Quote Of The Day: Abandoning The Bailout Edition
The Detroit News reports that top White House economic adviser Austan Goolsby indicated today that the government would be exiting its equity position in GM in the short term. The DetN’s David Shepardson quotes Goolsby as saying
The writing is clearly on the wall that the government is getting out of the GM position. The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we’re trying to get out of that. We’re not trying to be Warren Buffet and figure out what the market is doing
And he’s not kidding: GM’s stock just closed at its lowest level since the IPO, after GM’s Q4 results came in below analyst expectations and the overall market experienced turmoil due to Middle East unrest.
If Treasury pulled the trigger today, the taxpayers would stand to lose some $10b on its bailout of GM. Luckily, Treasury signed a six-month “lock up” agreement for The General’s IPO, so it can’t sell off until at least late May. The bad news: Automotive News [sub] leads its analysis of GM’s Q4 results with the following gloomy ‘graph:
General Motors Co. today posted a fourth-quarter net profit that was its smallest of 2010, exposing profit drags that are likely to linger this year. [emphasis added]
It’s beginning to look like the GM bailout will lose at least few billion. Meanwhile, GM’s market cap is just under the $50b the government put into it. But hey, “negative event on the economy” averted, right?