The General Motors IPO, the second largest ever, is arguably this decade's most hyped financial event. But it might also turn out to be this decade's biggest financial fiasco. Its timing is driven not by the financial needs of the company-- or the interests of taxpayers who are poised to get royally screwed--but the election-year needs of the Obama administration.
The IPO will allow GM to sell a part of the government's share to investors on the open market. But floating an IPO now is the Bush administration equivalent of declaring "mission accomplished" after two months in Iraq.
It is true that GM is in better shape than it was last year at this time. It has had two profitable quarters in a row and earned $1.3 billion from April to June in contrast to $13 billion in losses the previous year. It has eliminated many superfluous brands, and its remaining product line is getting high marks on quality and dependability. It has done quite well in overseas markets, especially in China, where GM compacts such as Buick Excelle, Regal and Chevrolet Lova have surpassed competitors.
