GM careens toward bankruptcy – taking vast amounts of taxpayer money with them.
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.
Gee and Obama wants to do for all the manufacturers in the US just what he’s done for GM. I feel really good about that, especially now.Frankly, investors have to be reluctant to buy GM stock given the way the Obama administration trampled on the rights of secured creditors the last time around. Heck, I wouldn’t buy GM stock if it was free. Which is what it’s price looks likely to go to.
I was disappointed with this article.
The author’s only arguments were a declining market share and stock price for GM and his prediction that the new Malibu would flop.
It could well be that GM will face bankruptcy in the next few years, especially if the economy heads further south. I would have just liked to have seen him provide more evidence.
I would have liked to have seen some year over year financial comparisons, inventory levels, whether or not GM is bleeding cash, how other products like light trucks are doing, etc.
Take a look at Mickey Kaus over at the Daily Caller. He’s been following a disaster over at GM Europe that the US press has largely been ignoring.
The management hasn’t changed; they were going broke before. The unions were bailed out; they are not changing. Neither one seems to care about the stock price. Then there was that $600 mil deal with Manchester United that got a guy fired.
So for certain everything is working perfectly as planned, except for the big iceberg…