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.

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Voted Remain? How you can use the general election to kick out hard Brexiteers

Open Britain, the European Movement and Britain for Europe will be sending volunteers to assist MPs who oppose hard Brexit. 

There’s no escaping the fact that Britain’s impending departure from the European Union hangs over this general election and all of the other issues it will throw up. Those who believe in an open, tolerant Britain, with strong links in our interests to our European neighbours, have a duty to stand up and fight against a destructive hard Brexit.

The Prime Minister made it very clear when she fired the starting gun on this general election that she felt this election would be about one thing and one thing only – Brexit. On the steps of 10 Downing Street, she called out all those who have raised valid questions about her approach to Brexit for “political game-playing”, and was unapologetically explicit in her aim to “make it harder for opposition politicians who want to stop me from getting the job done”, and to “make me stronger.”

This government has decided to pull the UK out of the single market and the customs union – and all the proven benefits they bring – before we have even got to the negotiating table. Ministers have discarded the best economic option from the get go, and persist in the belief that the nightmare scenario – Brexit with no deal, defaulting onto World Trade Organisation rules – would be “OK”, as Boris Johnson has said. They have failed to guarantee the rights of EU citizens living in the UK. The government appears intent on a destructive hard Brexit that will put jobs at risk, cause investment to decrease and prices to rise. Pro-Europeans, of all parties and none, have a duty to stand up and fight against that hard Brexit path.

That is why Open Britain has come together with the European Movement and Britain for Europe to take the fight to hard Brexiteers on the ground in this election campaign. As the three biggest pro-European groups in Britain, with more than 600,000 supporters between us, we have volunteer groups the length and breadth of Britain.

We will be directing our activists to key seats during the election. In half of these, we will be challenging supporters of hard Brexit, like Iain Duncan Smith, Steve Baker, and Kate Hoey. Open Britain volunteers will get involved in the campaign for the candidate who is challenging them.

The other half are seats held by an MP who has been vocal in opposing a hard Brexit. These stretch from Lewes and St Ives to Belfast East and Edinburgh South. We are urging our activists to get involved in any way they want to and in whatever way will help the specific campaigns on the ground in those key seats, with the aim of securing the greatest possible representation of MPs who will fight against hard Brexit and for an open Britain in the next Parliament.

If we succeed in doing so, we can build a brighter future for Britain. We can stop this government cashing a blank cheque for hard Brexit, which would undermine our trading, security and diplomatic relationships with our European partners. We can secure a meaningful final vote on the Brexit deal for MPs, so they can hold the government to account for the divide between their rhetoric and reality. And we can put forward an alternative vision for Britain – one where jobs and businesses are protected, our workers’ rights and consumer protections are maintained, and Britain stays open and internationalist. If you would like to join us in this campaign, you can find out more details of how to get involved on our website.

James McGrory is the co-executive director of Open Britain.

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