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Update on the Bailout

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On: Mon, Sep 23, 2013 at 3:25PM | By: Karen Cook


Update on the Bailout

Did we have a recession or a depression? It depends on who you ask but we’re now being told that it is over, or almost at least. So how is the automotive industry doing after the government (the taxpayers) came to the rescue?

The government is backing away slowly from its automotive concerns, kind of like when a bird gets pushed out of the nest to survive on its own. Recently the Treasury Department sold 110 million shares of GM stock totaling about $811.1 million, reducing its stake to 7.3%, which was at 13.8% last June. This was more than they had originally planned to sell but between May and September they brought their total proceeds to $3.8 billion according to Treasury documents. They plan to sell off all its shares by early 2014.

All this comes 4 years after we all got together and bailed out GM (and other big car makers) and allowed them to declare Chapter 11 bankruptcy. They are doing well now with their stock on the rise and they are enjoying a strong year. The President considers the bailout a success because it prevented further collapse of the economy as a whole. Unfortunately this “success” still leaves taxpayers about $10 billion short of being fully repaid. The final figures will depend on the stock performance over the rest of the year but it looks now as though only $35.4 billion of the $49.5 billion has been recovered.

Still the powers that be say they have recouped significantly more from the auto makers collectively than they expected. Auto manufacturers are profitable and are gaining more in the market than they have in the last 20 years. If this is true then why are the taxpayers not able to collect fully on this debt? It seems that we are paying twice, once on the bailout and then for the automobiles we are obviously continuing to purchase. Shouldn’t we at least get a big rebate? I mean, we were there when they needed us. Hmmm, just a thought.

Did we have a recession or a depression? It depends on who you ask but we’re now being told that it is over, or almost at least. So how is the automotive industry doing after the government (the taxpayers) came to the rescue?

The government is backing away slowly from its automotive concerns, kind of like when a bird gets pushed out of the nest to survive on its own. Recently the Treasury Department sold 110 million shares of GM stock totaling about $811.1 million, reducing its stake to 7.3%, which was at 13.8% last June. This was more than they had originally planned to sell but between May and September they brought their total proceeds to $3.8 billion according to Treasury documents. They plan to sell off all its shares by early 2014.

All this comes 4 years after we all got together and bailed out GM (and other big car makers) and allowed them to declare Chapter 11 bankruptcy. They are doing well now with their stock on the rise and they are enjoying a strong year. The President considers the bailout a success because it prevented further collapse of the economy as a whole. Unfortunately this “success” still leaves taxpayers about $10 billion short of being fully repaid. The final figures will depend on the stock performance over the rest of the year but it looks now as though only $35.4 billion of the $49.5 billion has been recovered.

Still the powers that be say they have recouped significantly more from the auto makers collectively than they expected. Auto manufacturers are profitable and are gaining more in the market than they have in the last 20 years. If this is true then why are the taxpayers not able to collect fully on this debt? It seems that we are paying twice, once on the bailout and then for the automobiles we are obviously continuing to purchase. Shouldn’t we at least get a big rebate? I mean, we were there when they needed us. Hmmm, just a thought.




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