GM

No doubt, you've read in the newspapers or seen on the boob tube that General Motors has "paid off" it's government loans. Great! It has already paid off the bailout money from the US government. Wow!

But the story is a bit different than that. Thanks to Robb for sending the Forbes article detailing the "pay off."

Now, if you were a bit like me, you wondered how GM, if it wasn't yet making a profit, was still losing money, it could pay off its debt/loan and so early to boot. Strange, but wonderful. Except....

GM paid off the debt with other money from the federal government. It didn't pay off the $46 billion or so. It only "paid off" about $6.7 billion. The rest of the "loan" is actually equity the government bought into GM. It will be "paid off" if and when GM can come up with another $40 billion and the government decides it wants to be paid off, that is, sell its equity. So, GM didn't really "pay off" its loan? There's more.

Part of the bailout money allowed GM to establish a slush fund, an escrow account, of about $13 billion. The return of the $6.7 billion, touted as "paying off," came from the escrow account, the slush fund. Oh, so GM paid off the government loan by using other government money? It seems to be so. Isn't that sort of a giant ponzi scheme? Let's see, you owe me $1000, but can't pay it. So, I loan you another $1000 to pay off the first loan. Oh, OK. And, as usual, there's more.

With GM now able to boast that it paid off the loan earlier than expected, "years earlier," it can now seek other gov't loans, er, grants, at even lower interest rates. Hmmm...curioser and curioser.

And I have received several e-mail reports from a Michigan Senator and Congressman lauding the early GM pay offs. Are they aware of all this? Are they aware of all this--and there has to be gov't collusion, understanding of what's going on, doesn't there?--and still bragging how they are conducting investigations into Goldman Sachs?

I guess the question now is "who's regulating the regulators?"

Thanks, Robb.