US Treasury to sell stake in General Motors

Total loss to be around $6.5bn.

The United States government is starting to sell off its stake in General Motors, taken as part of the bailout which saved the company in 2009. It plans to take 15 months to completely disinvest, but in the meantime, that investment is doing so well that the total value of the bailout may be far smaller than was previously thought.

When the government intervened in July 2009, it spent $49.5bn to purchase most of the assets and trademarks of "old GM", through an intermediary called NGMCO Inc, ensuring the continued operation of most of the company's plants and continued employment of most of its workers.

Since then, the Treasury has already earned back $28.7bn of its money from "repayments, sales of stock, dividends, interest, and other income". And with its first move towards disinvestment, it plans to sell 200m of its 500.1m shares in GM back to the company itself, for $27.50 a share, raising a further $5.5bn. So at the end of that sale, the government will be left with $14.8bn still in GM and a further 300.1m shares.

It's obviously unlikely that the state will make back its entire stake; Felix Salmon estimates that the price would need to rise to $50 a share, considerably higher than the all-time peak of $39.48 early last year. But it is possible; and it's definitely the case that the state will lose a lot less than the $50bn figure which was causing such consternation when the bailout was announced.

Such is always the case with investment programmes like this one, though. The headline figure gets reported, and debated over, as though it were just the same as any other spending; the fact that that money comes back to the Treasury, either in actual cash, as with this sort of investment, or in kind, as with most infrastructure investments, is buried in the discussion.

If the government manages to sell the its remaining shares at today's face value, it will end up losing around $6.5bn from its four-year investment in GM. If the share price rises, that number will fall lower still. At the time, there was obvious uncertainty about how successful the bailout would be; and there was always a chance that the government would lose its whole stake.

But there was also a chance that, as with its similar stake in insurance company AIG, it would make a profit. And absent either of those, a $6.5bn programme which saved a company employing 202,000 people isn't that bad. But as Matt Yglesias points out, the problem may be that those jobs are, in the long run, not saveable at all:

The total collapse of the Michigan-centered auto industry would, for better or for worse, have opened up new market opportunities for other automaker with production facilities located elsewhere… On the other hand, either the total collapse of the midwestern auto industry or a huge wave of bank failures would have produced massive dislocations in people's lives and a lot of misery on the road to renewal. Those are the questions to think about, not how much money was made or lost in this or that investment.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Unite stewards urge members to back Owen Smith

In a letter to Unite members, the officials have called for a vote for the longshot candidate.

29 Unite officials have broken ranks and thrown their weight behind Owen Smith’s longshot bid for the Labour leadership in an open letter to their members.

The officials serve as stewards, conveners and negotiators in Britain’s aerospace and shipbuilding industries, and are believed in part to be driven by Jeremy Corbyn’s longstanding opposition to the nuclear deterrent and defence spending more generally.

In the letter to Unite members, who are believed to have been signed up in large numbers to vote in the Labour leadership race, the stewards highlight Smith’s support for extra funding in the NHS and his vision for an industrial strategy.

Corbyn was endorsed by Unite, Labour's largest affliated union and the largest trades union in the country, following votes by Unite's ruling executive committee and policy conference. 

Although few expect the intervention to have a decisive role in the Labour leadership, regarded as a formality for Corbyn, the opposition of Unite workers in these industries may prove significant in Len McCluskey’s bid to be re-elected as general secretary of Unite.

 

The full letter is below:

Britain needs a Labour Government to defend jobs, industry and skills and to promote strong trade unions. As convenors and shop stewards in the manufacturing, defence, aerospace and energy sectors we believe that Owen Smith is the best candidate to lead the Labour Party in opposition and in government.

Owen has made clear his support for the industries we work in. He has spelt out his vision for an industrial strategy which supports great British businesses: investing in infrastructure, research and development, skills and training. He has set out ways to back British industry with new procurement rules to protect jobs and contracts from being outsourced to the lowest bidder. He has demanded a seat at the table during the Brexit negotiations to defend trade union and workers’ rights. Defending manufacturing jobs threatened by Brexit must be at the forefront of the negotiations. He has called for the final deal to be put to the British people via a second referendum or at a general election.

But Owen has also talked about the issues which affect our families and our communities. Investing £60 billion extra over 5 years in the NHS funded through new taxes on the wealthiest. Building 300,000 new homes a year over 5 years, half of which should be social housing. Investing in Sure Start schemes by scrapping the charitable status of private schools. That’s why we are backing Owen.

The Labour Party is at a crossroads. We cannot ignore reality – we need to be radical but we also need to be credible – capable of winning the support of the British people. We need an effective Opposition and we need a Labour Government to put policies into practice that will defend our members’ and their families’ interests. That’s why we are backing Owen.

Steve Hibbert, Convenor Rolls Royce, Derby
Howard Turner, Senior Steward, Walter Frank & Sons Limited
Danny Coleman, Branch Secretary, GE Aviation, Wales
Karl Daly, Deputy Convenor, Rolls Royce, Derby
Nigel Stott, Convenor, BASSA, British Airways
John Brough, Works Convenor, Rolls Royce, Barnoldswick
John Bennett, Site Convenor, Babcock Marine, Devonport, Plymouth
Kevin Langford, Mechanical Convenor, Babcock, Devonport, Plymouth
John McAllister, Convenor, Vector Aerospace Helicopter Services
Garry Andrews, Works Convenor, Rolls Royce, Sunderland
Steve Froggatt, Deputy Convenor, Rolls Royce, Derby
Jim McGivern, Convenor, Rolls Royce, Derby
Alan Bird, Chairman & Senior Rep, Rolls Royce, Derby
Raymond Duguid, Convenor, Babcock, Rosyth
Steve Duke, Senior Staff Rep, Rolls Royce, Barnoldswick
Paul Welsh, Works Convenor, Brush Electrical Machines, Loughborough
Bob Holmes, Manual Convenor, BAE Systems, Warton, Lancs
Simon Hemmings, Staff Convenor, Rolls Royce, Derby
Mick Forbes, Works Convenor, GKN, Birmingham
Ian Bestwick, Chief Negotiator, Rolls Royce Submarines, Derby
Mark Barron, Senior Staff Rep, Pallion, Sunderland
Ian Hodgkison, Chief Negotiator, PCO, Rolls Royce
Joe O’Gorman, Convenor, BAE Systems, Maritime Services, Portsmouth
Azza Samms, Manual Workers Convenor, BAE Systems Submarines, Barrow
Dave Thompson, Staff Convenor, BAE Systems Submarines, Barrow
Tim Griffiths, Convenor, BAE Systems Submarines, Barrow
Paul Blake, Convenor, Princess Yachts, Plymouth
Steve Jones, Convenor, Rolls Royce, Bristol
Colin Gosling, Senior Rep, Siemens Traffic Solutions, Poole

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.