“Government Motors” Loses $6 Billion

Three years ago, back when Lindsay Lohan was vivacious and General Motors was profitable, our favorite starlet slipped a nipple at an event sponsored by the car maker.

Today, “Government Motors” slipped a lot more than that – $6 billion further in the hole, to be precise.

From the Washington Post:

GM, the biggest U.S. automaker, lost $9.78 per share, compared with a loss of $3.3 billion, or $5.80 per share, a year earlier.

Revenue fell 47 percent, to $22.4 billion from $42.4 billion in the same quarter last year. Cash on hand totaled $11.6 billion — approaching the absolute minimum reserves needed to continue operations.

The amount of available cash would have been even lower if not for an infusion of $9.4 billion in federal loans in the first quarter. GM got another $2 billion last month and also had received $4 billion in December, bringing total government assistance to $15.4 billion.

Yup. Like we said back in March when Barack Obama effectively fired GM’s CEO, Big Brother is driving now.

Of course, it’s actually much worse than that. Not only is government making all of GM’s decisions, it’s going to reap a disproportionate share of its future profits, too.

Well, government and the unions, anyway.

That’s because a government-controlled “bankruptcy” would effectively nationalize GM.

From Monday’s Wall Street Journal:

The biggest losers here are GM’s bondholders. According the Treasury-GM debt-for-equity swap announced Monday, GM has $27.2 billion in unsecured bonds owned by the public. These are owned by mutual funds, pension funds, hedge funds and retail investors who bought them directly through their brokers. Under Monday’s offer, they would exchange their $27.2 billion in bonds for 10% of the stock of the restructured GM. This could amount to less than five cents on the dollar.

The Treasury, which is owed $16.2 billion, would receive 50% of the stock and $8.1 billion in debt — as much as 87 cents on the dollar. The union’s retiree health-care benefit trust would receive half of the $20 billion it is owed in stock, giving it 40% ownership of GM, plus another $10 billion in cash over time. That’s worth about 76 cents on the dollar, according to some estimates.

In a genuine Chapter 11 bankruptcy, these three groups of creditors would all be similarly situated — because all three are, for the most part, unsecured creditors of GM. And yet according to the formula presented Monday, those with the largest claim — the bondholders — get the smallest piece of the restructured company by a huge margin.

That’s right. GM’s investors – which are owed the most – will receive the least.

Obama and his union thugs will own 90% of the company, which will no doubt need billions more in taxpayer subsidies before it comes close to reaching profitability.

Obama’s meddling in GM – and Chyrsler, for that matter – is the closest this country has ever come to outright communism.

It’s depressing. Disgusting. Debilitating to our free market.

Which is why all we can do to keep from crying is enjoy this high-resolution image of Lindsay’s GM slip …

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