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Thread: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S.

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    Treasury announces GM exit strategy; automaker buying 200 million shares from U.S.

    Treasury announces GM exit strategy; automaker buying 200 million shares from U.S. | The Detroit News | detroitnews.com

    Washington — The Obama administration said Wednesday it will sell 200 million shares — or 40 percent of its remaining stake in General Motors Co. — back to the automaker and announced plans to completely exit the Detroit automaker by March 2014.

    The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock's closing price on Tuesday. GM shares jumped sharply on the news and were up 6.7 percent to $27.10, or $1.59.
    Uncle Sam Books 50% Loss As Government Motors Buys Back 200MM Shares From Tim Geithner | ZeroHedge

    A few days after divesting its stake in the firm that started it all, AIG, and at a profit at that (ignoring that the risk has merely been onboarded by the Fed whose DV01 is now $2+ billion as a result), the US Treasury continues to divest of all its bailout stake, this time proceeding to GM, where the channel stuffing firm just announced it would buyback 200MM shares from the US government at a price of $27.50. More importantly, the "Treasury said it intends to sell its other remaining 300.1 million shares through various means in an orderly fashion within the next 12-15 months, subject to market conditions. Treasury intends to begin its disposition of those 300.1 million common shares as soon as January 2013 pursuant to a pre-arranged written trading plan. The manner, amount, and timing of the sales under the plan are dependent upon a number of factors." Assuming a price in the $27.50 range, this implies a nearly 50% loss on the government's breakeven price of $54. So much for the "profit" spin. One hopes all those Union votes were well worth the now booked $40+ billion cost to all taxpayers.
    Buy high. Sell low.

    What could possibly go wrong?

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Next time is guaranteed to occur, after all, that union got "deserved help", so the precedent is established. Yes they can!
    “The reasonable man adapts himself to the world: the unreasonable one persists to adapt the world to himself.
    Therefore all progress depends on the unreasonable man.” ― George Bernard Shaw, Man and Superman

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Is it worth noting they got a profit from bailing out the bankers?

    shrug

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    How much tax revenue was generated by the company continuing to operate?
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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Quote Originally Posted by Deuce View Post
    How much tax revenue was generated by the company continuing to operate?
    Just because they declare bankruptcy doesn't mean they cease to operate.
    "When the people find they can vote themselves money, that will herald the end of the republic." -- Benjamin Franklin

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Quote Originally Posted by PerfectStorm View Post
    Just because they declare bankruptcy doesn't mean they cease to operate.
    That's true but without the right management team and plan they would have ceased to operate.

    And if they were no longer operating, those workers would have received unemployment insurance/welfare.


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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Quote Originally Posted by Deuce View Post
    How much tax revenue was generated by the company continuing to operate?
    How much money was saved by unspent unemployment by keeping the supply chains working?
    How many jobs were saved by keeping supplier firms going?
    How much taxes from all this activity was saved?

    You know that Bronson won't discuss those. Ever.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    Quote Originally Posted by PerfectStorm View Post
    Just because they declare bankruptcy doesn't mean they cease to operate.
    Considering their cash burn rates (as well as the burn rates of their suppliers), not much longer.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    On a related note, anyone seen the spy picks of the new corvette?


    It's gonna be AWESOME, though I HATE that they ditched the round tail lights...
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    Re: Treasury announces GM exit strategy; automaker buying 200 million shares from U.S

    More importantly they totally ruined your claims that this is some sort of socialist plot for the government to own car manufacturing and puts it firmly into the area of the dems saved GM and then gave it back as intended. I can see why that would bug you. Technically the whole point of the bailout was to use the government to bear the burden of GMs collapse at a cost. So we get some of our money back, and the government puts some money back in that it can use to pay off some of it's loans.

    If you want to argue whether or not the plan could have been done better by letting GM fail and all those workers hit the workforce at it's lower levels and come up with some way that would have been better for the US at the time then please do. However, this seems to be the intent of the bailouts, and the US was going to take some of the losses onto itself to keep americans employed at one of the worst times to have GM go away. The alternative was to let GM fail and hope that an american automaker came in instead of foreign automakers to pick up the slack and create a new american car manufacturer. Could that have been done with a number of foreign automakers read to capitalize on the vaccume created by the loss of GM which would have shifted more jobs overseas, and more money overseas. Then could that new automaker have reached GM employment levels in 4 years to offset the layoffs in the US. All that time we would have been paying unemployment, losing tax revenue, and possibly strengthening countries like China's manufacturing centers if we let GM go bankrupt. Instead we had all those people employed which kept tax money coming in and kept a few major US car brands in the market.

    It seems to me that if you figured out the revenue losses and increase in recession that would have come from the right's plan to bail on GM and the american worker you would see that these losses are not even close to the overwhelming damage and expense of letting GM fail. I would have to say unlike AIG this was a great decision on Obama's part and now that he is releasing control back to GM we have no paranoid fears of GM being taken over for socialism.

    Seems like always you are shortsighted and wrong. But don't let me stop there, why don't i do the math on unemployment for the layoffs.

    Gm employs 120,000 people. That is not including all parts manufacturers, dealers, and mechanics that would have also suffered layoffs without GM.
    Let us say 40k average salary. This is low considering how much the execs make, but I am going to help bronson out by undershooting.
    Unemployment benefits would be half or more, so we will call it half.

    120,000 people * 20000 * 1.5 years of unemployment = 3.6 billion dollars of unemployment payments alone the US saved.

    Now remember, i was shooting low there, and that also does not include loss of tax revenue from those people who are employed, and the loss of tax revenue from car sales. It also does not cover the possible foreign dominance of the auto industry that would have come from america's largest car manufacturer going away. So considering that we lost 5.5 billion on the shares, but kept that revenue coming in, and avoided 3.6 billion in unemployment payments alone. this was a pretty good deal, but feel free to show us the numbers you have for the collapse of GM, or just chime in with the random right wing dodge you always do.

    What will it be, perhaps an insult? Or maybe you will shout at Obama? really, the only question here is in what way will the republicans avoid any actual proof of their claims that this is supposedly worse than the alternative.

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