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Taxpayers to Take $24 Billion Loss on Government Motors
Posted By Daniel Greenfield On December 19, 2012 @ 3:27 pm In The Point | 9 Comments
GM is alive and it only cost the taxpayers 24 billion dollars in losses.
“The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday,” the Detriot News reports.
However, the break even price — the price that GM would need to pay for each share in order to pay back the money the government put in to the company —was $53 a share.
And since that’s never going to happen, enjoy the 24 billion dollar company you no longer own, but that you paid for anyway.
Don’t assume for a moment that the bleeding is limited to 24 billion dollars.
The Treasury has said it expects to lose $24.3 billion on the $85 billion auto bailout. Treasury also holds a 74 percent stake in Ally Financial Inc., the Detroit-based auto lender, as part of a $17.2 billion bailout.
Last year, the government exited Chrysler Group LLC and booked a $1.3 billion loss on its $12.5 billion bailout. The government had planned an initial public offering of Ally in 2011 but put it on hold because of market conditions. Any IPO won’t occur until after Ally’s troubled mortgage unit ResCap completes its bankruptcy restructuring.
Hostess, by way of comparison, had 1.4 billion in liabilities, most of that was to the union pension fund. It also had 2.5 billion dollars in annual revenues and employed 19,000 people. But some unions are just better connected than others.
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