Gov't Panel: GM/Chrysler Bailout a Loser Before It Leaves The Showroom
Remember the celebration of pretend profits from the TARP bailout?
Well, when it comes to bailing out GM and Chrysler, no one is even faking it:
The federal government is unlikely to recoup all of the billions of dollars that it has invested in General Motors and Chrysler, according to a new congressional oversight report assessing the automakers' rescue.
The report said that a $5.4 billion portion of the $10.5 billion owed by Chrysler is "highly unlikely" to be repaid, while full recovery of the $50 billion sunk into GM would require the company's stock to reach unprecedented heights.
"Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount," according to the report, which is scheduled to be released Wednesday.
The report also recommended that the Treasury Department act with more transparency and provide a legal analysis justifying the use of financial rescue funds for the automakers. The report was prepared by the Congressional Oversight Panel, which is overseeing the federal bailout programs.
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while full recovery of the $50 billion sunk into GM would require the company’s stock to reach unprecedented heights.
No shit. GM’s market cap was below a billion dollars earlier this year; not sure what it is now.
Hope and change is cruelly ephemeral.
Best thing I have read today is
“GM, the jewel in the government’s crown, has staked its fortunes on an economy model car that, since it is powered by battery, happens to cost $40,000, twice as much as any other economy car (it also requires a total battery replacement halfway through its operating lifespan amounting to at least another $16,000. So let’s round it off to $60,000 — three times what any other economy car costs.) Since the Volt can be marketed only to the extremely wealthy clinically insane — not an enormous market — it’s obvious that GM can be kept afloat only by subsidies, which will end at the same time that Democratic hegemony does.”
http://www.americanthinker.com/2009/09/barack_ozymandias.html
“Extremely wealthy clincially insane” That is funny.
The report was prepared by the Congressional Oversight Panel, which is overseeing the federal bailout programs.
Wait a cotton picking minute there! I thought overseeing the federal bailout programs was Biden’s fucking job.
“Extremely wealthy clincially insane” That is funny.
It’s funny that you can’t even do a pull quote without spelling errors, John.
provide a legal analysis justifying the use of financial rescue funds for the automakers.
I’d like to see that myself.
And the gummint ain’t gonna see their 50 billion back? No shit. Any sophomore business student could have figured that shit out. GM would have to make more money than they ever have, and do it consistently for 25 years to pay the money back. Good luck with that.
it’s obvious that GM can be kept afloat only by subsidies, which will end at the same time that Democratic hegemony does.
This strikes me as irrationally optimistic.
Big. Fucking. Surprise.
Someone is keeping a “bullshit chart” of stuff like this, right? As in, “In March they said this, but in September they said this…”
I knew I’d done the math on Chrysler once already. It’s outdated, but the principles apply.
And that was in May. We’ve dumped more money in Chrysler since then, and I could do the same analysis on GM and get even more absurd numbers. The math ain’t difficult, so why couldn’t anybody in the .gov figure it out before now? Or did they just not give a fuck?
From NPR this morning:
Priceless little exchange on NPR’s Morning Edition between the host and an expert from Edmunds.com this morning about the prospects for automakers in 2010 that went something like this:
Edmunds.com: And Ford has been the beneficiary of not taking federal funds. People have been saying they’ll buy Ford because of that.
Host: But that’s not a moral comment — that’s because of…
Edmunds.com: I’m not sure that isn’t a moral comment. A majority of Americans were against the bailout. That helped Ford.
Hasn’t Rep. Paul Ryan introduced a bill that would give the government’s stock in the auto companies to every taxpayer (proportional to his total tax)?
Then each taxpayer could sell it or hold it if he thought the future looked brighter. And we could get Joe Biden’s thumb off the scale and maybe elect a board of directors that would get serious about quality, engineering, and labor relations.
The Chevy Volt, with an estimated 230 mpg, (a low estimate btw so the company don’t look greedily optimystic) while costing some $60,000 over its lifetime, is still the biggest bargain in the new car market. It saves so much fuel that owner actually has more money in her/his pocket after making the payment each month. And that my friends will be stimulating to the economy. Hell, if a person buys two, they can buy a house for free with the money generated from fuel efficiency!
Obama’s a freakin genius for having GM produce such a vehicle!
Citizen Nothing, I’m so glad someone else heard that. The host practically tripped over herself in her rush to discredit that line of thinking. Classic NPR.
brotherben,
I wonder how much coal or natural gas it takes to generate the electricity to recharge the Volt batteries?
Coal? No, no, F.C. You don’t understand. You just plug it into the wall.
CN, you’re just bein snarktastic right?
Snark? Me? Whatever do you mean, brotherb?
we can just about break even if our 8% of the profits is $430 million a year for the next 30 years.
So, if I’m following, GM needs to make nearly $5.4 billion in profits per year for thirty years?
So, if I’m following, GM needs to make nearly $5.4 billion in profits per year for thirty years?
About that, give or take some slop at the margins. I’d have to find my worksheet with the calcs to verify that. You like the odds of GM making that much in profit over the next three decades?
I think I’ll fart roses first. I am, of course, leaving out the possibility of massive currency devaluation, which is looking more and more likely.
I think you were joking, but just in case, that number is absolute bullshit. Even if it’s true, the Volt has some serious problems. Given it’s price, the Volt has to compete with BMW and Lexus. The Volt is dead.
The Volt was dead when GM told people what they would have to pay for that car.