If you needed further proof that the whole GM bailout thing was anything but political, you can check out the most recent news from Washington:
The U.S. government plans to sell a significant share of its remaining stake in General Motors Co. this summer…
On one hand, that’s great news. The less productive assets we have in the hands of the government, the better off those productive assets are.
On the other hand, it’s kind’of a bummer.
See, the deal was that we were all gonna make money of this turkey. The idea that the government would bailout and then take an ownership take in the company was sold to us on the idea that we would then sell back that share for a nice hefty profit.
How’s it gonna work out?
A sale within the next several months would almost certainly mean U.S. taxpayers will take a loss on their $50 billion rescue of the Detroit auto maker in 2009.
To break even, the U.S. Treasury would need to sell its remaining stake—about 500 million shares—at $53 apiece. GM closed off 27 cents a share at $29.97 in 4 p.m. trading Monday on the New York Stock Exchange, hitting a new low since its $33-a-share November initial public offering.
Not so well. Looks like a 46% loss to me.
But at least this works for Obama:
Government officials are willing to take the loss because the Obama administration would like to sever its last ties to the auto maker, the people familiar with the matter said. A summer sale makes it more likely Treasury could sell all of its stake in GM by year’s end, avoiding a potentially controversial sale in the 2012 presidential election year.
This is the danger afforded each of us when the government gets involved. It’s not because people in government are mean ugly people who are actively looking to harm the American people. Not at all. Most are good-natured folk truly looking out for our best interests.
No. The danger lies in the fact that the incentives of elected officials are not the same incentives as us the taxpayer. Obama wants to get elected. We wanna make money. And when those two things are in conflict, the wrong decision is made.
This is why government fails.