Edward Niedermeyer reveals the truth about the surprise announcement that General Motors would “repay” loans from the American taxpayers – even as it reported a huge loss for the third quarter. It seems that the “repayment” is anything but in reality:
For starters, $6.7 billion doesn’t begin to scratch the surface of what G.M. actually owes us. Over the past 12 months, the Treasury has given it some $52 billion in the form of cash, loans and the purchase of that 60 percent of the company’s post-bankruptcy equity. And that number fails to take into account the two bailouts of G.M.’s former lending arm, GMAC, or the $3 billion spent on the “cash for clunkers program,” which doubtless kept the company from posting even deeper losses.
Moreover, G.M. is not, in the strictest sense, paying back taxpayers at all. Rather, it is refunding $6.7 billion of an $18 billion escrow account that was given to it by the government when it emerged from bankruptcy. The rest of that account will be used to cover fourth-quarter losses (including $2.8 billion pledged for the rescue of G.M.’s major parts supplier, Delphi), repay loans from the Canadian government, and possibly prop up the automaker’s shaky European operations. That escrow account is due to expire in June, at which time G.M. will repay what remains of the $6.7 billion from this week’s pledge — and then pocket the estimated $5.6 billion remainder.
There’s much more, go read it all.
My own opinion is that GM will not, in the long run, survive at all. Chrysler is likely to fold even sooner. Maybe I’m wrong about that, but I know I will not personally ever buy a vehicle from either company. I rather suspect that a lot of others feel the same way, judging from recent sales figures.
American taxpayers got taken for a ride on the GM and Chrysler bailouts by the Wizard of O and his munchkin minions – those companies are going to pay dearly for that as the taxpayers wake up to that fact.