You and we now own 60% of General Motors. The cost was a mere $70 billion.
Doing the math, we find that each of the Republic's 300 million citizens has a stake in the company of 0.0000002%. That's for an investment of $233 per person. That should translate to each citizen getting about 311 shares at the current price.
Of course, it doesn't, because there aren't that many shares of GM. At the present trading price, GM is worth about half a billion dollars.
That's right: Uncle Sugar is paying $70 billion for 60% a company worth half a billion. At its peak, GM was worth $56 billion on the open market. If it ever sees that value again, which is doubtful, we'll only be out around $40 billion. Looks like we overpaid.
And that's a fine reminder of how much easier it is to be careless "investing" someone else's money than it is your own.
4 comments:
By comparison, how are our investments in the financial institutions doing? Can I start planning that trip to Europe?
Wasn't part of the reasoning against privatizing Social Security, because the US government was not supposed to be investing in the private sector via our Social Security funds or something like that.
I have vague memories of politicians saying this would create a flood of cash into the stock market and that could be a bad thing.
But here we are doing just that, only we are investing in losers instead of winners.
The banks seem to be doing rather better than the auto manufacturers, but let's remember that the rationale for the cash infusion was to preserve liquidity. There's no comparable benefit to the auto bailout. We recommend planning a trip to Europe as an air courier and staying in youth hostels.
Christine, we believe you are utterly correct, illustrating how many ways the present administration should be compelled to eat its words.
I am pretty sure that I could have done something on my own to look like a laughing stock in front of the other nations of the world, but... no, Obama won't even let me do THAT myself.
We are too big to fail, but not too proud to be foolish.
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