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Have You Checked Your G.M. Stock Lately? (Yes, You're Still a Shareholder)
Will taxpayers see more losses on their GM investment?
By Bob Stokes
Tue, 05 Jun 2012 16:45:00 ET
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General Motors was the world's largest company for decades, a powerhouse that symbolized American manufacturing and economic might.
 
But that corporate glory is in the past. The automaker's economic slide was long in the making.
 
By November 2008, GM's future was so precarious that the company turned to the Federal government for help. But Congress rejected GM's bailout request.
 
Soon, however, the executive branch did fork over $15.4 billion of Troubled Asset Relief Funds to General Motors, an amount which eventually grew to $49.5 billion. In other words, taxpayers bought a stake in GM.
 
In 2012, we the people still own 500 million shares. And General Motors' share price needs to reach $51 just for us to break even. But...
 
At GM's Monday closing price of $21.11 a share, the government would lose $16 billion on its $49.5 billion bailout.
The Detroit News, June 5
 
Earlier this year (February 14), a CNNMoney article noted that
 
GM shares are predicted to hit $32 within a year, according to analysts surveyed by Thomson Reuters.
 
Needless to say, those analysts were a little off.
 
The government obviously hopes that taxpayers recoup their GM investment through economic growth. The Detroit News article also reported that the assistant Treasury secretary said "We have to balance maximizing recovery for the taxpayers with the speed of exit."
 
But is Treasury counting on a recovery that will not arrive? Here's what the March 2012 Elliott Wave Theorist said:
 
[Economic] indicators of coming change are flashing bright red.
 
The Great Crash won’t be over until trillions of dollars worth of credit go into default...Total credit peaked in 2008.
 
The General Motors website reports (May 3) a Q1 net profit of $1 billion. But stock market prices are not governed by fundamentals. During the past two months GM stock has declined. The main indexes have tumbled too. And keep in mind, the stock market leads the economy.
 
So what do we see ahead?
 
Get our latest outlook for stocks and the economy in our new June Financial Forecast. This new issue is 10-pages long and presents 12 insightful charts. Here are the chart titles:
 
  • The Dow's Wave Structure
  • Total World Domination
  • Momentum Takes the Low Road
  • The Lesser Fool Theory
  • The Bust Taking Charge
  • The Mania Era Loses Its Pop
  • Deflation's Vise Tightens
  • Gold's Short Shelf Life
  • The Dollar Takes Flight
  • A Double Top for Debt Bubble
  • Bubblenomics 101: This Never Ends Well
  • Commodities Reverse After a Fibonacci Retracement 

Tags: bailouts, conquer the crash, debt crisis, deflation, economic indicators, Elliott wave, fundamental analysis, gross domestic product (GDP), stimulus package, stock indexes, Troubled Asset Relief Program (TARP), Troubled Asset Relief Program (TARP), U.S. Treasuries
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