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(Hat tip:&#160 NewsBusters – damn, Jodi Miller is hawt!&#160 &#160 )

By now, Denizens, most of you have seen the sickening visage of one Ed Whitacre, new chair-type-critter of Government Motors, touting the “fact” that GM paid off – WITH INTEREST, BAH GAWD!!!&#160 (a little Good Ol’ JR&#153 lingo there) and wrenching his arm from patting his own back.&#160 (There is a similar video below the fold.)

Obviously, the Ayatollah and the rest of Al-Obambi would positively lurrrrrrve&#160 to use this to beat the GOP and the American people over the head with this – “See?&#160 Gummint bailouts, taking over on-the-verge-of-failure and handing them over to unions DOES work!!!” – which in turn would give them grist for their particular financial-sector-reform retardedness.

But something smelled awfully&#160 damned fishy in Denmark, don’tcha know.

See, I’ve had, albeit somewhat indirectly, first-hand experience with this Ed Whitacre fellow.&#160 As many of you know, I was previously employed by what Denizen & fellow blogger Alan K. Henderson lovingly (lovingly?) calls the “Death Star” – i.e, AT&T Wireless.&#160 I was there the day Ed Whitacre spun us off into our own little company, then put the sorriest-assed excuse ever for a management team in charge of the thing.&#160 I watched as AT&T Wireless spiraled down the tubes, only to be taken over by Cingular Wireless.

I could only sit idly by and suffer as they brought Chris Corrado, Chief Layoff Officer, in – probably with the approval of Ed Whitacre – and started ending the AT&T/Cingular careers, first of my friends, then mine.

So you’ll understand if I cast somewhat more than a jaundiced eye towards anything Ed Whitacre has to say.&#160 Particularly when it has to do with Government Motors – from whom, so help me God, I will never&#160 buy another vehicle, period, end, stop.

Well, turns out there was more to the Whitacre announcement of the loan paybacks than met the eye.&#160 Much more:

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn’t, the company, which couldn’t raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, “The GM Bailout: Paid Back in Full,” most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate–a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company–arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion–the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

Oh, but that’s not the half of it, sportz fanz.

But wait! Even that’s not the full story given that GM, which has not yet broken even, much less turned a profit, can’t pay even this puny amount from its own earnings.

No shit.&#160 Don’t let ’em fool you, Denizens – GM isn’t doing that well in sales.&#160 Ford, for example has (if memory serves) lapped ’em at least a couple times.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money–government money–to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development–although hardly one worth hyping in ads and columns–if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government’s tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new–and bigger–DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM’s government debt–not pay it back!

GM boasts that, because it is doing so well, it is paying the $6.7 billion five years ahead of schedule since it was not due until 2015. So will there be an accelerated payback of the rest of the $49.6 billion investment? No. That goal has been pushed back, as it turns out.

In order to recover that investment, the government has to sell its equity. It plans to do that only when GM becomes a publicly traded company once again. GM was hoping to turn a profit by the end of 2010 and float an initial public offering this winter. However, GM Chief Financial Officer Chris Liddell, when queried about that timeline a few days ago, demurred. The offering will be made, he said, “when the markets and the company are ready.”

So in other words, Denizens – Ed Whitacre’s lying through his teeth.&#160 Government Motors hasn’t paid back shit.

Yet another reason never to buy another Government Motors vehicle.

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