May 27th, 2009 by Ross Edwards
The U.S. Government will likely own as much as 70 percent of GM when the company emerges from its impending bankruptcy, but will also likely need to pay more than $50 billion to keep the company alive, experts say.
GM’s bondholders sealed the company’s fate today by rejecting an offer to exchange $27 million in unsecured debt for a 10% stake in a restructured GM. Without the bondholder debt exchange, GM will be forced to declare Chapter 11 Bankruptcy.
According to The New York Times, the U.S. Treasury Department will need to spend at least $50 billion dollars to get GM through bankruptcy. The actual cost could be tens of billions more than that though, according to Edmunds Inside Line.
With $20 billion already spent on GM and nothing to show for it, does it really make sense to drop another $50+ billion on the company?
Today a coworker of mine posed the question: “what’s that system that’s the opposite of ours? Where the government owns everything?”
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