Sunday, April 25th, 2010 | Author:

Well, not exactly, despite all the TV ads to the contrary.  As near as I can figure out from the Forbes article, the numbers look like this:

Uncle Sam gives GM $49.5 billion: $6.7 billion loan @7% interest + balance as purchase of 60.8% equity in company.

Uncle Sam puts an additional $13.4 billion in GM’s escrow account during bankruptcy.

In my math-challenged mind, this means the taxpayers have forked over a total of $62.9 billion.  (This does not include the $9.5 billion that Canada  “invested.”)

So how much of that $62.9 billion has GM “repaid?”  The initial $6.7 billion loan.

But … they need more money.  Knowing that another bailout would be less than popular, they’ve applied to the DEC for a $10 billion loan – at 5% interest, 2% less than the loan they just “repaid.”

As Forbes so succinctly put it:

In short, GM is using government money to pay back government money to get more government money.

If you or I tried this, 1) we’d call it refinancing, and 2) we’d get arrested.

Reality Check:. Because a billion has nine zeroes here in Amerika, I’ve used the” billion” word like the government does.  They do it to make it look like a smaller number.  I did it because if I typed it out each time, this post would be too long.  But here’s what it looks like just once:

1 billion = 1,000,000,000

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2 Responses
  1. Jim Wetzel says:

    Excellent! Thanks for looking into this — I’ve been meaning to since I started hearing radio ads last week, touting this “payback with interest.” Somehow, I was pretty sure it was completely bogus. But there’s nothing like having the actual numbers. If our leaders weren’t innumerate, they’d use scientific notation to tame those big numbers. “We gave GM $6.29E+10 of your money.” And the victims of American public “education” would say, Huh? What’s that mean? Hey, see if Ultimate Fighter’s on yet!

  2. akagaga says:

    Somehow, I was pretty sure it was completely bogus. Oh, you skeptic, you. How can you doubt what Government Motors tells you?