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Obama Headed for Second GM Bailout
Posted By Daniel Greenfield On October 14, 2012 @ 5:20 pm In The Point | 10 Comments
Forbes has some of the numbers and they just do not look good for General Motors or for America. Or for Obama.
Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.
Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.
GM is a state-owned business because the US government is its largest stockholder and cannot get out of the GM business without losing money. GM is a failed company being propped up by billions in taxpayer dollars… but GM has not stopped failing.
In the 1960s, GM averaged a 48.3% share of the U.S. car and truck market. For the first 7 months of 2012, their market share was 18.0%, down from 20.0% for the same period in 2011.
GM is still sliding, except some of the cost of the slide has been shouldered by taxpayers, but that still isn’t enough.
GM’s market share fell by 2.1 percentage points in the first three months of 2012, to a level the company hasn’t seen since 1922. GM’s 2012 share is even more striking considering that 10 years ago, GM was aiming to return to 30 percent of the American market.
The math here isn’t hard to do. GM is in freefall. That means Uncle Sam will have to step in for a bigger share. And the cycle will continue until there’s no more money or Obama is out of office.
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