GM on Track for a Second Bailout?

According to a report released by Forbes magazine, it would appear that General Motors will be seeking a second bailout in the near future. The magazine pointed out that the company is once again losing market shares and that it is unable to develop products that are competitive outside U.S. markets. If President Obama wins his second term he could be bailing out the company once again. Currently the federal government owns about 26% of the company due to the last bailout. The article stated that these shares are going for $20.21 but in order for the government to break even on the bailout the stock would have to be about $53.00 a share. This means that the government holds $10.1 billion worth of stock and has an estimated $16.4 billion loss when the shares do not go for the anticipated price.

The GM bailout three years ago cost the government and the taxpayers $50 billion dollars. Currently taxpayers’ loss on the deal is estimated at half of that sum or $25,000. The Treasury has announced that they will not sell any of the remaining shares until after the November elections. The U.S. Treasury is not the only faction that will take a loss. The Congressional Budget Office also estimates that they will suffer at least a $14 billion loss. These figures are just estimates, and there is no telling what the stock market will do. GM could make a full recovery, but with the way the numbers are pointing right now that is unlikely.

When you hear these stories in the news, it can make bankruptcy seem like an unforgiving system and an experience to avoid at all costs. The image of bankruptcy in the news is often distorted. If the process always went smoothly then there would be nothing for news agencies to report. Bankruptcy is a difficult process and requires the assistance of someone who knows the proceedings. At the Law Offices of Marshall D. Schultz we are ready to help you set aside some of the bankruptcy myths and work toward a stable financial future. Please contact us today for a free consultation.

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