This ugly chapter in GM’s history has dragged its brand image through the mud, and the shares held by the Treasury have in part kept a lid on its stock price. That will cause a massive loss when General Motors Company (NYSE:GM) finishes buying its shares back from the government. Right now the U.S. taxpayer and the Treasury stand to lose roughly $11.4 billion on the transaction — a staggering amount. To put that in perspective, let’s compare what that number really equates to.
Envisioning $11.4 billion
- That much money in one dollar bills equals more than 12.5 tons, or more than 4,100 Cadillac Escalades.
- That much money is more than the GDP of Mongolia, more than 75% of Jamaica, and more than half of Afghanistan.
- That much money could pay all the Powerball winners in 2012 combined — 10 times.
- That much money could buy every single share of Chipotle Mexican Grill, Inc. (NYSE:CMG) — tempting, right?
- That much money can pay 228,000 salaried jobs earning $50,000 each.
You get the idea: $11.4 billion is a good chunk of change. Consider that last statistic again. That’s a large number of jobs this much money could fund, but consider that the money we lost in the bailout saved 1.4 million jobs through plant and supplier jobs. That’s more than 15 times the number of General Motors Company (NYSE:GM) jobs in the United States.
I’m not defending GM. It deserved to lie in the bed it made. However, the bailout did more than toss a lifeline to a drowning company — It helped the nation as a whole during a dire time.
Investors, consumers, and Americans
As investors, we had plenty of reasons to avoid Ford and GM as investments. Both companies had every red flag that makes investors hesitate — terrible management, poor-quality products, and zero sustainable profits or growth. Today, though, Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) represent valid investments and are undervalued because most people don’t realize that those three factors have completely reversed. People today are buying domestic vehicles because of value and quality, not because of the large cash incentives we saw in the past. Both companies are expanding into emerging markets for growth and are drastically improving their financial health.
As consumers, some will never get over the domestic vehicles they owned in the past, which turned out so disastrously. Detroit automakers lost some consumers permanently — that’s a fact. If you’re a consumer willing to give Ford Motor Company (NYSE:F) and GM a second chance, the vehicles now are significantly improved in all aspects — especially Ford’s. Consider that since 2010, Toyota and Honda are far ahead in vehicle recalls — Toyota with triple that of GM’s. On a different note, Ford’s Fusion is catching up to Toyota’s Camry in U.S. sales, which has long dominated the segment. The F-Series is again America’s best-selling vehicle, and the Escape is one of the hottest SUVs on the market.
As Americans, we’re watching as Detroit tries to rebuild itself as a city and an automotive powerhouse. Detroit’s Big Three couldn’t help themselves four years ago yet have now righted the ship — through different routes — and are now reinvesting in themselves and their city. It took me a while, but I finally agreed to put everything in the past and turned my Toyota Celica for an iconic American muscle Mustang — a decision I don’t regret.
Bottom line
Some of us will never give Detroit auto’s a second chance, and that’s understandable. I’m glad to be a longtime Ford Motor Company (NYSE:F) shareholder and recently decided to give GM a part of my hard-earned money. I don’t get emotionally attached to stocks, because you simply can’t in this profession. That said, I’m proud to be part of a Detroit comeback. Let’s hope it continues, and maybe one day we can put this ugly chapter in our rearview mirrors as investors, consumers, and, above all — Americans.
The article Why America Needs to Forgive General Motors’ Bailout originally appeared on Fool.com is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors and owns shares of Ford.
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