they are clearly a garbage company that has been totally mismananged and deserve to go under. the only reason to keep them afloat is to prevent the huge number of job losses. i can't see pres. obama letting a union stronghold like GM fold but he should. who knows how much it will cost to reform this company if the govt tries to bailout this piece of garbage. http://money.cnn.com/2008/11/07/news/companies/gm/index.htm?source=yahoo_quote GM: Almost out of cash No. 1 automaker posts huge loss - says it has made case to Washington for rescue. November 7, 2008: 11:39 AM ET NEW YORK (CNNMoney.com) -- General Motors shook an already embattled auto industry Friday as it reported a huge loss that was much worse than expected and warned it is in danger of running out of cash in the coming months. GM, the nation's largest automaker, reported it lost $4.2 billion, or $7.35 a share, excluding special items. That's up from the loss $1.6 billion or $2.86 a share it reported a year earlier and was far worse than the forecast of analysts surveyed by earnings tracker Thomson Reuters, which had forecast a loss of $3.70 a share. But the most shocking news came in its statements about its cash position. GM said it had burned through $6.9 billion during the quarter and warned that it "will approach the minimum amount necessary to operate its business" during the current quarter. In addition, the company said that that in the first half of next year its "estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve." The report was by far the most grim assessment by a company that has insisted it is not considering filing for bankruptcy court protection. While the release did not mention the threat of bankruptcy, the outlook appeared to raise the possibility of such a dramatic step. The company announced a series of additional job cuts and spending cuts designed to help it improve its cash reserves by $5 billion. But it warned even those steps would not be enough without a turnaround. GM said that it may need help from the federal government. "The company has engaged in discussions with various U.S. federal government agencies and congressional leaders about the ... the need for immediate government funding support given the economic and credit crisis and its impact on the industry, including consumers, dealers, suppliers and manufacturers," according to a company announcement. Shares of GM (GM, Fortune 500), whose trading was halted ahead of the announcement, fell 16% after they resumed.
just saw on CNBC (on tv) that they're suspending merger talks with Chrysler to focus on financial health. saw a suburban on a lot at Kirkwood @ Dairy Ashford with a sign that read: 77% off MSRP!!!
They should, but GM chose a helluva time to go bust. So in principle yes, but as we've seen with Lehman, it'd be disastrously risky just to arbitrarily let them go. I hope they bury it and never look back. Talk about a bad idea upon more bad ideas.
and it's more dangerous to have the policy where you allow horrible companies to get bailed out. too big to fail needs to end...it is disgusting and anti-capitalist.
there is a reason GM is failing and its not because of their innovative ideas and flexibility. something will step in to fill the void.
This is going to be an interesting decision. On one hand, it's a severely mismanaged company with long-term problems regardless. On the other, we just spent $1 trillion bailing out the financial industry, much of which was also mismanaged. A GM bailout would cost a tiny fraction of that. While there's no systemic financial risk losing GM, you have a jobs risk, with potentially several million jobs gone there between GM, it's suppliers, and then the ripple effects. So if the purpose of the financial bailout was to prevent the economy from falling off a cliff, then a much cheaper GM bailout serves the same purpose.
Just wait. Some sovereign fund from Abu Dhabi is going to fly in and give a huge capital investment in the automotive sector, and provide some much needed liquidity to GM and/or Ford. The UAE is desperately trying to diversify its economy, and they can buy a stake in auto at bargain prices.
Let it die. It'll hurt. But, people won't stop buying cars. The other competitors will take that market share and hire some of the people. But, obviously it'll hurt.
We can't just "let it die." That's simply not an option. That will absolutely destroy the entire supply chain, even over to tech and industrial. Then the communities around those areas will plummet as well. IT IS UGLY. The govt needs to step in and provide a bridge loan to F and GM so that they can continue operations -> it's to the point that they may not have enough cash to continue operations.
But which politician will step up to the plate? Who would resist pulling some arbitrary moves and intervene for some strong lobbies? I love how the French are reacting to the financial mess. It's the end of laissez faire capitalism! Yeah, but the company has rotted to the core. Car companies can run in America, but the relationship the Big Three has with unions should be washed away. WSJ article about the mess.
It's borderline anti-capitalist, but companies like AIG were bailed out due to the "domino consequences" of their failing. Lehman was allowed to fail because their impact could be contained, and the bankruptcy code could wind them down without having a complete worldwide financial meltdown. GM would seem to me more in the boat of Lehman, but the job losses would be a tough political issue to stomach. I agree it's a crap company.
Unfortunately, looking back, I think the Lehman damage was far more than people anticipated - that's what started/accelerated the spiral of death in September and October. Even Lehman, relatively small, had massive ripple effects.
its not even the political damage. Way too many companies in the US and abroad are reliant on GM. Their supply chain is so gigantic that millions across the world will be out of a job. GM is garbage but I agree, letting it die would be even worse.
I do not want GM to continue to live, especially on the government dole. If it kills a bunch of companies in the supply chain, leaves thoudands upon thousands of people jobless, then so be it. GM is so big that that's going to happen eventually; why not now? If we're spending money, I'd rather spend it on getting workers retrained and in new jobs then to prop up an untenable company. If we really can't let it die, I'd want it completely disfigured. Break it apart into new companies, with new names, new managements, new unions, new contracts, everything. If GM is "too big to fail" then it has no business being that big. We may want to start looking around at healthy companies that we can't afford to have fail and do something to make sure we can afford it.
If they rescued Lehman bear stearns-style and protected it's creditors, then we wouldn't have needed the massive bailout then (probably months later) to prevent the money markets seizing up from panic runs. Then again, Bernanke/Paulson's mistake probably allowed Obama to get elected easily. GM's risk's and consequences are much more different and the damage is more upfront to Main Street.
They shouldn't, but I think they will. I know it hurts to lose a longtime US company like that, but this is the time for change. It was bound to happen eventually to some major manufacturer. Bad luck, bad business plan, and better competition will lead to bankruptcy.
it just pisses me off to no end when i hear ceo wagoner basically use the systemic risk argument when he is talking about GM and it's potential failure. he is using their interconnectedness to the u.s. economy as leverage to get the govt to bail them out from their own mess.
I think GM only has enough for one more year of operations. To some people's arguments to let them fail because another company will eventually take their places - it's true. But the impact of job losses will be immediate and lengthy. These employees can't wait that long, and the opportunities for employees at large are already small. I don't like this bailout. This entire situation is getting ridiculous with all the bailouts. But we may be forced to do what's best (bailout) instead of what's right (nothing).
Bankruptcy as in re-org? Why not? The US automotive industry is lazy and has worried about more cup holders rather than innovating and building more efficient cards. The Chevy Volt is a good start....but a bit too late. DD
