Obama’s General Motors bailout still ripping us off

by CalWatchdog Staff | July 26, 2012 11:57 am

[1]July 26, 2012

By John Seiler

One reason the American economic “recovery” is so weak is that, when General Motors went bankrupt in 2009, President Obama stole the company’s assets from bondholders to give to the UAW union. Yes, he did steal them.

In long-established bankruptcy law in America, bondholders are the first in line to receive the assets of a bankrupt company. Obama changed that, putting the unions first. Bondholders got only about 5 percent on their invested dollars[2].

What that did was to weaken the value of all bonds in America, including bonds held by middle-class retirees, pension funds and mutual funds. Formerly one of the most secure investments, now nobody knows if the bonds might be de-vauled by Obama, or his successor in the Kremlin, just on a whim. American bonds now are as trustworthy as Venezuelan bonds or Albanian bonds.

The New GM also was supposed to pay back all of the $49.5 billion bailout money the taxpayers were forced to inject into it. But the Detroit News just reported[3]:

“General Motors Co. stock fell 1.2 percent Wednesday, closing at $18.80, down $0.22, on worries about Europe — the first time the Detroit automaker’s stock has closed below $19 a share since its initial public offering.

“The Detroit automaker has seen its share price tumble by more than 52 percent since it reached a high closing price in January 2011 of $38.90, just after going public in November 2010. The company has shed more than $30 billion in market capitalization over the last 18 months, and now is worth about $29 billion….

“GM’s low stock price has prevented the Treasury from exiting the automaker. It still holds 500 million shares of stock in the company as part of its $49.5 billion bailout, or a 32 percent stake.

“It needs about $53 a share in order to break even on its GM bailout. At current prices, it would lose $17.25 billion on the bailout.

So we were totally ripped off!

And let’s not forget that Government Motors also perpetrated the flammable[4] Chevy Volt car. For Obama and eco-freaks, it’s the future of electric cars. But each Volt sold[5] costs taxpayers $250,000. That’s more than the price for a new Ferrari California[6]!

What should have happened was that GM should not have been bailed out, and not forced to build the Volt. By now, the company long would have recovered under completely private ownership, saving tens of thousands of jobs instead of burning them.

Source URL: https://calwatchdog.com/2012/07/26/obamas-general-motors-bailout-still-ripping-us-off/

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