GM buys back shares - Taxpayers lose billions

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OVERKILL

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Article here: http://www.nbcnews.com/business/gm-buys-back-stock-taxpayers-may-lose-billions-1C7659301 From that article:
Quote:
General Motors will repurchase 200 million shares of its own stock currently held by the U.S. Treasury, with the White House announcing plans to sell off its remaining 300 million shares within the next 12 to 15 months. The automaker will pay $27.50 for the shares it will acquire, a 7.9% premium over the $25.49 closing price on December 18, 2012 – but that is also a sharp discount from the $33 price set during GM’s initial public offering in November 2010. And it means taxpayers will lose billions on the sale. Treasury has been under strong pressure to announce an exit plan – an issue that failed GOP presidential candidate Mitt Romney repeated frequently during his campaign. He called on the White House to sell off its stake last summer, though at that point GM was trading as low as $18.72 a share. At that price, the government would have received about $1.5 billion less than it will now get, a total of $5.5 billion for the initial 200 million share sell-off. Industry analysts had estimated a sale price of $53 would be needed to recoup the government’s full investment in General Motors, however.
Oh, and nothing like going back to the ways that got you bankrupt in the first place:
Quote:
As part of the latest move, the government will remove some of the restrictions it had placed on General Motors as part of the 2009 bailout which ultimately totaled $49.5 billion. While Akerson last week said the government had “stayed out” of GM’s day-to-day management, contrary to some early concerns, he nonetheless chafed over limits the White House had placed on senior management salaries. It also barred GM – and Chrysler, which also received a 2009 bailout – from owning corporate aircraft. Salaries and bonuses will almost certainly rise to match those at competing makers, such as Ford, industry observers anticipate. And GM could announce plans to acquire new jets within a matter of weeks.
Is anybody else facepalming here? I think it is a great idea that GM buys back their shares. But they should be doing so at a value that repays what was lent to them, not this farce that screws us all for their financial mis-management.
 
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Originally Posted By: OVERKILL
From that article:
Quote:
General Motors will repurchase 200 million shares of its own stock currently held by the U.S. Treasury, with the White House announcing plans to sell off its remaining 300 million shares within the next 12 to 15 months.
The American people will probably never know how much money we lost. All we'll get spoon-fed is that the bailout "worked" and that the government no longer owns any of GM. Oh, and new bonuses and corporate jets for everyone! Nice.
 
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Quote:
This announcement is an important step in bringing closure to the successful auto industry rescue, it further removes the perception of government ownership of GM among customers, and it demonstrates confidence in GM’s progress and our future,” said Dan Akerson, chairman and CEO of GM.
It could have been worse.
 
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You know it wouldn't be so bad if they actually made some decent cars. But the [censored] they pump out with the exception of their pick up trucks is awful. Besides those guys really need corporate jets so they don't get caught stuck on the side of the road in one of their cars... LOL
 
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Disgusting waste of taxpayer money. Stock? Crazy It should have been bonds paying interest. Yet another example of why they should have a law to keep the government from bailing out companies.
 
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They do make decent and reliable cars in my personal experience. Also, none of my GM vehicles have left me stranded yet. Just my experience. Should they be worrying about corporate jets.........absolutely not.
 
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I wonder how many of those who claim this was such a waste of money could say so while looking in the faces of all of the good employees whose jobs were on the line. I also wonder who is making such judgments in light of what might have happened to the already-vulnerable US economy had the Big Three been allowed to go under. I'm not exactly a fan of most of the parties involved here (the Big Three, the UAW, etc.), but at some point we have to be pragmatic. A billion dollars here or there is barely a blip on the scale of the whole country, and it seems to have bought us quite a bit.
 
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Why not wait and see if the stocks go higher in the next year? Oh well, this loss of money by the govt is less annoying than finacial aid to places like Pakistan or Somalia.
 
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Originally Posted By: DevilsRule
They do make decent and reliable cars in my personal experience. Also, none of my GM vehicles have left me stranded yet. Just my experience. Should they be worrying about corporate jets.........absolutely not.
Well, that's great for you. Every GM car I have ever been associated with has been garbage. John
 

OVERKILL

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Originally Posted By: d00df00d
I wonder how many of those who claim this was such a waste of money could say so while looking in the faces of all of the good employees whose jobs were on the line. I also wonder who is making such judgments in light of what might have happened to the already-vulnerable US economy had the Big Three been allowed to go under. I'm not exactly a fan of most of the parties involved here (the Big Three, the UAW, etc.), but at some point we have to be pragmatic. A billion dollars here or there is barely a blip on the scale of the whole country, and it seems to have bought us quite a bit.
The point of what I posted is two-fold: 1. GM promised to pay the taxpayers back. If they buy back the stocks at this price, they are not paying us back. We are getting screwed, period. 2. GM management should not be chomping at the bit for salary increases, bonuses and private jets. It is this mindset that got them in the position of going bankrupt in the first place. The message this sends is "hey, we didn't learn anything! You paid for us to stay afloat, are taking a hit on us paying you back, and now we get to go spend money frivolously again!" This is NOT the kind of message you want to be sending to the American public, who propped you up when you were failing. This is a slap in the face, rather than a "thank you".
 
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Originally Posted By: d00df00d
I wonder how many of those who claim this was such a waste of money could say so while looking in the faces of all of the good employees whose jobs were on the line. I also wonder who is making such judgments in light of what might have happened to the already-vulnerable US economy had the Big Three been allowed to go under. I'm not exactly a fan of most of the parties involved here (the Big Three, the UAW, etc.), but at some point we have to be pragmatic. A billion dollars here or there is barely a blip on the scale of the whole country, and it seems to have bought us quite a bit.
+1
 
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Originally Posted By: d00df00d
I wonder how many of those who claim this was such a waste of money could say so while looking in the faces of all of the good employees whose jobs were on the line.
Sure. Because GM sells, what a few million vehicles here in the USA every year? Had they been allowed to become bankrupt, yes people would be out of work. But someone would come in and fill that void. And that company would need people to work to produce the cars. And who better to employ than those that did that same job prior? Happens a lot in my line of work (IT) - someone decides to outsource and the company that wins the contract ends up hiring most of the old staff. Most companies would love to by GM's plants, tooling, and such for pennies on the dollar. Would be a cheap way to make more in the USA and lower costs as it's not cheap to ship cars from Korea, Japan and the EU to the USA. And if we are worrying about the "ancillary" companies, perhaps vertically integrated like Henry Ford wanted was best. One end you have raw steel and glass, the other end you have a car. When you control all aspects of production of your widget you are always better off than relying on someone else. Had GM, Ford, Chrysler, Honda, Toyota, Nissan, etc. been vertically integrated you wouldn't have to worry about those ancillary industries as steel, glass, plastic, eectronics, etc. is freely available on the market and used by a number of other industries.
 
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Seems pretty simple; shareholder is deciding to sell his shares and he is actually getting premium over the market price. What more do you think he can ask for??? You are an individual investor, explain to me how you would do this differently??? Are you claiming that market price should be higher? I mean what exactly is your complaint about GM buying back the shares from US Government? I am holding bunch of HP shares :-( I have lost lot of money; only if I had sold it when it was over 40. Can I get HP to buy back my shares at a premium??? If you are saying US Government should not have taken a stake at GM, then that is different argument.
 
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