What are the odds that we are going to earn the bailout money back on GM ever?

Consider the math:

GM has received $50.7 billion in taxpayer money ($30.1 billion for DIP etc, $20.6 billion previous capital infusion). When Government Motors comes out of bankruptcy,  Uncle Sam will own 60% of it.

At its all time high, GM’s market cap was $56 billion which slid down to ~$7.3 billion prior to chapter 11. (Symbol = GMGMQ.PK)

For the taxpayer to just break even on their investment , the New GM would have to have to reach a market capitalization of $84 billion — almost 150% of its all time peak. That will be tough, even with the new GM’s better capital structure, employee contracts, and much less debt . . .


via What I learned


Top 10 Things the Letters “GM” Stands For (April 2nd, 2009)


Cisco, Travelers into the Dow (June 1st, 2009)


Category: Bailouts

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

52 Responses to “Making Money on GM Investment”

  1. call me ahab says:

    a bargain- and the fact that it will keep costing us- even better- we can look at it as a sort of Airbus type industry- instead with us it’s subsidized cars- so we can take on the rest of the world in automobiles-

    makes me proud to be an American

  2. RW says:

    Given some time and inflation GM could achieve a market cap of $84+ billion but, of course, it would not exactly be “paying the taxpayer back” at that point even if it did reach a nominal break-even.

  3. DL says:

    The odds of breaking even on the GM “investment”…?

    Roughly a snowball’s chance in hell.

  4. CNBC Sucks says:

    Chrysler bailout, ~$15.5 billion
    GM bailout, ~$50.7 billion
    Stimulus funds to benefit the US auto industry, $50 billion
    Keeping a Republican President out of the White House to stave off Cormac McCarthy’s The Road for another 4 years…PRICELESS

    And the Chinese are only too happy to finance another 4 years of mankind’s existence.

  5. DMR says:

    The $84 billion dollars represents the opportunity cost for the feds to have invested the dollars elsewhere. If you factor in dividends, it would probably slightly reduce that number. But, that assumes that the end game is to recoup the investment. I personally don’t think the investment was ever meant to be recouped. Slowing down a car before it crashes, reduces the cost of medical intervention required afterwards. In that sense, the $50 billion + funds provided for the chapter 11 process together should be weighed against the unemployment benefits and other social services that the government would be on the hook for if a couple of 100k former GM employees hit the streets at the same time. Quite a few local govts. would have imploded as well. From the crisis management perspective, it has already slowed down the process enough to allow people to get offboard in an orderly manner before a final liquidation. So, my guess is that it has already paid for itself. I’m not holding my breath for the Chevy Volt to ever make production.

  6. Thor says:

    DMR – very good post

  7. Ned Bushong says:


  8. Thor says:

    CNBC – The Road – awesome book. Not sure about the Chinese though. I think they have their own problems right now. We’ve talked about how our own gov-mint isn’t giving us the whole truth with regard to how bad things are. Not sure I believe a word of what’s coming out of the Chinese government either.

    In any case, there is simply too much borrowing that is going to need to happen from Uncle Sam (nevermind the EU and Japan) for the Chinese to fund. At some point I think the Chinese spigot is going to run out – not because they’ve decided not to buy US Debt anymore, but because they’ll have their own problems to contend with and will need to spend that money domestically.

  9. franklin411 says:

    Agreed for the most part, although I think it’s much too early to count America out of the automaking game. Everyone agrees we need to break our addiction to foreign oil. The Democrats say we need to switch to domestically produced clean energy and the Republicans say we need to use domestically produced oil (ha, ha…good one!). From a strategic perspective, it’s not going to do us any good to trade Middle Eastern oil for Chinese autos.

    Long term, China is our natural enemy, not the Middle East.

  10. Becky says:

    Maybe Congress, in its infinite wisdom, will make the Cash for Clunkers apply only to domestic cars.

