It's unclear where anybody ever got the idea that a free market results in low prices when the entire point of capitalism is to maximize profit and low prices are less profitable. Therefore the natural proclivity should be to collude and fix prices at the highest sustainable point.
Oh, it's illegal to collude and fix prices and whatnot as deemed by the gubmint? Who are they to say how a free market should work when it's a matter of divinity per Adam Smith whose book nobody bothered to read?
Government Is Reluctant to Sell Auto Stake at a Huge Loss
DETROIT—The Treasury Department is resisting a push by General Motors GM +2.59% Co. to sell the government's entire stake in the auto maker—the latest source of tension between two unlikely partners thrust together at the depths of the financial crisis.
U.S. taxpayers kept the nation's largest auto maker by sales afloat with a $50 billion bailout in 2009 and now own 26.5% of the Detroit company.
But GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as "Government Motors." Executives have said the U.S.'s shadow is a drag on its reputation and hurts the company's ability to recruit talent because of pay restrictions. Privately, executives are also irked at the continued curbs on corporate jet use.
At GM's Friday share price of $24.14, the U.S. would lose about $15 billion on the GM bailout if it sold its entire stake. While GM stock would need to reach $53 a share for the U.S. to break even, Treasury officials would consider selling at a price in the $30s, people familiar with the government's thinking have said.
It is unclear if the government's gamble—that GM's share price will rise significantly—will pay off any time in the foreseeable future. That is because the company's prospects, especially in Europe, are murky.
GM has racked up losses in its Opel unit in Europe and analysts have expressed skepticism about how quickly that business can be turned around. Profits have also narrowed over last year.
Additionally, GM faces a U.S. auto industry recovery that is proving slower than analysts and executives expected, while sales growth in China has slowed. Meanwhile, it has experienced turmoil in leadership ranks with the ouster of some key executives.
I don't think experience really matters for a president. My point is that you can't really use his own words from 4 years ago against him.
1.20.2009 - The end of one error, and the beginning of another
Looks like GM is balking, because they can't pay their executives tens of millions in compensation due to rightful government restrictions while their assembly workers get paid pennies on the dollar. Or, something like that....
You'd be looking at almost +20% based on my July 8th assessment that GM is undervalued.
Just thought I'd bring it up.
Treasury’s biggest objection, according to the Journal, is that it would take a bath if it sells now. At Friday’s closing price, the government would lose about $15 billion on its GM stake, based on its current selling price. It’s willing to take a modest loss, according to an unnamed Journal source, but not eat the entire investment.
that's a Forbe's article from today just a couple hours ago..
now if it were me.. I'd sell a portion but keep part of it. (maybe 25%). Here's the problem.. the government owns a ton.. When it sells even a portion volume spikes and investors lose confidence (after all the government is selling). Also can you imagine the headlines if the government were selling portions of GM at a loss? Essentially we're stuck w/ GM for a long time.. I'm curious about one thing though.. does the government pay capital gains to themselves? Probably.. which is like moving money from your left pocket to your right, must be nice..
“The media's the most powerful entity on earth. They have the power to make the innocent guilty and to make the guilty innocent, and that's power. Because they control the minds of the masses." -Malcolm X-
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