By on November 16, 2009

(courtesy:sideshowworld.com)

According to GM’s 3rd Quarter financial results announcement:

GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December ($1.0 billion to the UST and $192 million to the EDC), followed by quarterly payments. Any escrowed funds available as of June 30, 2010 would be used to repay the UST and EDC loans unless the escrowed funds were extended one year by the UST. Any balance of funds would be released to GM after the repayment of the UST and EDC loans.

Though this sounds like positive news, don’t let it fool you. GM’s financials only acknowledge $6.7b in government debt, a sum that barely scratches the surface of the taxpayer “investment” in The General (let’s use $52b as a baseline). The escrow fund in question contains $13.6b of the final $30b GM was given as it exited bankruptcy. Having burned through nearly half of that princely sum, GM now plans on using at least part of the rest to pay off the “outstanding $6.7b.” The escrow account expires in June 2010, at which point whatever is left unpaid of the $6.7b will be returned to the government, and GM will keep the rest. GM will then declare victory and pretend like it has squared up with the tax paying public, when in fact the public will have merely paid itself back a paltry fraction of what GM actually owes. This “repayment” will then be dutifully reported without question by the mainstream media, and the stain of bailout will be symbolically lifted. Except, of course, it won’t. GM and the government are playing a classic shell game, taking advantage of the public’s inability to keep the billions straight. Shameful.

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15 Comments on “Bailout Watch 571: How GM Won’t Pay Off Its Government Debt (But Will Try To Make You Think It Did)...”


  • avatar
    mikey

    It would be a stretch to call it good,but its certainly” better” news than what we have heard from GM in a long time.

     Oh yeah,there is going to be them that call it “smoke and mirrors,creative book keeping, or another GM con job. However us folks that depend on GM for a living,see nothing but positives in todays news.

    • 0 avatar
      Mark MacInnis

      Mikey….if you depend on GM for your living, I deeply sympathize.

      But Edward is right….there is nothing honest about how they are characterizing this….using borrowed money that they will lose if they don’t “use” is tantamount to theft of public money…..

      Liars, damned liars, and corporate spokesman….

    • 0 avatar
      wsn

      I would not call such a scam “better” news. GM essentially got your money, pay a small amount back to you to justify your investment and then get more of your money.
      This is essentially a Ponzi scheme. The only difference would be that GM had the entire North American tax paying public cornered from the start, as opposed to virally spread.

  • avatar
    JG

    GM should have became a bank.  Get the US gov to give them part of the bailout in greenbacks, then use fractional reserve banking principles to loan themselves the money and pay the government back immediately.  Ka Zaam!

  • avatar
    NN

    This site’s greatest asset is the cut-through-the-bullshit explanations of the spin being fed to the public via the auto companies and media.  Great job, keep it up.
     

  • avatar
    porschespeed

    The key to most successful magic tricks is to distract the audience from what’s really happening.  Every so often the systemic looters of America will toss an Enron, a Milken, or Madoff to the pitchfork wielding crowd.

    Unfortunately for America, Dumbocracy  becomes more a documentary film everyday.  Believe it or not, the crowd still doesn’t have a clue what the feds put into GM/Xler/DoE-loan to Ford.  Not a clue.

    Mikey, unless you have unretired,  you don’t need to worry about the misallocated-borrowed-from-our-future-ChiCom-overlords-US- taxpayer’s-great-great-grandchildren’s- dollars that are propping up GM. 

    You do however need to hope the Canadian equivalent of the PBGC  can keep paying you when GM is finally unwound in 2012-ish.

  • avatar
    Durwood

    How is it possible to pay back money when u are still losing billions?
    http://news.yahoo.com/s/ap/20091116/ap_on_bi_ge/us_earns_gm

  • avatar
    lahru

    Trust us(GM), we are gonna pay you back, we promise…

  • avatar
    mikey

    No..Mr Porschespeed I’m still retired from GM Canada. But I do hold two,sometimes three part time jobs. Ontario has a pension guarantee fund. Our feerless premier has out right stated “the pension fund could not withstand the total collapse of GM” . Kind’a why Ontario lent GM Canada the cash eh?

     I  treat every pension check as though it was my last, thus the part time jobs.  Todays news tells me I’ve bought a little more time. Maybe,just maybe,  GM has turned the corner. Myself and the other thousands of GM retirees can only hope.

     
     

  • avatar
    Steven02

    At least the gov’t is getting back something here.  While they do owe much more to the gov’t, a good portion of that will come from the IPO.  I am not saying that the gov’t will get all of it back, just like with all of the bailouts that have happened.

  • avatar
    porschespeed

    rnc,

    Was not suggesting that the DoE funds were being hidden. Just that the average American does not know who their governor is, let alone how much money has been given to these companies.

  • avatar
    ASISEEIT

    I have a question! When are the idiots running G.M. into the ground going to launch the Chevrolet”Volt”? If this vehicle were to be a quality well priced vehicle it might make G.M. some money! But here comes the G.M. reality, I’m sure the launch of this vehicle will be very late!!! I’m also sure we’ll have many foreign manufacturers introducing their electric vehicles before the Volt and last but not least the Volt WILL have quality problems like most G.M. products!! Good ole Waggoner and the board of directors sure killed N.A.O.(On purpose)!!!! 

  • avatar
    Bridge2farr

    Glad to see The General is turning the tide and will repay loan money. Good news!

  • avatar

    Lets be realistic– the only reason this administration did anything for the US Big Three was to keep the UAW workers solidly in their debt. I doubt that obama cares about getting repaid — it isn’t his money anyway.


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