GOV. MOTORS

[SeaMent]

just saw that the Feds are gonna dump 500 million shares of Gov. Motors ! Feds gave em 50 billion and when all is said and done the American taxpayers are only gonna lose 12 billion !! is it ever gonna end ?? its like wipin your a$$ on a bicycle inner tube there aint no end to it !!!

[Glenn W]

I'm not sure I know what you're refering to.
When The Govt bailed out GM, our taxpayer "investment"was somewhere around $50billion in loans and stock.

In April 2010 GM paid back $8 billion in loans;
In Nov. 2010 the Govt. sold a portion of its ownership in GM in an IPO that netted $23.1 billion and which left the Govt. still owning 500 million shares of GM stock.
Two weeks ago, Delphi announced it was buying back the Company now owned by GM for $4.4Billion ( of which, half is still owned by the Govt)

Today, the new GM closed just under $30 (a little below the $33 the Govt got in the IPO), but I am unaware of the Govt. announcing a sale of the remaining 500 million shares it owns.

It was estimated in Nov. 2010 that the Govt. would have to recieve about $53.00/share after the IPO in order for taxpayers to break even. Considering that GM is now trading in the $30 range, if the GOVT. is indeed planning to sell its remaining ownership in the near futiure, it would appear that we (taxpayers) will take a hit somewhere in the neighborhood of $10 to 12 billion.

But--- is the Govt. indeed selling its remaining ownership soon?

[Glenn W]

What a dang minute--- the arithmetic doesn't work:
Investment $50b less $8b loan repayment less $23b IPO = $19b
then,
$19b / 500m shares = $38/share to break even

Current price is $30/ share. Assume a 10% Investment banker fee and/or dilution so:
$38 - $30 - 3 = $9/ share loss
$9 x 500m = $4.5 bllion loss

Damnifino

[JD5652]

But--- is the Govt. indeed selling its remaining ownership soon?

Yep...I heard the same thing.....2012 is close at hand and it seems it's not in the incumbent's best interest to own GM.....something about trying to look like a centrist....

[Glenn W]

Yep...I heard the same thing.....2012 is close at hand and it seems it's not in the incumbent's best interest to own GM.....something about trying to look like a centrist....

I suppose that promoting such an aire is admirable since moving to the philosophy of socialism is indeed to the right of communism

[Big Fish Billy]

Now if Obama forced them to sell everything they make for $10,000 for a year, John Q Public may feel like he didn't get f***ed too bad....