It's been about six months since General Motors declared bankruptcy, and I can't tell if the company's fortunes have improved or declined since the government bailout.Edward Neidermeyer, though, has an opinion: he says that GM's (and the government's) upbeat announcements last week are hogwash. In a piece in yesterday's New York Times (here), Neidermeyer says that US taxpayers aren't going to recover anything close to their investment in GM.
Niedermeyer reports that the US Treasury has invested approximately $52 billion in GM during the past year. Therefore, Fritz Henderson's announcement last week that GM would pay back $6.7 billion was more propaganda than substance. The only way for taxpayers to actually be made whole would be via an initial public offering (of new GM stock) succeeds beyond anyone's wildest dreams:
Any hope of an I.P.O. completely repaying taxpayers is wildly optimistic. Even before Mr. Henderson hinted at a timeline, a Government Accountability Office report pointed out that G.M. would have to attract a market capitalization of $66.9 billion for taxpayers to recoup the government’s investment. Sorry, but that’s a pipe dream: G.M. has never been worth more than $57 billion, and that was in the salad days of 2000.It's interesting because during the past month there has been tons of talk about populist anger at Wall Street and how that anger is going to make it difficult for the Democrats in 2010, but very little of the commentary has focused on the auto company bailouts. Is GM getting a free ride while Goldman and Citibank take all the heat?
373. What role is Fiat playing in running (or owning) GM? I wrote about Fiat becoming a major player (May 17, here), but I haven't heard all that much about the Italians since. Does Fiat management get to take part in major strategic decisions? Is GM producing Fiat cars (or vice versa)?