  11. call me ahab says:

    DMR Says-

    “before a final liquidation.”

    hmm . . .well- we’ll see if that happens- I had more a vision of GM surviving on taxpayer assistance for years on end-

    you are also assuming that GM- if liquidated months ago w/o government assistance- would not have had stronger auto companies purchasing plants and equipment for their own purposes- does it matter if autoworkers are making Chevys or Hyundai’s? One or several companies may have stepped in to fill GM’s shoes- they were still the # seller in US- so some capacity would be picked up by other companies to meet demand- no?

    thor says-

    “Not sure I believe a word of what’s coming out of the Chinese government either.”

    agreed- when I was there a few years ago the place was hopping- maybe I’ll have to do another walk around and get a feel for how things are going now

    thor also says-

    “At some point I think the Chinese spigot is going to run out – not because they’ve decided not to buy US Debt anymore, but because they’ll have their own problems to contend with and will need to spend that money domestically.”

    how will the US fund itself? QE²? – massive tax increases? massive spending cuts?

    choices, choices

  12. ben22 says:

    Sort of off topic but not really. thought people could use a Saturday laugh:

    I was told last night at a party that ALL of the banks that took TARP have already paid it back. I then did a shot.

  13. Mark Wolfinger says:

    Maybe we’ll collect some dividends along the way.

    Or perhaps someone will be smart enough to write some covered calls as time passes. We certainly own enough shares.


  14. call me ahab says:


    I thought I posted this before- but alas- it was eaten I guess-

    Re your argument- that congress consciously chose its current strategy with GM to slow the damage to the country that would be caused by a GM BK- and that GM will ultimately be liquidated-

    I counter that GM will not be liquidated- and will taxpayer supported for many years or indefinitely-

    w/ a BK several months ago- and GM likely liquidated- it’s plants and equipment would have been purchased for pennies on the dollar by other automakers- an opportunity they could use to expand and fill the void left by GM-

    that is a market solution- autoworkers are needed regardless who owns the factories-

    if GM is liquidated in the future as you suggest- then this will play out the same- but will have cost the taxpayers billions of dollars to arrive at the same destination- however- my guess is-

    we will be supporting GM well into the future

  15. thetanman says:


    Great! Until the day 300-400 million try to get off the merry-go-round at the same time. Great idea to destroy capital and kick that can on down the road. Wouldn’t really want to do anything substantive until the blazing floor joists are about to give way.

  16. ByteMe says:

    Barry, you blew the math by leaving out the bondholders.

    Yes, stock market cap was $56 billion, but bondholders also held billions in paper that needs to be counted. We now own 60% of the company, but that also includes the bondholders’ stake.

    Personally, I’ll call it “even” if we can get 30,000 people working and paying taxes and $30 billion back from selling the government’s stake in a year or two.


    BR: Why are you overcomplicating simple math:

    We taxpayers put in $50b as investors.

    When will we get that back?

  17. SecondLook says:

    There are a number of factors to consider when looking at a government bailout/investment in a private company.

    How much does all three levels of government save in expenditures that would otherwise be spent if the company went under? Unemployment benefits, food stamps, etc. – the panoply of economic support that modern states provide for its distressed citizens. (For the purposes of looking at cost/benefit analysis, treating all levels of government is appropriate, since all are concentrically linked)

    Then, there is the tax revenue gained that very well might be otherwise lost. Not only taxes gained directly, but also indirectly; there is a velocity of taxation just as there is a velocity of money.

  18. DMR says:

    @ call me ahab,

    What you mention is already happening…but what is being lapped up are not factories and buildings but talent and technology. Ultimately, a car is just a metal box with wheels on it, just like the factory that builds it is just a barn with robots. The real assets are the technology and the people who make that technology. I personally wouldn’t know what to do with a GM factory even if I did put down the $0.99 it would probably cost to buy one these days. To the extent that Ford hasn’t yet poached on GM and Chrysler talent, even today, prominent GM executives are resigning regularly. This week, Bo Anderson, their supply chain guy quit with rumors swirling about potential offers to him from either a reborn Opel (former GM company now Canadian owned) or a reborn Saab (former GM company now Swedish owned).


    as a naturalized American myself, I don’t take such a starkly ethnocentric view of the world! With all the cultural and political acrimony doing the rounds with the US these days, maybe there is less friction for someone living in a city in the Northeast to trade with the Chinese than with Texas???

  19. DMR says:

    …not that I have any issues trading with either Texas or Shanghai! I’m sure some parts of my currently GM made car was made in both locations. I’m just saying that I couldn’t care less.

  20. The Curmudgeon says:

    The Chrysler/GM/UAW rescue marks the turning point in American capitalism and economic hegemony in the world. It marks a wholesale rejection of the rule of law, which will prove far more costly than any $50 billion, as we lurch towards banana republic status. It is absolutely the worst of this “crisis” (which isn’t really, except for a few bankers and GM/Chrysler/UAW, and now the US taxpayer). It would have been cheaper for the UAW to have been given the $50b to distribute to its members and to give to its political supporters such that the ultimate aim of the Administration, i.e., re-election, would be better ensured.

