In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion from its $85 billion bailout of the auto industry. This is a mere $9 billion jump from its previous estimate of $14.33 billion.
Since Democrats are constantly claiming to be concerned about 'new revenues', it's worth mentioning that the above figures don't include that $45.4 billion dollar tax credit against future profits at the American taxpayer's expense given to them by the Obama Administration that could keep GM and its UAW owners tax free for years.
It also doesn't include $5 billion the government set aside to guarantee payments to auto suppliers in 2009.
What's going on here is a sharp decline in the value of GM's stock price. GM's Sept. 30 closing price is $20.18, down one-third over the previous quarterly price.
As I told you early this year, the Initial Public Offering (IPO) of stock for Government Motors was a huge bust, and the Feds were forced to sell a large block of shares it was holding as 'collateral' for the $85 billion bailout at a below break even price (otherwise known as a loss) of $33 per share. For those of you whom are math challenged, the current price reflects over a 38% decline in value since January from even that fire sale price.
In order for the taxpayers to have broken even, the price of the stock would have to rise to at least $52 and by some estimates as high as $103. It'll take years to get there, if it ever does, and the Obama Administration was simply being deceptive when it suggested that the stock price of $45 per share ( which it never even came close to hitting) would be enough for the taxpayers to recoup their considerable investment.
Part of the reason the stock has declined so rapidly is that GM is simply not making cars the public wants to buy. The Volt was a huge bust, even with the $10K government subsidy..it had sold only 3,895 units as of September. The Nissan Leaf, a similar hybrid car sold over twice as many cars during the same period, and did it without the American taxpayers paying people to buy it.
Overall productivity and quality control have also plummeted sharply since the government and the unions took over the reins.
The other reason the stock price has tanked is, well, poetic justice.
When the Obama Administration took over, the existing private stockholders, many of them retirees, saw their investment become virtually worthless overnight, as they were placed in the food chain behind the federal government and the UAW. In the restructuring, their 'equity' was reduced to 10% by government decree.
Stuff like that tends to be remembered. Is it any wonder no one wants to buy the stock as a private or institutional investor after that hosing?
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And of course, a lot of what profits there are that go into union coffers will be forwarded to the Obama Campaign, no doubt.
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