As the numbers above indicate, it will be a long slog, if ever, for the taxpayers to simply get their money back. Don’t look for ROI from this “investment”, because it isn’t there. It was a bad investment from the get-go for the American People, though I expect it helped the Democrats stem losses in heavily Union states tis yeaar. And we all know that keeping the Democrats in power is what the Federal Government is for, right?
When the Republicans get the Presidency and the Senate in 2012 (positive thinking mode: on), Union-busting needs to be at a place near the top of the agenda. From the SEIU to the Teachers Unions to the UAW and the Teamsters, the Unions are breaking this country. That has to stop.
Update: John Lott agrees:
Only the government would consider it a success to buy stock at $43.84 a share and sell it at $33. — But President Obama and those who supported his bailout of General Motors and Chrysler are claiming just that today.
First, the alternative to the government bailout wasn’t to “give up” as Obama claimed on Thursday at his press conference. Bankruptcy didn’t mean that all jobs were going to be lost. It didn’t mean that all the factories producing cars would be closed.
Yet, the president made that claim in his announcement again today and he continually misstates what would have happened in a normal bankruptcy. Courts don’t just close down bankrupt companies. In fact, that rarely occurs. Any part of a company that can continue operating profitably continues to do so.
All this was was a bailout of the UAW. You should watch out: next time we will have to bail out their pension funds.
