The US Treasury is concerned with the amount of overseas investors it should allow to buy large stakes in GM through its initial public offering this fall. Currently the Treasury owns a 61% share in the company, and although GM would like to eliminate it's US stake to stop dissuading potential customers, the issue is very complicated as US taxpayers contributed nearly $50 billion to fund GM's bankruptcy reorganization last year. The Treasury would like to hold off on selling its share so the government might break even or possibly make a profit on its investment, but that would probably involve selling smaller stakes of the company over a long period of time. Political fallout could result from a massive sale of one of the country's most prominent companies, but most would agree that it would be best to sell GM off to foreign investors including the company itself. The sale of our governments stake will most likely happen gradually although it might be in our best monetary interest to sell it off completely this upcoming november.It is important to understand why the government would act against a potentially profitable deal. This act of holding out on selling its share would show that the government wants to support for GM and appear as if they still believe in the possibility of future success for the struggling company. GM's success is as important to many American citizens faith as it is to the nation's economy, and the idea of foreign investors owning a major share of the company is a frightening one. Many citizens believe that selling GM is like selling a part of our nation's culture, while at the same time many others believe that it is within our best interest to unload the company while others are still interested in taking it on. Either way, it would certainly have a big impact on the US car market as it would leave Ford as the only prominent US owned and manufactured automaker left. It will certainly be interesting to see how Ford's sales will be affected by this event and what direction they will take in the future.
Morgan Duff
http://online.wsj.com/article/SB10001424052748704206804575467992376504722.html?mod=WSJ_auto_MiddleSecondHighlights
First of all, the bailing out of GM is an epic failure. GM was bailed out with our money when it should have collapsed. When a company is destined to fail and is no longer making money, it should be allowed to fail. No company is too large to go under.
ReplyDeleteGM should have failed. I think overpaid union workers were a huge factor in GM’s failure. This is not good for our economy. The demanding union workers got paid too much for what they did. We should not financially support GM with our tax dollars. Yes, there are American workers that may lose their jobs. Yes, it is unfortunate.
Consumers who buy only American cars to help create jobs for Americans are going to feel their loyalty was betrayed by the United Auto Workers (UAW). However, government should not be interfering. A free market will correct the problem over time. The problem started with the government bailing GM out.
“Sovereign-wealth funds and other overseas investors hold big stakes in many major U.S. companies. But the issue is touchy for GM, since U.S. taxpayers poured $50 billion into the car maker last year to fund its bankruptcy reorganization. The Treasury would begin to sell its shares through the IPO.” Again, the problem started when we, as U.S. taxpayers, poured money into GM.
Irene Kalis
http://online.wsj.com/article/SB10001424052748704206804575467992376504722.html?mod=WSJ_auto_MiddleSecondHighlights