Yesterday, it was announced that GM will buy back 200 million shares at a nearly 50% discount. (To the level which is “break even” for taxpayers.) That’s right, the taxpayer bailed out the company, or more specifically the United Auto Workers and their over funded pension and health care system, and now the taxpayer is selling (because the government wants to sell the shares) at far below the point at which taxpayers are paid back in full.
The break-even point for taxpayers is currently $53/share. However once the sale of 200 million shares goes through in January, the break-even point for taxpayers becomes $69.72/share.
GM and its cronies, both in management and in the unions, got completely indemnified (really much more than indemnified) for their short sighted and boneheaded decisions over decades, courtesy of the American taxpayer. When the company went belly up—the bond holders—the people who are supposed first in line to be paid during bankruptcy, were left in the cold. However, the unions launched inexplicably to the front of the line in 2009 and finagled control over a bunch of GM stock.
Now, GM is buying back stock at a huge discount from the US taxpayer? (Relative to what the taxpayers need to be paid.) Something doesn’t seem right.
In nearly every single way, the American people have been hosed on this one. But hey, Ohio and Michigan went for the president in the last election, so I guess its mission accomplished from the perspective of the administration.
When you go to buy your next vehicle, if you don’t want to support crony capitalism, consider buying from a company which has not taken so much from the American people. Buying a Corvette or Suburban only encourages these people.