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  • GM Bailout Demands Grow $12 Billion in 2 Months

    chrysler090218.jpg

    An hour later than promised, General Motors submitted a restructuring plan to the Treasury calling for an additional $17 billion in government funds, on top of the $13.4 billion promised by the Bush Administration less than 2 months ago. Today’s request, if granted, would be $12.4 billion more than the company asked for in its last turnaround plan, sent to Congress in early December.

    In its 177-page summary, G.M. promises a return to profitability in 2 years via a “comprehensive” transformation of its business.

    To achieve that goal, the plan calls for “considerable sacrifice from all stakeholders,” including bondholders, employees and labor unions, and dealers. The company was forced to admit, however, that is has been unable to strike deals with the United Autoworkers or the holders of its long-term debt.

    And cutting ties with dealers, a key part of restructuring sales operations, could take years and cost billions of dollars, due to restrictive franchise laws at the state level.

    Even if it manages to achieve all the concessions in its plan,  G.M. does not rule out requests for additional taxpayer dollars, which it may require depending on market conditions and the pace at which it is able to cut costs and reorganize.

    The government’s initial “loans” to G.M. and Chrysler, totaling $17 billion, are unlikely to be paid back. Additional loans made outside of bankruptcy could suffer the same fate.

    (Image of Chevrolet Corvair Lakewood CC licensed by Flickr user daveseven.)

    Posted in Economics [slideshow_deploy]

    12 Responses to GM Bailout Demands Grow $12 Billion in 2 Months

    1. Spiritof76, New Hamp says:

      GM demanding more bailout cash should not be a surprise. The most humane thing to do is to let GM and Chrysler go bankrupt, get rid of the Union shackles and restart outside the US. I don't understand why anybody would even want to start an automotive business in this country at all with all the punitive and oppressive government regulations of all stripes.

      If I were running GM, I would announce that GM will be filing Chapter 7 and liquidate all the assets. I will then sell the brand to a company set up in Abu Dhabi with plants in Europe, Asia and Brazil. Close all the plants in the US. Let the socialists figure out how to make cars and sell them.

      When card check is forced down our throats, the whole industry will collapse.

    2. Ozzy6900, CT says:

      The Corvair pictured in the article is a great visual description of GM's failure as a company. There is no doubt that no amount of bail out will be enough to keep failed companies like GM above water. A failed business deserves only one thing – liquidation!

      The American Taxpayer is being asked to get GM back on their feet (something that will never happen) and then pay top dollar for overpriced junk (as the photo depicts). Then when GM can't make the business work, they just go to Washington D.C. and ask for more….. "Please sir, may I have more porridge?" It's pathetic!

    3. logan says:

      Maybe GM should include a DVD of ‘Pearl Harbor’ with each new vehicle.

      It was American manufacturing that helped the US win WWII. It also saved alot of American lives.

      Maybe, if it had gone the other way. Alot of these naysayers would not even exist. They would have no parents or grand parents.

      GM cars dont last?

      We have..

      2001 Cadillac DTS 182k miles.

      2003 Saturn VUE 147k miles.

      Just bought a new 2009 Chevrolet Traverse. (01/03/2009)

      Other GM's we have had..

      1992 Pontiac Bonneville. 232k.

      1993 Cadillac SLS. 224k.

      1987 Buick turbo. 230k.

    4. Conan Miller, Union, says:

      The Auto Company bailouts have more to do with Democratic payback to the Unions than jobs, despite the flapping lips of so many in Congress and the OBamamanics. A well planned BKRTCY need not mean the end of GM etc…but it would mean an end to the burden of the legacy costs and Union domination of the future!

      Will the bailouts work? I doubt it, because in the end bad politics will prevail and when annual US Auto production hits below 9 million the jobs will be lost anyway and we will have wasted billions of public money for nothing!!

    5. Duane Phinney Pensa says:

      Conan Miller is 100% correct. This is nothing but union payback.

      GM during the good times was 60 billion in debt, they owe the unions 20 billion now. Chapter 11 is their only hope.

    6. Sliver, Wisconsin says:

      Screw GM let them fail, since their CEO or somebody in GM told congress that they should raise gas prices to $4/gal because they were selling small cars before. I have a GMC pickup which is a very good truck approaching 200k but since that comment I will buy either a Tundra or a Ford because they didn't take a bailout as of yet.

      I will never buy another GM product,never ever.

    7. Hozro1, Oregon says:

      The Automobile manufacturers are at some fault but not for the last three decades or more.

      Once again it started with Congress doing what it does best, jumping to conclusions!

      Lead. Lead in gasoline was bad for those who pumped gasoline. It could get on your hands and you could breath it. Of course the study only showed the small potential in mice, with no actual basis in historical fact, as with diesel.

