General Motors - Not One To Say “I Told You So”

It’s not that I like to revel in the demise of an American icon, but politicians have got to face up the reality that most of America already has, which is the General Motors (GM) model is untenable and we must allow it to fail and restructure under more sustainable terms. In my article in December, Congress Should Allow GM to Fail: Here’s Why, I laid out the rationale for why this is a lost cause and how a structured Debtor in Possession transaction that would minimize the net pain to incurred as a result of this unfortunate ordeal for everyone from workers to taxpayers.

$30 Billion in Total Aid Requested Today

GM came back today seeking an additional $13.4 Billion in new aid on top of the $16.6 Billion they already received with the promise of closing 5 more plants and laying off 47,000 additional workers. Some other key points:

• Claims to be able to return to profitability in two years and fully repay its loans by 2017.
• Claims the UAW reached a tentative deal with GM, Chrysler and Ford (I’ll believe it when I see it if the union accepts significant concessions)
• GM claims bankruptcy would end up costing the government much more, to the tune of $100 Billion
• Considering selling or terminating the Hummer, Saturn, Pontiac and Saab brands

The current model is simply unsustainable as evidenced by GM’s latest request for another handout today. I have to admit when I’m wrong though. I had predicted that by Summer, GM would be back with their hands out…turns out they’re back and it’s not even Spring yet.

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Comment by Samuel

2009-02-18 03:45:59

Not one to point out ignorance, but the brand is SAAB, not SAAD.

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Comment by Everyday Finance

2009-02-18 07:27:31

It’s called a typo.
Thanks for that valuable contribution.

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