GM to pay back government loan?????

http://www.msnbc.msn.com/id/33961851/ns/business-autos

Ok so I read this and want to see if anyone else has a WTF moment when they get to this paragraph.


"..........The company also said it will begin repaying $6.7 billion in U.S. government loans with a $1.2 billion payment in December. It plans to repay the debt over the next eight quarters, but could pay it back as early as next year. But the money will come from funds loaned by the government.........."


How do you pay back the Government with money you borrowed from the Government? If are running the company with borrowed money and you are still losing more money (1.2 billion last quarter) then how exactly do you pay anything back? Isn't that how you went bankrupt?

Read the rest of the article. The government gave GM a total of 52 billion, 45.3 of which was in exchange for 61% ownership of the company. The remaining 6.7 is in the form of a loan that must be repaid. GM stuck 16.4 billion of all that government money into an account as "rainy day" money should things get worse. They are just draining that account a bit at a time to pay off the loan. Essentially, they "borrowed" more than they needed and are now giving the excess back.

I read the whole article before I posted it or I would not of posted it. They are paying back borrowed money with borrowed money, doesn't matter how you sugar coat it.


"......That money will come from a $16.4 billion contingency fund set up by the U.S. government in case sales worsened or other problems cropped up. The seemingly circular payment plan was already stirring controversy in Congress.

"What is the logic in repaying government loans with taxpayer dollars?" asked Brooke Buchanan, a spokeswoman for Republican Sen. John McCain....."

WE TAX PAYERS ARE PAYING FOR ALL OF THIS EVEN IF GM GIVES BACK 6.7 BILLION WE PUT OUT 52 BILLION.

my (rhetorical) question is where do you think that 6.7 billion will end up after they pay it back? you know those crooks up in D.C. are pretty slick when it comes to stealing money.

I borrow ten $10 bills off you. Tomorrow I give you back one of the $10s you gave me, as I realize $90 is enough to carry me to payday.

That's a bad thing because I should have paid you back with "my" money instead of "borrowed" money?

While I consider it a poor investment, at least the government got 61% of the "new GM' out of the deal. It's not like they simply gifted it to them.

Its a slow day in a little East Texas town. The sun is beating down, and the streets are deserted.. Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich tourist from back east is driving through. He stops at the motel and lays a $100 bill on the desk and says he wants to inspect the rooms upstairs in order to pick one to spend the night.

As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.

The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.

The hooker rushes to the hotel and pays off her room bill with the hotel owner.

The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.

At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything.

However, the whole town is now out of debt and now looks to the future with a lot more optimism.

And that, ladies and gentlemen, is how the United States Government is conducting business today.



http://www.akfiles.com/forums/showthread.php?t=59207&highlight=slow+day+texas

I thought the Gov't lost their loaned money along with the other creditors when GM filed bankruptcy. Or is this a subsequent loan?

Read the rest of the article. The government gave GM a total of 52 billion, 45.3 of which was in exchange for 61% ownership of the company. The remaining 6.7 is in the form of a loan that must be repaid. GM stuck 16.4 billion of all that government money into an account as "rainy day" money should things get worse. They are just draining that account a bit at a time to pay off the loan. Essentially, they "borrowed" more than they needed and are now giving the excess back.
This is a shell game stunt to cook the books when things look bad. No value to this story because OP is right, they are making a payment with borrowed money while they also reported a (?IIRC) a 1.5 billion dollar loss last quarter. That's a real bad investment Kernal.

In other words-

It's a sinking ship and they are throwing over the ballast (borrowed cash) the maintain a buoyancy (public opinion), nontheless the ship is sinking.

Scott

The other part of their story is that they (GM) is also sending billions overseas for overseas expansion, HEY! what about our jobs here GM????? Fuckers!

You buy a GM product and YOU are a traitor.

Scott

KernalKrink I think you are missing the point. Giving someone back part of the loan because they gave you "too much" money does reduce the overall amount you loaned as you say, however it shouldn't be celebrated as payment on the loan. It does not demonstrate any ability to repay the rest of the loan. GM has emerged from bankruptcy as a company that is still loosing billions. Less billions than before but still billions. If they return to profitability and actually have profits to repay the debt then we can right a happy feel good article about it. An article about making payments on a loan at this point when they are just shuffling around borrowed money is a PR fluff piece and nothing more.

But aren't they doing SO well selling their new Demoncrap-approved little green suppositories that pass for their bland product line, that they can now pay everything back and declare the economy fixed and back on track to grow or save all those union jobs??

I grew up loving my 57 Chevy Bel Air and my Corvettes in my youth, but at this point I'd sooner buy a damn Kia than a new Government Motors product, and I don't see that changing any time soon. Let the union scum that pushed Obama on us all starve with the rest of us, when THEIR jobs go away, too.