    It is impossible for me to fathom why we wish to sustain industries that have failed. Life is not static. Just glance at the Dow changes over the last 100 years. Companies naturally come and go. Apparently, though, the rule is now that if they are located in crucial swing states and have powerful unions that can aggregate and focus contributions and votes, they stay. The UAW and the Obama Administration will one day regret this. The backlash is coming.

  21. bobmitchell says:

    DIP financing is not a gift. GE, one of he people who provided DIP financing in the past certainly would not gift the money to a firm, it is secured by inventory and equipment.

    Calling it DIP if it is just a gift is the wrong term.

    Don’t know the details well enough, but that is a red herring, or at the very least a misnomer.

    Why isn’t anyone else asking about the curious lack of an opinion on this BK from the big banks? They are getting ‘burned’ the most, why aren’t they complaining and signing on with the indiana pension fund suits?

    GM and the rest of the car companies were selling car loans, not cars. The money that they appeared to be making was coming from the financing of those cars. Once again people, its the banks.

  22. Thor says:

    Franklin says – Long term, China is our natural enemy, not the Middle East.

    I don’t think China is our natural enemy. I would categorize them more as a potential long term economic competitor. As I said earlier, there are just way too many “what if’s” for China to get to a point economically to where they can truly compete with us on equal terms economically. Militarily I don’t think China is ever going to challenge us. For one – say what you will about the two wars we’ve been fighting the last 6 years, but our and military are now very very experienced at fighting wars. For another. China for the most part hemmed in my geography. How far can they really project militarily without either India or Japan rising up to challenge it?

    Ahab says – how will the US fund itself? QE²? – massive tax increases? massive spending cuts?

    I think it’ll end up being both – how about you?

  23. Thor says:

    Curmudgeon – I’m not sure sure I’m of the thought that the GM and Chrysler issues can be boiled down to “It’s the union’s fault” GM does indeed sell a heck of a lot of cars still, it’s not as if the only car companies in the world having issues right now are GM and Chrysler, they’re all doing just as poorly. Sure, they made a bet on SUV’s over fuel efficiency that didn’t work out to well for them, but hey, it’s not as if people weren’t buying them up left and right. What would have been the alternative? Force them to make more fuel efficient cars? Or tax the SUV’s?

    Also, keep in mind that in all the manufacturing plants in the world outside the US Toyota, Honda, etc, do not have to pay health care costs for their employees, that’s picked up by the government. How much money is added to each GM, Ford, or Chrysler to cover that cost? Yes, I am aware that Honda and the other foreign owned companies have factories here that they provide health care for – but I wonder how much of that extra cost is offset by all the other factories (plus corporate HQ people) they are getting a free ride with employee health costs.

    That said – I do agree with you that the UAW is not so good for America. I think back in the day it really was about fighting for decent wages and benefits for people making a quality product. Those days are gone of course. I’m not as saddened by the bailouts given to Chrysler and GM as I am about the UAW having controlling interest in either company. We can argue all day about the cause for the problems these two companies are having, but at least moving forward, if they do go under, it’ll be the fault of the UAW since they’re now the one’s in charge.

  24. dead hobo says:

    BR pondered:

    What are the odds that we are going to earn the bailout money back on GM ever?

    Most excellent!! You think 150% of maximum historical market cap is going to be a problem? Where have you been living recently? Didn’t you just write a book about government excesses? I think you did. The FACTS may be clear to you, but somehow the CLARITY is missing at this time.

    Uncle Stupid knows what $trillions will do to the value of the dollar. Hint … it’s good for Uncle Stupid and the amount he owes. For anyone with a cost of living inflator (Grams and Gramps and their govt pension) , they’ll be doing OK too. GM will be sitting pretty with a trillion dollar market cap. Uncle Stupid wins and makes a profit.

    PS: I don’t think Uncle Stupid gives a shit about you. He doesn’t talk like he does. He doesn’t act like he does. He just wants to shove some problems off his desk and do it in such a way that the incompetent financial press pronounce that his books balance. He’s jst a slicker GWB in some respects.

  25. matt says:

    Given GM’s revenue, it’s possible that if GM can realize some proportion of Toyota’s margin, it could have a market cap over 80 billion.

