"You know, a long time ago being crazy meant something. Nowadays everybody's crazy." No less an authority on craziness than Charles Manson said that and he could very easily have been talking about today. It's GM IPO day and Wall Street is beside itself with excitement over the prospect of it all. The average schmuck can't get in on the deal – a blessing for which he should get down on his knees and offer thanks.
A couple of salient points folks eager to pour cash into GM might want to keep in mind: The fact that GM made money last quarter is not that big a deal. Toyota made money too, even though they dealt with the biggest quality and image problem in their history, and in the midst of this down economy. In fact, every significant auto maker made money, so it is hardly a tribute to outstanding management that GM was able to turn a buck. And GM made a lot less than Ford, even though they got the $50 billion bailout plus (and you want to keep this on the down low because our President and his economic team apparently have deemed it to be classified information) another $45 billion in tax breaks. In fact, all TARP recipients got big tax breaks so the publicly stated bailout amounts are just a tad – close to half - lower than the amounts we taxpayers actually ponied up.
For that matter, that these guys only made a couple billion, even though they had near a hundred billion of free money, got a get out of jail free card with their debts, and got to walk away from all of their dead assets and pressing liabilities should be good cause to run away from the IPO posthaste. But then Wall Street is not concerned with any of that. They will have GM bundled, spun and hyped and foisted off on little old ladies' pension funds before the year is out and will have cashed their commission and bonus checks long before the reality that GM is still the same company that went belly-up comes to light.
But at least the taxpayers are off the hook, right? Well, not quite. Barack and the boys are only getting out from about a third of the investment, and they are going to get $25-30 a share. They need $45 to break even – closer to $90 if we add in the tax breaks. So the taxpayers are losing their proverbial shirts; but we can take solace from the fact that we are probably cutting our losses before it gets much worse.