General Motors’ Share Price Tanks: Taxpayers On the Hook Kyle Becker July 31, 2012 9:48 am
 General Motors claimed record profits in 2011, but the company’s share price just hit an all-time low. The 40% decline from the bailed-out company’s IPO share price of $33 to $19.36 follows upon news of government-inflated sales figures and risky lending practices.
The approaching bankruptcy of GM in 2009 put taxpayers on the hook for $50 billion, but the entire taxpayer “investment” in the failed union-dominated enterprise has been at least $82 billion. Former “Auto Czar” Steven Rattner admitted in December 2011 that taxpayers would lose at least $14 billion in GM sponsorship.
But all factors considered, including $45 billion in Obama-dispensed write-offs on record profits, taxpayer losses stand to be appreciably more than that. Since the government still owns a 26% stake in the company, the selling of stock at anything below $51 per share would lead to a taxpayer loss.
On June 5th, presidential hopeful Mitt Romney urged the government to sell its stake as soon as possible, when the share price was at $21 per share.
When GM filed for bankruptcy in June 2009, President Obama unconstitutionally used government funds to purchase a majority stake. Obama then abused his role in office to pressure the CEO Rick Wagoner to resign, and replaced him with “Auto Czar” Steven Rattner, a political crony with no experience in the automobile industry who was under investigation by the SEC for pensions fraud.
Under the company’s government-led restructuring, the bondholders were deprived of assets in favor of Obama’s union ally the United Auto Workers. Since then, the president has propped up the company by increasing government purchases of cars, which was up 79% in June alone.
Even the pro-government New York Times confessed that the administration running and regulating GM was a bad idea, particularly in regards to the Chevy Volt. Despite all safety warnings about the “green” vehicle (which runs partially on coal-fired plant provided electricity), the administration subsidized the disastrously unsuccessful Volt.
Regardless of the checkered past following the shotgun wedding of government and business, the Obama administration has touted its bailout of “Government Motors” as a success. Much like Obama’s belief that his economic plan “ worked,” despite record unemployment rates extending past 41 months, and an $800 billion stimulus plan that failed by its own measures, one has to suspend disbelief of the shoddy track record in order to buy it.
Chevy is now trying to convince potential buyers that its company is still American as apple pie with an ad campaign celebrating its 100th birthday accompanied by America the Beautiful. At the end of the commercial, Chevrolet thanks us for making it a part of our lives. Thanks, but no thanks, GM. Most taxpayers would rather you’d run your own business and leave us out of it. If you come up with a model worth purchasing, then we’ll talk. |
