Ed Carson, Investor’s Business Daily, tallies up just how much taxpayers have lost in the General Motors bailout:
General Motors (GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.
Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.
Include that $18 billion gift, and taxpayers’ true loss climbs to nearly $35 billion.
Union workers did make sacrifices in bankruptcy, but not nearly enough. GM only narrowed the labor cost gap vs. what Japanese automakers pay their workers. Given that Toyota (TM) still enjoys a price premium over similar GM vehicles, the U.S. auto giant needs a labor cost advantage, not near-parity. And Toyota has relatively high costs. Volkswagen(VLKAY) pays workers at its new Tennessee plant only about half what GM does.
So don’t expect GM’s prospects to improve significantly in the near term. Obama says he saved GM and the U.S. auto industry for the “long term”. But using taxpayer dollars to prop up a high-cost, low-premium producer in a mature market isn’t a foundation for success.
Investors’ Business Daily, July 3, 2012