General Motors recently reported a LOSS of over $4 billion dollars, not a great return on the tens of billions taxpayers “invested” in the car companies (not voluntarily, no sane private investor would have invested which is why government had to).
With profits like this,the share price will surely fail to rise to the historically high levels needed to insure a return of taxpayer money.
The problem could get even worse long term.
The GAO has reported that the pension funds (for 900,000 workers) are underfunded by $17 billion. Payments of about $15 billion have to be made in the next few years to the pension funds.
Hard to make these payments with no earnings.
The company continues to liquidate itself, this time losing taxpayer money.
The government’s clear preference for unions in all these dealings suggests that more taxpayer money will ride to the rescue in the years to come.
If the company was doing something of value (to us) and doing it well (making money), we might be happy to see the debts being repaid out of earnings. But that’s not happening and may never happen.
- CNBC Guest Blog - The State of Business Today
William Dunkelberg is Economics Professor, Temple University, an Economic Strategist, Boenning & Scattergood and Chief Economist, National Federation of Independent Business.