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Friday, October 30, 2009

Will GM Pay Us Back?

This is a big question these days, and many observers say "no".  According to Rasmussen, most Americans don't expect GM to be able to pay back the loans.  I think the taxpayer is basically screwed here.  Even if there is a successful IPO, there is no way that the new GM will be worth as much in stock as the Old GM at its peak. 

What could a valuation of the New GM be?  According to Dartmouth's Anant Sundaram, the government share could about $26 billion.  You can see his analysis here.

So if there is an IPO, and the government gets $26 billion for GM, the U.S. Government will get a return of about 0.60 on the dollar ($50.7B loaned, $8.8B remains as debt, so $42.7B put in as equity)

1 comment:

Barry said...

Heck No! Just a total waste of tax payers money!