Bailed Out GM's Stock Nears Record Low
Many people don't realize that a government bailout of a corporation is actually done with our own tax money.
They really don't. A recent poll showed that 25% of Americans believe that the government has it's own money. And plenty of it.
You and I didn't get to pick this particular investment of our money. If we had, we simply wouldn't have. It was a bad bet and extremely risky.
Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.
Include that $18 billion gift, and taxpayers' true loss climbs to nearly $35 billion.
The government highly speculated on the success of the Chevy Volt in this deal. That aspect of the investment is proving to be poorly thought through. Liberals believed that people would flock to dealerships to buy the faulty and inefficient vehicle in droves. That didn't happen.
GM came under criticism for saying it would sell 10,000 plug-in hybrid Volts in 2011; it ended up selling about 7,600. The company abandoned its 2012 U.S. sales forecast of 45,000, saying it would instead match supply to meet demand.
GM has been forced to idle the Detroit-Hamtramck Assembly Plant for two stretches this year because of low demand. Detroit News.
Now, Ford Motor Company said, 'No, thanks' to the handout, deciding to instead sell off Jaguar and Land Rover as well as discontinuing it's Mercury brand to trim costs and generate profits. A tactic that you or I would use in our own personal or business practices. As a result, Ford is doing well for it's investors.
Of course liberals will argue that a company (actually two. Chrysler took the loot, too..but that's another story.)...was saved and jobs restored with this huge blunder, but I think that the people with 'a better idea,' would beg to differ. Me, too.
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Reader Comments (4)
I'd think it was shafting GM's creditors received during the bankruptcy rather than the government bailout that has investors scared of GM. I'd stay away from any car company's stock that has United Auto Worker employees.
I can't buy a GM car anymore. There's a 65' Vette convertible that I have my eye on that I guess I can rationalize as pre-Obama so it's ok. I do love it when Obama starts flapping the gums on how "he" brought the car industry back and GM is an example of his greatness. Never mind they filed bankruptcy, screwed their creditors and still owe the U.S. government $20 or $30 billion? That's a liberal success story.
I just traded my GMC pickup (bought just before Obama took over the company) for a new Ford F150. I feel much cleaner now.
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