Is GM Really Going to Go Bankrupt Again?
Louis Woodhill at Forbes seems to think so:
President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
He’s right about the president being awfully proud of “rescuing” GM. Remember this from last week?
Considering that the feds still hold 500 million shares of GM stock, they’d have to find a way to offload them for about $53 apiece to recover the $49.5 billion spent in bailing out the troubled automaker. But if the stock continues to stay where it is, this means that the feds will end up posting a loss of more than $16 billion on bailing out GM.
Because of this dive in stock price, the Treasury Department was forced to revise its projected bailout losses upwards to $25.1 billion from $21.7 billion — an increase of 15 percent.
“It’s doubtful that the Obama administration would attempt to sell off the government’s massive position in GM while the stock price is falling. It would be too embarrassing politically. Accordingly, if GM shares continue to decline, it is likely that Obama would ride the stock down to zero,” Woodhill writes.
“GM is unlikely to hit the wall before the election, but, given current trends, the company could easily do so again before the end of a second Obama term,” he adds.
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