    However, with the government as an owner, it’s more likely that America’s royalty will end up looting the tax payer supported company for a while until they feel like exiting. After this, an anemic GM will emerge a private enterprise and Joe Retail and pension funds can resume losing money in this American icon.

  26. DL says:

    On a completely unrelated topic.

    Ahmadinejad’s theft of the election is probably good news for the oil bulls.

  27. CNBC Sucks says:

    “Long term, China is our natural enemy, not the Middle East.”

    franklin – Congratulations, that is singularly the most Republican statement I have ever read on this blog!

    The United States of America does not have natural enemies, only natural creditors. The rest of the world is either scared of us, or hates us because they are scared of us. We are the one country in the world that is only too happy to fight a war anytime, anywhere, for any reason – and our war doctrine includes first launch of nukes as a legitimate option. The conjuring of “natural enemies” near and far since the end of the Cold War is a huge reason why we are in such debt, and why we can’t manufacture and trade much beyond weapons.

    Bruce, cvienne, ahab, Jeff – franklin’s all yours.

  28. dead hobo says:

    I said:

    He just wants to shove some problems off his desk and do it in such a way that the incompetent financial press pronounce that his books balance. He’s jst a slicker GWB in some respects.

    Remember. Asset inflation doesn’t exist. It can’t be recognized. It can’t be measured. There’s no such thing. If there were, a government statistic would provide monthly reports on it. Since there is no report, there is no asset inflation. If government dollars flow in certain ways, they only do good, since no statistic is available that says otherwise. Core inflation is all that matters, and only the parts not affected by second round commodity price increases. All higher prices not in the core CPI are good. Or at least they’re not bad because Current Economic Theory says so.

    I’m quite serious here. This is Ostrich Economics combined with Fantasy Economics. My verbiage may be a little non scholarly, but I am exceptionally sure we are at the precipice of some bad times ahead. Bailing out the worst of everything was OK. Slamming on the brakes now that the end of the world has been subdued is a good idea so the system can cleanse itself properly. I suspect the course of least resistance will be taken instead and a slow, steady, and unrelenting deterioration will be in our future.

  29. matt says:

    @franklin411: “Long term, China is our natural enemy, not the Middle East.”

    Yeah, China is part of the axis of evil. When the Chinese are not busy selling weapons of mass destruction to America’s other enemies, they tend to relax by slam-dunking babies in trash cans and feeding bunnies to tiger sharks.

    *rolls eyes*

  30. Marcus Aurelius says:

    Easy come, easy go. It was well worth the fun.

  31. matt wilbert says:

    The proper comparison would be enterprise value to enterprise value, no? GM had a lot of debt, even when it was at peak market cap.

    That said, I have grave doubts that the US will get all its money back. However, it seems it might not lose all that much WAY less that AIG, in any case.

  32. dead hobo says:

    I came back from a shopping trip at a regional mall. At lunch time, the food court was 80% empty. Macy’s had almost everything on sale. Talbot’s was empty as were Coldwater Creerk and Chicos.

    Penny’s had massive sales and few customers; checkout kiosk lines were not there … this is unusual as Penny’s has gotten very bad in this respect.

    Barnes and Noble was mostly a walkthrough from the parking lot to the mall, and was not busy in that respect either. Few browsers.

    I read a USA Today for the first time in over a year. They appear to understand the economics of today. Why don’t the others?

    Not much traffic at normally busy intersections. Sam’s Warehouse lines appeared long but moved fast because people weren’t buying much. Saw a Panasonic 42″ 720P/1080i TV for about $650. Thought about getting it because it was so cheap and Dish only supports 1080i. Maybe it’ll be $550 later.

  33. Thor says:

    Hobo – where are you though? I think it all depends on where you are. I live in LA – my commute to work is just as bad as it was two years ago but when I drive out to Palm Springs (110 miles east) there’s not a lot of traffic. What used to take me 3.5 – 4 hours now takes 2.5-3. I went to The Beverly Center last weekend, that’s a very large Mall near Beverly Hills, it was very busy. The Grove, another, newer, outside mall has always been, and is still, very busy. Not sure if people were buying much though.

