by Ed Tait
EDITOR'S NOTE: Ed Tait is the founder of www.edtait.com, a blog dedicated to sharing information about the United States, a unique and grand experiment, which was founded by great men. For more of Tait's writings, go to www.edtait.com. Ed Tait is a frequent contributor to RFFM.org.
When ‘The Obama’ Begins To Crow About What A Great Idea His Bail-Out Of GM Was; Don’t Be Fooled
Recently, in a television ad, General Motors (GM) announced that it paid back the U.S. Treasury and the Canadian and Ontario governments the balance of the money ‘loaned’ to GM last year...five years ahead of the agreed schedule and with interest.
A great deal, right?
Well, maybe. Great unless you remember that the American and Canadian taxpayers actually loaned GM more than $50,000,000,000.00 (Yes, more than FIFTY BILLION DOLLARS!)
The only reason GM can say they paid-off their ‘loan’ is due to the fact most of the money it was given in its bail-out was turned into equity.
Despite the fact the ‘loan’ to GM was paid off, American taxpayers will still own sixty-one percent of GM, and Canadian taxpayers will own ten percent...does that not sound a bit ‘soviet’ to you?!
The American and Canadian tax-payers, through their respective governments, given neither government actually has any money, had to borrow every cent they gave to GM. And to make the announcement even less attractive, the balance of the 'loan' money will be repaid with taxpayer money.
When GM emerged from bankruptcy protection last year, a fund was established to allow it operating capital and it is from this fund that GM intends to repay the 'loans'. The repayment will be made with money from an escrow account that was created when GM emerged from bankruptcy protection last summer. In April of 2010, GM said it had $12.5 billion in that account at the end of 2009.
So...the more complete picture would be that GM is re-paying the taxpayers--who loaned GM money to keep their doors open, without having to re-structure, like any other business who filed for bankruptcy would have had to do--with their own money.
The fact is, the repayment by GM in no way shows the company will ever be able to make a profit. General Motors lost over $4,000,000,000.00 (Yes, BILLION) in the last half of 2009!
Subsequently, before American and Canadian taxpayers and/or these governments begin celebrating, the public will have to wait and see if General Motors ever turns itself around. Until GM does turn a real profit, taxpayers won’t be able to get the real bulk of their money back. By the way, the funds given to GM in the bail-out were borrowed from China.
Due to the fact these two governments and their taxpayers own a controlling interest in GM stock, the American and Canadian governments are able to tell GM what to do. The sad truth is GM is in mortal danger of never being solvent again. Why do I say that? Because there has never been much of anything either the American or the Canadian governments have been involved in, or managed, that ever made a profit. Therefore, why should anything change now? You tell me.
NOTE: Comments to RFFM.org's blog which include ad hominems or personal attack will automatically be rejected. No hyperlinks allowed.
Those who would like to donate to RFFM can go to this link for more information: https://rffm.typepad.com/republicans_for_fair_medi/2010/01/rffmorg-needs-your-help.html