Prepare for the worst, hope for the best.

It's somewhat cliché advice offered by almost all financial advisers — and both the federal and Ontario governments are taking it to heart when it comes to the bailout of General Motors.

They are putting a little more than $10-billion into the floundering automaker.

Once the dust settles from the restructuring, Ottawa and Ontario will hold a $1.3-billion loan to GM, fistfuls of preferred shares and a 12.5 percent ownership in the company.

What value are Ottawa and Ontario placing on these assets for this year?

Almost nothing.

Although officials haven't said how much they expect to lose, both levels of government are expected to be adding much of the cost of the bailout to their already substantial deficits, meaning they are preparing for GM to default much of the loans, for the shares to be almost worthless and for themselves to be likely left unable to find any buyers for their ownership stake.

In other words, preparing for the worst.

Now, if GM manages to turn things around and return to profit someday, then the two governments stand to make a windfall of revenues in whatever year they decide to cash in.

If the full value of the bailout is written off this year, any returns will be added to the bottom line in future years.

From a political standpoint, both governments have decided to post astronomical deficits this year in the hopes a revived GM will help them return to balanced budgets in the future.

— James Fitz-Morris