No gain but we avoid a lot of pain

Here's a simple bottom-line answer to the question of whether you, the new taxpayer-owner of General Motors, will make an investment profit on your new $50-billion, 60.8% stake in the company:

No.

But in the wonderland where politics and economics meet and marry, things aren't that simple. There the question boils down to this: How much is it worth to save the U.S. economy? The answer may well make the GM deal look like a bargain, for the choice may be between the nation's making this investment now and facing a future with a hollowed-out industrial midsection bereft of factories, commercial strips and households.

Whether the government's novel venture into industrial ownership will save the economy, or whether it's even a necessary component of an economic recovery, are questions certain to be widely debated in the coming months while GM hares its way through an expedited bankruptcy reorganization.

Some will say the government has no place meddling in a company's destiny under any circumstances. One argument is that it lacks the mind-set to succeed in the private sector.

Some people are uneasy about compromising the traditional independence granted private enterprise in the U.S.A. This isn't that much of a "tradition," though, when you consider the long history of federal lifelines thrown to drowning industries. The government bailed out the airlines after 9/11, gave loan guarantees to Lockheed Aircraft Co. and Chrysler Corp. in the '70s, and propped up banks, railroads and industrial firms of all descriptions during the Depression.

These government efforts aren't generally based on Warren Buffett-style investment considerations.

The GM bailout certainly isn't. In the simplest mathematical terms, when all is said and done the U.S. government will have spent about $41.2 billion to acquire a 60.8% stake in the new General Motors. (The feds will have contributed a total of about $50 billion in bailout financing but will hold $8.8 billion of debt and preferred shares that will, hopefully, be repaid or redeemed someday.)

The idea is for GM to emerge from bankruptcy by Labor Day, ready to rebuild its value in the stock market's eyes. But the taxpayers won't break even on their stake until the stock market values the new GM at about $68 billion, at which point the government's shares could start to be sold off at a profit.