Stocks Slip, Taxpayers Could Profit from GM Bailout
Wall Street closed last week at its highest point in nearly four months. Unfortunately, that upward momentum was not able to keep markets from slipping at the opening bell today. According to CNNMoney, investors are trying to make the best of a recent flurry of corporate deals. Nevertheless, the lackluster push this morning is directly related to a general lack of corporate news. Stocks tend to swing upward when Wall Street is in the news.
One of the only major deals on the horizon is a potential move from Arkansas-based Wal-Mart. According to Bloomberg, the world’s largest retailer is eyeing a potential $4.6 billion deal to buy Massmart Holdings and enter the South African market. The deal would make the largest retail chain in the world even larger, and give it a strong foothold in one of the strongest and most viable economies in Africa. The move is not necessarily an altogether good thing for the United States. Wal-Mart is expanding overseas because demand and growth are still so lacking in their American domestic market.
In other news, the government is making a renewed effort to exit two of the largest and most controversial industry bailouts.
According to CNNMoney, taxpayers may indeed turn a profit on the huge investment made in General Motors. A year ago GM was literally worthless – it was actually worth less than that in certain areas. Today, it is worth more than $60 billion and seems to be on the rise. The company still needs to grow by another 10 percent for the taxpayers to break even on their $67 billion investment.
Elsewhere on the bailout market, the Treasury Department is poised to announce plans this week to finally exit the embattled former insurance giant AIG. According to Bloomberg News, the Treasury is looking to liquidate its $49 billion preferred stake in the company through common stock sales beginning in 2011.
The company still has a long way to go to make up for massive corporate losses and an astronomical bailout from the American taxpayer. However, it does seems poised to get there eventually. Just two years ago some were unsure whether or not the government would ever recover the costs. Now, it is just a matter of time.