Goverment is a different kind of investor - Saab General Bulletin Board - Saabnet.com
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Goverment is a different kind of investor
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Posted by Bruce [Email] (more from Bruce) on Mon, 11 Jan 2010 12:30:27 Share Post by Email
In Reply to: Re: Technology, jimg, Mon, 11 Jan 2010 11:47:30
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The U.S. has put in about $58B into GM and has about a 61% stake. So 61% of the estimated $500M to $1B that GM would get from Saab, (which could include technology rights), is only about 0.5% to 1.0% of the money the US government has put in. I don’t know about you, but if any deal to sell GM puts into jeopardy the ability to recover the other 99% or $57.5B, I say close it.

Also, please understand the real return on investment for the Government, (and by this I mean all levels of government), is quite different than other stock & bond holders. As for losses, normal stock or bond holders are limited in their loss to what they invested. Whereas the Government would be on the hook for a lot more if GM where to fold such as a lot of people claiming unemployment, filing for Social Security earlier than they would have (which is happening now across the economy) & other welfare benefits, plus the loss of taxes (primarily income & sales taxes), plus all the same issues to vendors of GM and other businesses that service its employees. As for gains, normal stock & bond holders are limited in what they can gain by how much that stock or bond might rise in value, plus any dividend or interest payments. Government would also benefit from all of the taxes it would collect from GM, its employees & its vendors & the Vendor's employees.

What does that mean, even if the US gets a negative or lousy direct return on its investment, it may still be way ahead.

posted by 198.179.147...

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