Thursday, November 18, 2010

Government to make $13 billion in GM IPO?? Not so much...

"The US Government should MAKE [all caps added] about $13 billion," according to today's Chicago Tribune.  Who learned you your math?  The lede should be that the US Government will LOSE about $12 billion on the preferred shares it is selling.  The math is simple -- using round numbers, the US paid $50 billion for its preferred shares.  It is now selling half of those shares -- which equals $25 billion worth of the shares it purhased (.5 x $50 billion) -- for $13 billion.  Ergo, a $12 billion loss ($25 billion paid for the shares less the $13 billion received in the IPO). Great investment Mr. President and even happier spin brought to you by the Trib.

Here is the link to the article:,0,2904278.story


  1. As I understand it, didn't GM already pay back the "cake" of the 50B$ of the shares, so now this initial IPO is all yummy, chocolatey Frosting, so to speak?

  2. Using round numbers again, the US infused GM to the tune of $60 billion. $10 billion was a loan, the other $50 billion was the purchase of preferred stock. A few months back, GM touted that it had repaid the LOAN of $10 billion, forgetting to mention that it did so with other funds it borrowed from the government. The $50 billion preferred stock purchase was never paid back, until today at about 50 cents on the dollar.