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OK, let's make sure we're on the same page here, because it appears that some posters on this thread don't understand what the GM bailout was about and don't understand some basic accounting principles.
There were two parts to the GM bailout - roughly $7 billion in the form of a loan out of TARP funds, and roughly $43 billion that was used to purchase equity in the corporation in bankruptcy. That $43 billion is not a loan. It's an investment, even though it had the effect of providing GM with much needed capital.
GM has paid back the loan they took from the government, but they have not bought back the equity the government put in. The government could theoretically sell those shares to another private entity for cash (though they probably will not, and I don't know about any particular rules applied to the stock series the government got). If GM bought back the stock, they would have to pay the government the market value of the stock on the day they buy them back.
The shares the government owns in GM are worth more today then they were when the government bought them. That means they currently have a profit. They might not have a profit if and when they sell their shares. The government can only realize a gain or loss on the day they sell their equity interest. GM does not currently have an outstanding debt to the government. They do not owe the government anything until they decide to buy back the shares of GM stock the government owns.
Just making sure we're on the same page at this point, because some don't seem to be able to understand all this here.
What you say here is very true but does GM have any shareholders who aren't the government? If they do and they are paying them any kind of money for their share ownership surely they would have to pay the government the same amounts BEFORE they distribute bonuses to the UAW workers. I don't want any stock anywhere that doesn't share its profits with its stockholders. I am very glad that my share of Government Motors is only my tax money they used to save the UAW buddies of Obama.
Why would a company contoled as you say by the UAW give so many bonuses to the salary employees?
Until taxpayers are paid back, no none should get a bonus.
You are right but I can't see any of these left leaners understanding any part of that. Government Motors had been controlled by people appointed by the government, as if they were the owners, but they don't have to pay dividends to the government.
What you say here is very true but does GM have any shareholders who aren't the government? If they do and they are paying them any kind of money for their share ownership surely they would have to pay the government the same amounts BEFORE they distribute bonuses to the UAW workers. I don't want any stock anywhere that doesn't share its profits with its stockholders. I am very glad that my share of Government Motors is only my tax money they used to save the UAW buddies of Obama.
Q: Who owns the new G.M.? A: The majority owners of the new G.M. are the American and Canadian governments, which hold 72.5 percent. A union health care trust called a Voluntary Employee Beneficiary Association, or VEBA, holds 17.5 percent, and 10 percent is held by the old G.M.
However, following the IPO in 2010, the government's share went from about 66% to 33%. So GM at this point is majority owned by investors other than the US government. In the IPO, common stock shares went for about $33 per share, and three months later, are worth about $36.
There are good reasons to be providing bonuses to hourly workers at this point. Over the past few years they have been through a really tough set of circumstances. Bankruptcy, being blamed for the collapse of the economy, being on the brink of liquidation; and they've emerged and are now generating profits again. A bonus for them can be reasonably held to be entirely appropriate under those circumstances.
But I do see your point too - if GM is a private corporation, the government should be getting out of it. The question is whether GM is going to be consistently healthy enough that the government could ask for billions of dollars to be repaid by having GM buy back their shares at this point.
OK, let's make sure we're on the same page here, because it appears that some posters on this thread don't understand what the GM bailout was about and don't understand some basic accounting principles.
There were two parts to the GM bailout - roughly $7 billion in the form of a loan out of TARP funds, and roughly $43 billion that was used to purchase equity in the corporation in bankruptcy. That $43 billion is not a loan. It's an investment, even though it had the effect of providing GM with much needed capital.
GM has paid back the loan they took from the government, but they have not bought back the equity the government put in. The government could theoretically sell those shares to another private entity for cash (though they probably will not, and I don't know about any particular rules applied to the stock series the government got). If GM bought back the stock, they would have to pay the government the market value of the stock on the day they buy them back.
The shares the government owns in GM are worth more today then they were when the government bought them. That means they currently have a profit. They might not have a profit if and when they sell their shares. The government can only realize a gain or loss on the day they sell their equity interest. GM does not currently have an outstanding debt to the government. They do not owe the government anything until they decide to buy back the shares of GM stock the government owns.
Just making sure we're on the same page at this point, because some don't seem to be able to understand all this here.
Can GM afford to buy back those shares from the US gov. at their current "value"?
What would happen to GM is the US gov. dumped all of it's GM shares today?
Can GM afford to buy back those shares from the US gov. at their current "value"?
I'm not sure. It's a very good question, and I'm not sure anybody has clear answers. The IPO raised about $20 billion. The value of the US shares is almost certainly at least double that. GM's access to credit is still very limited. If GM can keep themselves in better financial shape for the next several years, they eventually will be able to buy back those shares.
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What would happen to GM is the US gov. dumped all of it's GM shares today?
Another very good question. Answer would be "it depends." Is the government selling the shares to another investor? If so, to whom? Why are they dumpng the shares?
Reactions could vary wildly. The market could see it as a sign that GM is back on its feet and in good health, and GM would do fine; or the exact opposite could happen.
And how long has it been since you were complaining about President Obama capping bonuses? Or, do you complain about asking for a cap if those involved are Wall Streeters and you complain about letting workers get bonuses since they are... workers.
I've complained about nothing. I simply pointed out GM still owes us money.
There you go! Points for you. "The actual current profit."
Too late for both.
Try buying a candy bar with unrealized stock gains. Better yet try taking a tax deduction for unrealized losses. Neither happen until you sell the stock. As your link points out their is not profit for the tax payers.
I've complained about nothing. I simply pointed out GM still owes us money.
GM owes us nothing unless and until they ask to buy back the shares of stock the government owns. They paid back the loan. The remainder is "investment."
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Try buying a candy bar with unrealized stock gains. Better yet try taking a tax deduction for unrealized losses. Neither happen until you sell the stock.
You and HistorianDude are talking past each other at this point. I think what you want is to be able to say that we have literally our cash back, while HistorianDude is saying that based on standard accounting principles, we currently have a profit; and if we sold today we would realize that profit.
The world realize is a term of art in accounting and tax law.
Try buying a candy bar with unrealized stock gains.
If I wanted to buy a candy bar, I'd sell some stock.
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Originally Posted by shorebaby
Better yet try taking a tax deduction for unrealized losses.
Since I don't have to pay taxes on unrealized gains, no. I don't think I will.
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Originally Posted by shorebaby
Neither happen until you sell the stock.
Yes. We established that several pages ago.
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Originally Posted by shorebaby
As your link points out their is not profit for the tax payers.
Yes... there are. They are still paper profits, but they are profits nonetheless.
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