Can GM repay our $50 billion loan?


On June 2, a day after it filed for bankruptcy, I estimated that the new General Motors would have to reach a value 20 percent above its all time high in order to repay the $50 billion government loan it received to keep it from having to liquidate. A month later, The Washington Post is out with a similar analysis, which agrees almost to the penny with my estimate. My conclusion then was that reaching this value is unlikely and that our money is mostly gone.

I concluded then that the new GM would need to be worth $68.7 billion in order to pay back the $50 billion loan the U.S. will make to GM. How so? Since $8.8 billion of the $50 billion will remain in the form of loans, the U.S. will convert $41.2 billion worth into its 60 percent equity stake.