GM cuts better bondholder deal, to stiff taxpayers

General Motors has negotiated a better deal with its bondholders, many of whom will accept, though that should have little effect on GM’s still-expected bankruptcy.

Here’s the big news, though, out of GM’s Securities and Exchange Commission filing on the new bondholder deal:

General Motors says it is unlikely to pay back any of the government help it’s already gotten OR any additional government financial help it will get as part of a government-structured bankruptcy.

Between already granted help of $14.9 billion and what it expects to get in bankruptcy, the total aid could hit $50 billion. GM expects to repay just $8 billion.

More than $40 billion of federal help to GM will be converted into a 72.5% stake in the new company. This means that for taxpayers to make back any of the money loaned to GM, it will have to be because shares of the new GM increase dramatically in value following an exit from bankruptcy.

And, if you believe GM stock is going to be worth dramatically more, anytime close to soon after it comes out of bankruptcy (IF it does, which is a whole nother issue), I’ve got some Timmy Geither tax advice to sell you, too.

There’s a number of hurdles. One, GM’s cutting an entire product line, meaning fewer car sales. Two, GM is ahead of only Chrysler among the American Shrinking Three in having truly fuel-sipping vehicles to offer. No hybrids. No money to bring the Volt (gee, who couldn’t have seen that coming) to market. Nothing on the horizon.

These are, in fact, some of the reasons the Obama Administration decided not to give GM more bailout money three months ago. And, not one thing has changed for the better since then.

Five years from now, even with some sort of economic recovery, I’ll bet the General is selling 20 percent fewer cars than this year.

Ahh, that Obama industrial policy. Again, nobody’s going to buy higher-mileage American cars, Herr Obama, without the stick of a higher gas tax. And, even then, for the next five years, GM ain’t going to be making any of them!

Sometimes, The One is idealistic, sometimes he’s pseudo-idealistic, and sometimes he’s just effing clueless. (Or chickenshit on refusing to follow the logical road on federal gas taxes.) Just.Another.Politician.™

You know, if Obama actually would do a full-blown industrial policy, he might pull off a GM turnaround. But, without it being “full-blown”? Forget it.

Oh, and unless Toyota is opening its delayed U.S. Prius plant in the Great Lakes State, Michigan Gov. Jennifer Granholm is even more deluded about the Shrinking Three than Obama is. (Of course, given the amount of pseudoscience the Greek Goddess peddles, it’s only fitting that this pseudoeconomics piece should appear there too.)

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