Dude, I’m Serious – Where’s My $50 Billion?
This is a follow on to an earlier post: http://www.deborahwright.com/2009/07/dude-wheres-my-50-billion/
I just read that GM is drawing down more of its $50 billion taxpayer-funded bailout escrow fund. This made me wonder again about that great big $50 billion loan we, the taxpayers, made a year ago. At that point, it was to a loan to tide the company through tough times – then times got tougher, and bankruptcy ensued.
The chapter 11 restructuring of GM left them owing the US taxpayers $6.7 billion, and left the taxpayers with 61% ownership of GM. The new GM stock is not yet publicly traded, meaning the value of that ownership is not known. But in order for the taxpayers to break even, the value of GM would need to be somewhere around $70 billion – at its peak, in 2000, GM was worth around $56 billion. Does $70 billion for a smaller GM (losing Pontiac, Hummer, Saab, and Saturn) seem likely in the face of falling worldwide demand and slow economies?
As I was writing this, I learned that the Government Accountability Office released a report today that basically concurs with the above. You can read it here: http://www.gao.gov/new.items/d10151.pdf
GM said earlier that it was hoping to raise capital in the public markets as early as next year – but will the markets be receptive, or will GM be in for another go at the trough? As I write this, I wonder why more people aren’t talking about these bailouts – have we simply become numb by the magnitude of it all?
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