Mission Accomplished at GM? … We’ll bet ‘under’ (with a caveat).

GM is rushing to IPO before the mid-term election to “prove” the wisdom of the bailout.

Pundits are saying that the company’s politically motivated IPO could jeopardize taxpayer ”investment.”

Here’s why:

Taxpayers have somewhere between $40 billion to $60 billion “invested” in Gov’t Motors
For taxpayers to come out whole, the Treasury’s 304 million of the company’s 500 million common shares would need to average $131 to $197 per share
That would put GM’s implied valuation at somewhere between $65 billion to $98 billion.
Ford has a market value of only $40 billion.
Ford’s near-yerm earnings are expected to be six times those of GM.
If investors valued both companies the same … taxpayers would incur a 50% loss.
And, oh yeah, the market isn’t looking all that good these days.

Ken’s Bet: Watch the Administration to rush the IPO and then strong-arm Goldman et. al. to buy up GM shares at inflated prices and either push the share on clients (think CDOs) or eat them in their proprietary accounts.

* * * * *

Post inspired by: Obama’s ‘Mission Accomplished’ Moment At GM, 08.30.10
http://www.forbes.com/2010/08/30/general-motors-ipo-elections-opinions-columnists-shikha-dalmia.html?boxes=opinionschannellatest

This entry was posted on September 8, 2010 at 6:58 am and is filed under Autos - Travel. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Mission Accomplished at GM? … We’ll bet ‘under’ (with a caveat).”

James Says:
September 8, 2010 at 10:42 am | Reply
So let me get this straight. Over the course of 18 months:
– The Administration first screws the taxpayers by investing in two bankrupt companies
– Then they strong arm bondholders and give ownership to unions
– Then they go on a public witchhunt against GM’s #1 competitor without knowing the facts — later being proven wrong about any defect.
– Now they are screwing taxpayers again by fastracking an IPO for political gain — and then claim success.

Conclusion: Abuse of power at its finest.

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