Earlier this week, GM made a big announcement and is running ads that it has paid back the government loan. You can find commentary on the matter here . The Youtube of the ad is here .
Chuck Grassley's comments from the Senate are here. TARP money was repaid from other TARP money. Who didn't see THAT coming?
Kinda like a kid asking Dad for a Jackson so they can go to the mall and buy the Father's Day present.
The ad is misleading at best, pedantic lies at worst. They must think that their audience, and the public in general, will believe whatever they say. They must think that we're a buncha morons.
Truth is, they didn't really pay back the government "in full." They didn't even get started good, as my grandmother would say.
THIS iteration of GM, the NEW GM, paid back some of the money it borrowed to keep running. THE FORMER iteration of GM, the one that went belly up, hasn't recouped anything for the taxpayers. Nor will it. The taxpayers took an ownership stake, and the bondholders got screwed out of something like 80 cents on their dollars.
Where is the payback for those guys?
The UAW, however, ended up with a big chunk of ownership too, at the expense of everyone else. Surprise.
Finally, everyone's talking about an eventual GM IPO that will bring in anywhere between $20B and $50B. Question: Who in their right mind would buy GM stock? Or GM bonds for that matter?
More importantly, how can portfolio managers and those with fiduciary responsibility (or reputational capital for that matter) purchase any NEW GM stock given what happened to the OLD GM stock? Wouldn't they be in jeopardy with the "prudent man" requirement?
What investor in her right mind would have anything to do with this going forward?
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Yes indeed. Tarp money was paid using Tarp money. I think that Buick-GMC Sales Increase of 54% led to the 5.8billion repayment to the U.S. Treasury and Export Development Canada; The new investment in fairfax for the malibus and detrot for a total of $257 milion might be a sign that the consumers are optimistic about the brand again, so much that they load the streets up with malibus, equinoxs et al. But I think with this momentum and Toyota's woes, maybe just maybe Detroit can come alive again. Hopefully the big wiz learnt something. Big isnt necesarily better. Gas prices aren't going down any time soon. Green earth momentum is gearing in....something gotta change in Detroit for Americans to buy American.
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