President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.

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.

It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero.



http://www.forbes.com/sites/louiswoodhill/2012/08/15/general-motors-is-headed-for-bankruptcy-again/

8/16/2012 9:44:42 PM

8/16/2012 9:45:25 PM

8/16/2012 9:49:05 PM

8/16/2012 9:59:43 PM

8/16/2012 10:17:55 PM

Is this surprising?

Nothing with this administration is.

8/16/2012 10:21:05 PM

ITT, pizza boy shows that he doesn't understand the difference between a company's fiscal solvency and its stock price

8/16/2012 10:56:16 PM

Tell us the difference.
Tell me how one is not related to the other.

8/16/2012 11:09:30 PM

Didn't say there's no relation between the two. Just said they are different.

8/16/2012 11:17:03 PM

Therefore your post & point is irrelevant to the issue.

8/17/2012 7:15:26 AM

8/17/2012 7:34:37 AM

Didn't the bail out end up going to the union, and not GM as a company? Thought I read that somewhere.

8/17/2012 8:17:23 AM

maybe but but GM got money considering the US government owns 500,000,000 shares of GM.

8/17/2012 8:31:52 AM

GM needs to go Chap 11, re-organize, boot the unions, and build new, modern factories in right to work states. They carry way too much dead weight.

8/17/2012 8:39:29 AM

Quote :

"Didn't the bail out end up going to the UAW, and not GM as a company? Thought I read that somewhere."

IIRC the Union owns part of GM. Also, much of the reason GM was in so much trouble is because they owed so much to unionized workers in things like outsized pensions and early retirement deals. So indirectly, the union and its members got the vast majority of it. In one sense.

Quote :

"GM needs to go Chap 11, re-organize, boot the unions, and build new, modern factories in right to work states. They carry way too much dead weight."

Never going to happen. Not only would their entire supply chain be fucked, but it's also a *massive* investment to build several new plants and shutter old ones, too massive for them to afford right now. And I'm willing to bet the unions have language in their contract that the company cannot replace an existing unionized plant with a new one in a right-to-work state. Such language might or might not be stricken under a chapter 11 reorg.

[Edited on August 17, 2012 at 11:23 AM. Reason : dd]

8/17/2012 11:21:09 AM

Quote :

"Therefore your post & point is irrelevant to the issue."

No, not really. PizzaBoy said "GM is headed for bankruptcy" and then proceeded to talk ONLY about how their stock price was down. reading is fundamental, jackass

8/17/2012 11:25:35 AM

Can we suspend PizzaBoy for a blatant Soap Box thread (without any original content in the post, even) in CC?

8/17/2012 1:05:03 PM

here here

8/17/2012 1:10:21 PM

I've always thought it was kind of silly to mass produce cars every year with a few upgrades. Why not have buyers purchase some sort of program when they buy the car in order to get yearly upgrades...or something similar

8/17/2012 1:13:25 PM

the logistics of that would be interesting

8/17/2012 2:39:41 PM

So a 1.5 billion profit for last quarter means bankruptcy now?

8/17/2012 8:45:24 PM

Lock. Terminate.

Fuck this guy.

8/18/2012 11:14:02 AM

That's right, the right media machine now has to kill GM just for spite! nothing but FUD.

8/18/2012 11:18:50 AM

Where is Shrike to tell us all about how the GM bailout and massive stock purchase would be a net money maker for the taxpayer despite all evidence to the contrary?

Yes, GM has managed to finally be profitable again, and all it took was taxpayers buying massively overvalued shares that will result in a net loss when sold. By the way, we've already taken a loss on those shares once already. If GM had any modicum of decency they would being making quarterly stock buybacks at the original purchase price to at least attempt to get square with us.

Of course, they won't because they can barely prop themselves up financially as is.

8/18/2012 11:25:40 AM

Does this mean Detroit will be even shittier?

8/18/2012 11:27:17 AM

8/18/2012 12:12:56 PM

^Hey, look, pictures of GM vehicles.

Seriously, when was the last time you saw a non-Corvette or Yukon vehicle produced by GM and said, "man, I would love to drive that!"? I've had several GM rentals and they were all, without exception, poorly designed and terrible. If they didn't have fleet vehicle sales to governments there's a good chance they would have been out of business quite some time ago.

8/18/2012 12:16:27 PM

I almost bought a Volt.

8/18/2012 12:23:05 PM

i drive a porsh and a lamborgeeny

8/18/2012 12:29:47 PM