Quote:
GM Bailout Losses Worthwhile for Obama as IPO Shrinks Cost to $9 Billion
By David Welch and Craig Trudell - Nov 18, 2010 11:01 PM CT

General Motors Co.’s initial public offering showed that while U.S. President Barack Obama’s administration may lose billions on the auto-industry bailout, the national budget and economy might be better off for it.

The U.S. sold almost half of its stake in the nation’s largest automaker for $33 a share -- about $10 less than it needs to break even. The remaining shares will need to sell for about $20 higher to make up the difference. GM opened at $35 and stayed within $1.11 of that price all day. Selling the remaining shares at that price would produce a loss of about $9 billion.

That may go down as a bargain. The U.S. would have lost $28.6 billion in spending on social services and missing tax revenue if not for the bailout of GM, its former lending arm and Chrysler Group LLC, according to a study released Nov. 17 by the Center for Automotive Research in Ann Arbor, Michigan.

“GM ends up an economic contributor to the U.S. economy,” said Barry Ritholtz, author of “Bailout Nation” and chief executive officer of New York investment research firm FusionIQ. “It’s manufacturing products, it’s creating jobs, it’s buying wholesale parts, it’s doing what an industrial company is supposed to do.”

Since the Treasury sold almost half of its stake at $33 a share, the government needs future offerings to sell for an average of $53.07 a share to break even, according to data compiled by Bloomberg.

GM rose $1.19, or 3.6 percent, to $34.19 yesterday in New York Stock Exchange composite
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bloomberg.com

Fair play!