Treasury: U.S. to lose $25 billion on auto bailout

[Psephos]

Source: Detroit News

Washington -The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.

In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update. The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout. The steep decline in GM's stock price has indefinitely delayed the Treasury's sale of its remaining 26 percent stake in GM. No sale will take place before the November election.

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Read more: http://www.detroitnews.com/article/20120813/AUTO01/208130392

[Trillo]

1. But at least the 1% can buy Chevy Volts. NT

[bluestateguy]

3. I'd say the Volt is more of a car for the top 10%

Of the latte-drinking liberal type.

In any case, while the car is not cheap, we are not talking Ferrari prices here.

And then of course are all of the jobs this vehicle has created.

[Trillo]

7. Either way, the point is that poorer U.S. taxpayers end up subsidizing

those who can afford one.

[IndyJones]

10. And remind me again, how much do those CEOs make? And what was their corporate tax liability?

I always think it's suspect when a company's CEO makes more than the company pays in income taxes.

[bluestateguy]

2. Money well spent and saved in the long run

Had we just let GM and Chrysler vanish, there would have been a million job losses, and a deduction of more GDP, meaning less tax revenue coming in.

All those unemployed people would then be drawing unemployment insurance, food stamps, welfare and Medicaid, thereby costing taxpayers more money.

All those unemployed people would have their houses foreclosed upon, driving the housing market even further into the abyss and depressing property values and property tax revenue down still more in the factory towns.

[Volaris]

4. I agree wholeheartedly, but what I don't understand is...

minus overhead and operating expenses, why every penny of profit that GM and Chrysler make ISN'T going directly to the Treasury until that bailout is repaid. If I missed something, please feel free to explain it to me, as I am uninformed...

[dmallind]

13. They own 26% not 100%. nt

[Igel]

11. That assumes that all the demand would have been met by existing facilities and workers.

That GM hung in there means that the demand was there.

However, things like pensions would have become a government liability.

[Teamster Jeff]

5. A little perspective

Iraq war ends with a $4 trillion IOU

http://articles.marketwatch.com/2011-12-15/general/30778140_1_iraq-war-iraq-and-afghanistan-veterans-budgetary-assessments


Auto bailout was money well spent

[valerief]

6. Yeah, and didn't the Pentagon "lose" 2 trillion as of 9/10/11? Whoops! nt

[mwooldri]

8. It's stock the government owns. Right now it's a paper loss.

This loss would only be realized if the government sold the shares.

GM stock price may well recover soon for all I know. Plus I find nothing wrong with government holding stock in some companies.

[jmowreader]

9. The Iraq War cost $720 million per day

So, for less than the cost of 35 days worth of American soldiers getting killed in an illegal war of occupation, we saved pretty much the entire economy. Sounds like a decent tradeoff to me.

http://www.washingtonpost.com/wp-dyn/content/article/2007/09/21/AR2007092102074.html

[sofa king]

12. Why, that would have avoided six months of defense cuts!

The entire $50 billion cost of the auto bailout is equal to the amount which will be cut from the DOD budget every year for the next ten years, thanks entirely to Republican greed and incompetence.

So I would say that we the people came out ahead, didn't we?

[ObelixS]

14. $100,000 Notes for Federal Reserve Banks

The $100,000 Gold Certificate was used only for official transactions between Federal Reserve Banks and was not circulated among the general public. This note cannot be legally held by currency note collectors.

http://moneyfactory.gov/100000goldcertificate.html