    Palm Springs, where I spend my weekends usually, is a resort town, over 150 golf courses. This is off season now, too hot (although this summer has been very cold) went to breakfast this morning and had to wait in line awhile. Friend of mine works at one of the big resorts as a corporate sales manager and he’s told us that although individuals are still coming to the resorts, corporate sales, where a lot of them make their money, has almost completely dried up. Believe it or not there’s still construction here, not too many homes, although a development that had been stopped a year just started up again. A large Staples, and Smart and final just opened on one of the main drags. . . .

    Would be interesting to hear what it’s like where all of you other posters live . . .

  34. DL says:

    dead hobo @ 5:59

    Yeah, but how’s the second derivative lookin’ at that mall?

  35. VennData says:

    These calculations do not include the taxes paid by GM, their employees, the people who buy their cars etc. When you add that in the numbers changed dramatically.


    BR: I doubt that. Do the math of it, and its not a big deal.

    And, other firms would have replaced GM in the market anyway.

    Also, do you presume that these people would never work elsewhere or pay taxes again ?

  36. alfred e says:

    I would say a lot the feds are doing now is not about jobs or BKs, it about keeping tax revenues flowing. Think the feds would just as soon not have to backstop all the state debt, particularly pension funds that have been so horribly mismanaged.

    Guess we’ll see with CA soon.

    Not to mention the muni fiasco looming on the horizon.

    The good news here is a few wise people have decided it’s more important to continue to provide human services than open another 84 jail cells at a cost of several $M. And yet others are petitioning to fund the jail. Must be inmates that like the food, or the employees looking for work.

  37. DL says:

    VennData @ 7:10

    That gives me an idea. Let’s throw billions of dollars down the drain, then impose a tax on the owner of the drain.

  38. constantnormal says:

    @alfred e 7:47

    “Guess we’ll see with CA soon”

    Care to hazard a guess as to when “soon” might be? Just how long can CA keep doing the Wile E Coyote sprint across thin air, before the jig is up? This summer? This year? Next year?

    I think the feds have a problem here — they would like to have CA dangle in the wind so that nobody is surprised of reacts when they eventually do go BK, but I don;t believe the bondholders are likely to support that, and will force the state into court ASAP, as bondholders have been getting royally reamed so far. I guess the one thing we do know, is that PIMCO and the banksters will have to have unloaded all of their California dreams before the hammer falls.

    Anyone — any hard news/rumor/speculation on this?

  39. constantnormal says:

    Next question — which state will follow California into bankruptcy?

  40. Bruce in Tn says:


    If the cash for clunkers bill passes, are you considering that an additional cost to the taxpayer whenever a GM product is bought?

    Are we having a made in America program for cars so that all government cars must be GM, C, or F?

    Are we going to “out” congressmen, members of the executive branch who don’t buy American cars? Announce the list every six months?

    If the government starts paying for warranty work during the bankruptcy, does this count against our earnings?

    ……..Isn’t this the stupidest thing you’ve ever heard of? If Rod Serling were alive, he’d get three or four episodes out of this time in our history…. Goodnight.


    BR: I don’t really know the details of cash for clunkers

  41. constantnormal says:

    … And have a pleasant tomorrow.

  42. Bruce in Tn says:

    And Geithner looks like Eddie Haskell…so there..

  43. Christopher says:

    “…..and feeding bunnies to tiger sharks.”

    I heard if you hook em just right they stay alive quite awhile….

    Our only “natural enemy” is ourselves.
    We have met the enemy….and it is us.

  44. Simon says:

    @ Bruce,

    Geithner is actually T1000 sent back from the future to destroy our world.


  45. moses says:

    They need 100/1 return to break even,

    some of us have been pointing this out a day after it happened.

    They paid $40billion for a 60% stake in something currently worth hundreds of millions in total.

  46. moses says:

    GM will end up like Fannie and Freddie.
    Vehicles for political patronage.

    Decisions of where to build plants will be political not economic,

    tthey will largely be building tiny cars no one wants, the gov’t having already mandated smaller vehicles will continue to pimp for them.

    Ultimately like all other big gov’t liberalism they are delaying the bottom of the asset pricing.
    They should have gone broke, the assets passed onto more productive owners.

  47. ilsm says:

    The US government has invested $130B in star wars since Ronald Reagn [became convinced a US president needed to shot down an accident ICBM launch from USSR rather than launch one back in retaliation such blood thirsty logic], this year a paltry $7.6 billion to fail tests and defend against North Korean missiles with even bleaker test results.

