WHICH IS IT? DO THEY OR DON'T THE STILL THE GOVERNMENT

[motorhead]

I read on here all the time about how GM paid back their dept to the US government ,but every time I read else where like Autoline Detroit or watch the news they still comment on how GM still owes.

Just this morning I watched Fox and ABC. They both had stories about GM going public and both said they Still owed the government $400,000,000 dollars. So really, what is the real story here.


Please don't turn this into another Political thing about how we bailed out GM. We already know the story. I just don't get the conflicting stories I read all the time.

[el ess A]

After the IPO, GM would still owe U.S. taxpayers around $33 billion. The government hopes to get the balance back in several follow-up stock sales.

Source:
http://www.cnbc.com/id/39993982

[bigearl]

This gets confused all the time and needs to be clarified.

GM got a loan from the Government. Additionally the Government bought a portion of GM. The loan was paid off, however the Government still owns a substantial piece of GM. That's the 33billion part. The loan was paid off, now they want to sell the company out to individuals as a stock IPO so the government can get their money back. GM technically doesn't 'OWE' this money, since it's not a loan.

[a_Username]

Originally Posted by bigearl

This gets confused all the time and needs to be clarified.

GM got a loan from the Government. Additionally the Government bought a portion of GM. The loan was paid off, however the Government still owns a substantial piece of GM. That's the 33billion part. The loan was paid off, now they want to sell the company out to individuals as a stock IPO so the government can get their money back. GM technically doesn't 'OWE' this money, since it's not a loan.

This

[BigRigMike]

Originally Posted by bigearl

This gets confused all the time and needs to be clarified.

GM got a loan from the Government. Additionally the Government bought a portion of GM. The loan was paid off, however the Government still owns a substantial piece of GM. That's the 33billion part. The loan was paid off, now they want to sell the company out to individuals as a stock IPO so the government can get their money back. GM technically doesn't 'OWE' this money, since it's not a loan.

That is how I have always understood it. The government has been paid in full with cash and company equity. Now the equity just needs to sold so the cash can go back into the treasury.

GM does not need to pay anymore money from their bank accounts.

[motorhead]

Originally Posted by bigearl

This gets confused all the time and needs to be clarified.

GM got a loan from the Government. Additionally the Government bought a portion of GM. The loan was paid off, however the Government still owns a substantial piece of GM. That's the 33billion part. The loan was paid off, now they want to sell the company out to individuals as a stock IPO so the government can get their money back. GM technically doesn't 'OWE' this money, since it's not a loan.

I get all of that. What I don't get is why doesn't any of the media put that way. They always say that GM still owes the money. If that was the case then anyone that owns stock in a company must owe that company the money instead of owning the stock. Why don't they report as the government still owns a 33billion dollar stake in GM instead.

[a_Username]

Originally Posted by motorhead

I get all of that. What I don't get is why doesn't any of the media put that way. They always say that GM still owes the money. If that was the case then anyone that owns stock in a company must owe that company the money instead of owning the stock. Why don't they report as the government still owns a 33billion dollar stake in GM instead.

There will always be political spin to make it say what you want it to say. Another example would be despite the massive empirical evidence that states otherwise, it is still taught in History/Economics that Hoover was a defender of lassiez-faire and literally FDR saved the United States. It does sort of still owe money to the taxpayers, although this particular wording is for the understanding of the common man to avoid technical babble.

[bigearl]

Originally Posted by motorhead

I get all of that. What I don't get is why doesn't any of the media put that way. They always say that GM still owes the money. If that was the case then anyone that owns stock in a company must owe that company the money instead of owning the stock. Why don't they report as the government still owns a 33billion dollar stake in GM instead.

The financial pros in media do get this. Like Forbes and the WSJ. It's the splash news (10-30 second highlights of everything) that doesn't flesh it out. If you really listen to what they say on those highlights, what they say is technically true- it just misses all the important data that comes along with it.

Edit: OOps, a-username kind of beat me to it.

[motorhead]

Originally Posted by a_Username

There will always be political spin to make it say what you want it to say. Another example would be despite the massive empirical evidence that states otherwise, it is still taught in History/Economics that Hoover was a defender of lassiez-faire and literally FDR saved the United States. It does sort of still owe money to the taxpayers, although this particular wording is for the understanding of the common man to avoid technical babble.

I believe the common man doesn't enough credit for what he knows. There is a big difference between owning 33 billion dollars worth of stock in a company and that company owing you 33 billion dollars. I think most people understand that.

[bigearl]

Originally Posted by motorhead

I believe the common man doesn't enough credit for what he knows. There is a big difference between owning 33 billion dollars worth of stock in a company and that company owing you 33 billion dollars. I think most people understand that.

Let me rephrase that slightly- I believe the common man doesn't get enough credit for what he can learn. However I keep seeing people who know more about what's happening on the Jersey Shore then they do about REALLY basic economic principals. It was recently determined that the largest source of "news" among people 18-34 was Jon Stewart. No offense to Jon Stewart, he's a fine comedian, but what do you do with that?

[motorhead]

Originally Posted by bigearl

Let me rephrase that slightly- I believe the common man doesn't get enough credit for what he can learn. However I keep seeing people who know more about what's happening on the Jersey Shore then they do about REALLY basic economic principals. It was recently determined that the largest source of "news" among people 18-34 was John Stewart. No offense to John Stewart, he's a fine comedian, but what do you do with that?

Yeah, that's pretty sad. I just wish they would report it correctly The way I look at is that the government owes the taxpayers 33 billion for using our money to buy a large share of a car company.

[hot_rod]

>>>I keep seeing people who know more about what's happening on the Jersey Shore




Well put...... very sad.... but very true!

[derklug]

Ford, GM and Chrysler all took low interest loans from the government, but GM and Chrysler needed to get relief from their creditors and declared bankruptcy. The government bought out the creditors of GM for stock and will recoup a portion of that money at the upcoming IPO. Ford and GM have repaid the low interest loans and don't "owe" the government any money, but the bailout portion is typically used as the amount that GM still "owes" the government. If the IPO fails to generate the kind of money the government spent, people will once again howl about how GM isn't paying back the taxpayers.

[DGthe3]

Owing money means that there is some specified amount that you've got to pay back. Under that definition, GM doesn't owe the US government any money from the bailout or the subsequent post-bankruptcy loan (thats the one the paid back in the spring). At least, General Motors Company doesn't. I think Motors Liquidation Company (formerly General Motors Corporation, aka Old GM) might have that debt on their books. But even if they are supposedly responsible for it, they're not going to be paying back a whole lot if it. They've got a bunch of other debts to be paid as well, and not a whole lot of assets to pay it with. And for that very reason, the US, Canadian, and Ontario governments (plus the UAW's VEBA fund) took ownership of the brand spankin' new General Motors Company. The intention is to get back an amount roughly equivelent to the amount each one was owed by 'Old GM' when they sell off their portion of the company.

But nobody can predict just how much they'll get from selling their shares. Might be 50% of what they were owed (which is still a lot more than what they'd get if GM liquidated last summer). On the other hand, it could work out to 50% more than what they were owed (expect that to happen the day after GM announces the Z28 MSRP to be $9,995 + destination).