      So Congress said,"Get the lead out!" And out the lead we got. What we forgot was that lead made for a cleaner burning fuel with more energy per gallon than non-leaded. Old Ramblers consistently got 36 MPG. Lots of family cars and station wagons and pickups got over 25, 26 MPG.

      Congress never once consider personal protective equipment for the gas pumper, such as gloves, (which they wear here in Oregon), and if you really happen to live in a dead air space, a filter mask.

      Anyway. we took the lead out, added alcohol and got 2/3 the milage! That meant even more CO@ going into the air, more grime and slime in the engines!

      With the technology we have at this time, putting the lead back would allow American Automobile makers to outdo all foriegn makers, in performance, milage, longevity, everything, because we have better materials, especially in the metals!

      Parts for american cars are always half or foriegn, and I mean Japanese, because we use the same starter/ alternator and such for years and years, and they can be rebuilt, making lots of ,"Cottage Industries." Japanese cars, on purpose change those components every year, without expense because those parts are made in China, so that you cannot interchange parts! The money is in the parts.

      Besides, I'm an American, I like to buy American. You need a nice unbrella? buy one at Walmart for five bucks. Only costs them four bits, its from over seas. Walmart could buy from an American Manufacturer, but that same umbrella, propably better made, would cost the company three dollars! They only make two dollars compared to four fifty.

      Smart business, but is it good Americanship?

      You can brag about your Hondas, Toyotas, Mazdas and all that you want and how great their fancy options are and the wonderfull milage, but my wife and I drive a 1998 Lincoln Contiental that gets 21 to 22 MPG in the city qand 25 to 27 on the highway, and in the dessert, and certain States, at 100- IT GETS 36 TO 38 MPG. And it can pass your little overseas car in a heartbeat, and will probably last another ten to fifteen years or more. We just keep her serviced. And it has all the fancy gadgets too!

      So tell your Congress people and the president to stop lieing to us, fix the problem that they created, and let's take back America!

      Hozro

    8. Mike, Hickory, North says:

      There now! You see?

      Socialism works such wonders! Ain't Socialism wonderful? Not!!!

    9. Eugene Hoffman, Hous says:

      The decision to bailout the auto industry, or not, is a very complex issue; there are many factors that have caused the big three to be in this situation. Obscene regulations for fuel efficiency and the effective performance for payload ratios are costly, especially the demands required by of the almost bankrupt state of California: imagine that. The return to gas guzzling, very heavy and large vehicles was a mistake; when the cost of fuel went up the demand for these units dried up. Executive pay and golden parachutes are at a level that is outrageous, and finally union negotiated retirement packages were and still are unsustainable. We need to manufacture as many goods in our Nation as possible, losing this major cog in our GDP would hurt not only the economy but families as well. Restructuring is the answer, and if taxpayer money becomes the only viable option to repair the damage caused by greed, the government, Management, the UAW, and the EPA, then restrictions on executive compensation and employee wages must be enacted until the taxpayer is payed back with interest. We must remember that this is our MONEY that Washington is spending.

    10. ANDREW, OHIO says:

      AMERICAN AUTOS GOT A LOT OF HELP FOR THEIR PROBLEMS. OUR GOVERNMENT GOT IN THE WAY. BIG TIME. RESTRICTIONS ON EVERYTHING. UNIONS. BIG TIME. WHEN MANAGEMENT IS HANDCUFFED FROM OPERATING AND FIRING THOSE THAT ARE NOT WORTH A SH..,. HOW CAN A COMPANY GROW AND PROSPER WHEN THE WORKERS DETERMINE HOW THE BUSINESS WILL WORK. WHEN THEY ARE ALLOWED TO SHUT DOWN PRODUCTION. GET PAID FOR SITTING HOME. REMINDS ME OF GOVERNMENT PAID JOBS AND THE RAILROAD. GOVERNMENT NEEDS TO BACK OUT OF EVERYTHING BUT TO KEEP US SAFE.

    11. Mike Sez says:

      GM or any other company should not receive a bailout. They should be liquidated or sold to the lowest bidder and allowed to reinvent itself with new management and new salaries/commissions more competitive with other companies.

      Banks are too powerful, regulate the hell out of them, set the bar high enough for personnel to qualify for a loan to ensure a high rate of successfully paid off loans. Those who can't qualify, not my problem, be a renter or leasor. Maybe this will motivate you slackers to budget better or read the fine print moron!

      Lost your job, get another one, suck it up!

    12. Mike Sez says:

      GM or any other company should not receive a bailout. They should be liquidated or sold to the lowest bidder and allowed to reinvent itself with new management and new salaries/commissions more competitive with other companies.

      Banks are too powerful, regulate the heck out of them, set the bar high enough for personnel to qualify for a loan to ensure a high rate of successfully paid off loans. Those who can’t qualify, not my problem, be a renter or leasor. Maybe this will motivate you slackers to budget better or read the fine print on your loan documents!

      Lost your job, get another one, suck it up!

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