Tuesday, June 30, 2009

The GM Bailout is a Screw Job

So how much will the GM bailout end up costing American tax payers? Well, probably a lot. From the Washington Post:

For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained....

"I don't know how much we're going to recover," a senior Obama administration official said as the company headed into bankruptcy last month.

This uncertainty stems from the difficulty in valuing the 60 percent GM stake that the United States will receive in exchange for the public investment. The government also gets preferred shares and other compensation.

The stake will be worth enough to fully cover the government's direct investment only if GM's stock rises above $68 billion. Even at its recent 2000 peak, GM's stock was worth only $56 billion.

So why is the Government doing this, if we stand to lose so much money?

In announcing the government's intention to put another $30 billion into the company earlier this month, President Obama said, "We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Ah, thank you mighty Obama.

(cross posted from notoriouslyconservative.com)

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