Treasury: U.S. to lose $25 billion on auto bailout

[Dave]

Yeah, the auto bailout worked out real great didn't it? The way I understood it, the auto bailouts were done to help prevent the car companies from going bankrupt.. in the end though, 2 of the big 3 went bankrupt anyway so maybe Romney was right, maybe they should of went through bankruptcy the usual way... might of made them a little bit stronger in the end.

Washington -The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That's 15 percent higher than its previous forecast.

In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM's stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.

The steep decline in GM's stock price has indefinitely delayed the Treasury's sale of its remaining 26 percent stake in GM. No sale will take place before the November election.

Treasury spokesman Matt Anderson said the costs were still far less than some predicted.

"The auto industry rescue helped save more than one million jobs throughout our nation's industrial heartland and is expected to cost far less than many had feared during the height of the crisis," Anderson said.

The Obama administration initially estimated it would lose $44 billion on the bailout but reduced the forecast to $30 billion in December 2009.

But the recent estimates are not as optimistic as last year.

The Treasury Department said in a May 2011 report that its estimate of auto bailout losses was $13.9 billion. The Congressional Budget Office also estimates a $14 billion loss. The CBO has written off $8 billion of the government's auto bailout as an unrecoverable loss.

Republican presidential candidate Mitt Romney has decried the losses on the auto bailout and insisted that forcing GM and Chrysler Group LLC to go through bankruptcy first would have saved taxpayers money.

But President George W. Bush — who gave the automakers and their finance arms about $25 billion in his final weeks in office in bailout funds — said there wasn't time.

Taxpayers incurred a $1.3 billion loss on the $12.5 billion bailout of Chrysler.

The Treasury also has put on hold an initial public offering initially planned for last year in Ally Financial Inc. because of market weakness. The government holds a 74 percent majority stake in the Detroit auto finance company as part of its $17.2 billion bailout and has recovered $5.7 billion.

GM CEO Dan Akerson told employees at a town hall meeting Thursday that the company was working to take actions to boost the automaker's sagging price.

From The Detroit News: http://www.detroitnews.com/article/20120813/AUTO01/208130392#ixzz23...

[XLFD]

Free market capitalism is an ecosystem.  Competition causes changes in a very Darwinian way. There’s symbiosis. There’s a chain in the system, like a food chain, except instead of the larger eating the smaller the chain is of someone producing something simple up to someone producing something very complex.  For example, the producer of a resistor up through the producer of a super computer, and even farther where the super computer is a control component in an automated factory. 

When people interfere too much with a natural ecosystem (over-hunting, clear-cutting vegetation, etc.) the ecosystem adapts until so much interference takes place that, for all practical purposes, it dies.

A free market ecosystem adapts to interference until finally there is so much interference with it’s natural functioning–in this case, as a result of government imposing unnatural changes such as bailouts, regulations, altering incentives, creating uncertainty, etc.–that it dies.  Letting GM and/or Chrysler 'die' or 'adapt' naturally, would have created the wherewithal for the capitalism ecosystem to continue in a natural way, without government interference.  When the GM tree falls, many new trees will sprout up where the shadow of that tree fell on, likely with new opportunities and even more jobs.

[Dave]

Not to long ago Obama was boasting about how good the auto bailout has went, that GM has paid back everything it owed and that GM has had some good sales months of late.. problem is that the federal government ordered a bunch of cars.. mostly Volts.. that we of course are paying for and obviously that with GM still owning quite a bit of money that the bailout hasn't went all that great. Of course some of the liberal leaning people are going to take his word for it which is a shame, as it would be if the roles were reversed.. blind faith in most anything, specially government is typically never a good thing.

[XLFD]

Being that the Federal Government is probably the biggest overall purchaser of motor vehicles in the world, it is a major conflict of interest, and vastly unfair to Ford and other automakers that weren't bailed out, for the Feds to purchase such worthless cars as the already subsidized Volts without any rhyme or reason.  http://usconstitutionalfreepress.wordpress.com/2012/03/02/breaking-...

But this is what always happens when government and big business become partners.  Even at the local level.  That's why you should never vote for anyone who believes public/private partnerships are a good thing-- unless you're part of those partnerships.