Monday, September 14, 2009

Federal Government will Loose Billions from General Motors and Chrysler.

U.S. 'Unlikely' to Recoup Auto Outlay, Panel Finds -

The federal government is unlikely to recoup all of the billions of dollars that it has invested in General Motors and Chrysler, according to a new congressional oversight report assessing the automakers' rescue.

The report said that a $5.4 billion portion of the $10.5 billion owed by Chrysler is "highly unlikely" to be repaid, while full recovery of the $50 billion sunk into GM would require the company's stock to reach unprecedented heights.
"Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount," according to the report, which is scheduled to be released Wednesday.

Great car of the past. Will future cars be loved this way?

We were told by the Treasury Department, just four months ago, that the United States would recover most of its planned $50 billion investment in General Motors within 5 years. And if the government-monitored corporate reorganization fails and GM sputters again, the government investment in the company will be lost.
Now it's starting to look like the US government is going to loose $50 billion dollars or are we loosing $50 billion dollars. How did President Obama believe that we would get our money back from the car companies?
During the boom years, the annualized figure for car sales in the United States hovered around 16 million. Recently, it has fallen to between 9 million and 10 million on an annualized basis. To get our money back President is betting that the US auto market will rebound to 16 million by 2012. A 40 percent increase in just 3 years in this economy? Is President Obama willing to bet the house?
For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained. "It's very unlikely" that the government will recover its money, said
David Whiston, auto equities analyst at Morningstar. "GM will be a smaller company after the bankruptcy and there are going to be more foreign automakers entering the market that will make GM's efforts more

As the auto rescue has unfolded, the question of whether the government will be repaid has taken on increasingly political overtones, as partisans debate whether the Bush administration or the Obama
administration has handled the industry better. We shall see.
More post from Wag This Dog.
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Will GM, Chrysler go Forward or President Obama's Iraq?

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05.07.09 Sen. Corker Discusses News that Chrysler Won't Repay $7 Billion Taxpayer Loan

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