    The numerous “defense” contractors taking in $300B a year have market capitalization which would go to zero if anyone got serious about defense as anything other than a wealth transfer porcess.

    The next generation aircraft carrier will cost far more than $35B for the first needless ship.

    GM at 50.7B is a bargain compared to the 35% of the US government expenditures going to “discretionary” pork.


    BR: 35% of the Federal Budget is discretionary pork? How about some hard data to back that up ?

  48. galton says:

    BR, there are certainly a lot of potential benefits that the government would get not by means of selling its 60% stake (at market prices). Arguably the potential recoveries from these “other” effects could dwarf the stock market benefits, even if the govt sells its stake for pennies.

    And you can’t just wave it away by saying those people/companies/bondholders would have paid taxes _at the same rate_ elsewhere. It’s quite possible to disagree on the numbers, but the effects could be quite large:
    -taxes (above and beyond what would be paid in a deeper/more severe recession).
    -These taxes should be considered over some period of time (five years?).
    -Profit taxes for companies that would have declared more significant losses (and remember – profit tax losses are carried forward)
    -Pension liabilities guaranteed by the government for potentially large numbers of retirees (these will need to be discounted for 10-20 years out).
    -Increased health costs picked up by various levels of government, again, going out some years, as employees from GM and companies dependent on it go under.
    -Losses (and hence lowered profit taxes) from bondholders that would have taken an even more severe loss.
    -Potentially very significant county/municipal/state losses/costs that, yes, the Feds are not directly responsible for – but hey, if the Feds can save $5 bln in losses for lower levels by a (marginal) $500 mln, wouldn’t this make sense? (Yes, it would be some distribution from state to state – or you could look at it as the Fed using their big fiscal guns to get over collective action problems the states would not otherwise be capable of). (Numbers are made up, of course, just to illustrate).

    If you add all of these up, you can easily get to plausible numbers for US breaking even in some larger sense, particularly when you add in liquidity trap issues. And yes, the numbers will depend on some assumptions few could conceivably make with accuracy, but limiting the “fiscal cost” to money they put out the door and ignoring the tax effects and others is silly.

    Great blog, and you’re right to be skeptical about the math and the logic behind this – but we need to at least recognize these (potential) effects. There are potentially very large externalities, and you’d probably mock them if someone suggested we should just ignore them in other areas of the economy.

  49. willid3 says:

    BR, i seriously doubt any body will replace GM. so far they have been given their chance, and so far none have done so. while we might gripe about many stupid decisions the company has made over the last 100 years. one thing is true (and still is). they are the biggest supplier of vehicles in the US today as they have the biggest sales of all makers. and odd thing shave been noted over decades and still holds true. as GM sales go, the rest of the market goes. when they go up, others do too. when they go down, every other major sellers sales tanks too. will we get out loans back from them? i doubt it too. but we won’t have to pick up all the pieces either. but we aren’t the only country investing in their car companies either.
    i suspect that GM (and the rest) are just the canneries in the coal mine. they were showing stress in 2006 when times were suppose to be ‘good’. we know they weren’t, but all we heard then was how great things were. NOT.
    now that GM sales are down, all the Japanese car makers are down also. and so many thought they were to be the replacements. evidently not.
    are the Koreans? i suppose in a few decades maybe. not been that long when their products were the laughing stock of the industry with quality issues that would make Fiats look good.
    the Chinese and Indians might take off, but they face a long hard road. Americans are used to a really brutal car market, unlike the rest of the world.
    we have had the cheapest prices (ex. Prius here about 25K, in Europe, its about 30-40k).
    and the coming $2500 car. won’t be the same price here as there. and many won’t buy it as they want some things (like a/c) that aren’t on it.

  50. ByteMe says:

    BR: the reason I brought up the math is that you were trying to compare apples to oranges in your math.

    However, the real question is indeed: how much will we see come back to the taxpayers?

    I think of the first $20B as a sunk cost that was used by Bush and Obama to kick the can down the road 6 months and I doubt we’ll ever see that money again.

    The $30B DIP is another story. I think it’s very reasonable that in a year or two — once the credit markets start to function again and the “bad” pieces of GM like Saab and Hummer are turned into cash — that people will want new cars and that the company will issue common stock and get the taxpayers out of it at that point with something like a 10% return on the $30B investment. Just a guess, but our bet on the banks is looking like maybe we might see that money again, so maybe I don’t need to be such a pessimist about this bet.

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