Well, we taxpayers took it in the shorts as President Barack Hussein Obama and his minions have struck yet again. General (or Government) Motors (GM) announced on December 19 that it plans to buy back 40 percent of the company stock owned by the federal government; that’s we taxpayers. GM announced that it will buy back 200 million stock shares, currently held by the Treasury Department, for $5.5 billion, or $27.50 per share.
The GM stock price was, at close of business on December 18, about $25.50 per share. What’s the problem, you ask? Taxpayers got a premium of about $2 per share. We should all celebrate, right? Not so fast.
As a result of GM’s buy back, the government has recovered about $28.6 billion of its $49.5 billion GM bailout, which means it will most likely lose billions when selling its remaining shares. The government would need to sell its remaining shares at a price of $69.72 to break even. That’s up more than $15 from earlier this year, when the U.S. Treasury would have to sell its 500 million remaining shares at about $53 per share.
So, GM is buying 200 million shares, and we taxpayers lose $25.50 per share ($53 – $27.50). That means that we lose $5.1 billion on the buy back deal ($25.50 loss per share * 200 million shares). The “breakeven” price keeps increasing. Does that mean that we taxpayers will, when the Treasury sells its remaining 500 million shares of GM, again take it in the shorts?
According to the MLive.com report, the US government expects to lose about $25 billion of the $85 billion originally approved for the GM and Chrysler bail-outs. But not to worry. The $25 billion is down from the 2009 expected loss of $30 billion. Happy days are here again. The expected loss is now only $25 billion.
Just so you know, Chrysler, which now has the Italian automobile maker Fiat as its majority owner, was bailed out for $12.5 billion. The Obama administration recovered $11.2 billion. Let’s see, I (as a conservative) will need some help with my math. The Chrysler deal left us taxpayers on the hook for $1.3 billion. Sure, that’s not very much when one considers that the federal government spends $11 billion each day (that’s $6 billion more per day than it takes in). So, to quote Senator Everett Dirksen (R-IL), “A billion here, a billion there, and pretty soon you’re talking about real money.” Dirksen was correct: the US has reached the “real money” point.
Just because the bailouts were initiated while George Walker Bush was president in no way gives Obama a pass on the current (and recent, in the case of Chrysler) financial shenanigans. Here is another opportunity for Obama to blame Bush.
Does this mean that Christmas came early for GM? This is yet another opportunity for Obama to play Santa Claus with taxpayer money.
But that’s just my opinion.