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  • GM to Creditors: We Won't Pay

    General Motors today took one more step toward what is increasingly looking like an inevitable bankruptcy when its chief financial officer declared that it did not plan on making a bond payment due to creditors on June 1. That’s also the date given by the Obama Administration to the troubled company to get its house in order or to declare bankruptcy. While GM made some hopeful noises about expecting to reach an agreement on a debt-for-equity exchange with creditors by that date, the CFO, Ray Young, was more blunt, calling a bankruptcy “probable,” and at one point referring to the point “when” GM emerges from bankruptcy.

    A few months ago, this would have been shocking news. But today’s announcement caused barely a stir. The real question now is not whether there will be a bankruptcy, but to what extent the Obama Administration will try to direct the process, and control what kind of car company will emerge. Importantly, the Administration will likely continue the flow of federal funds during the process, giving it a big role. And the President continues to opine on how he thinks the firm should proceed. In a statement today, he stressed that GM and Chrysler must plan on building the fuel efficient “car of the future,” i.e. cars the Administration likes.

    Emerging from bankruptcy may be the least of GM’s problems. Emerging from the control of politicians may be far more difficult.

    Posted in Economics [slideshow_deploy]

    3 Responses to GM to Creditors: We Won't Pay

    1. Earl R St. Pierre Springfield Massachusetts says:

      We have to get this government out of the way. This interference on everything from global warming to the automotive company bailouts will be the undoing of the United States. I personaly think and thus feel that I have lost alot of my simple everyday
      freedoms I have enjoyed in my youth.It gets some what frustrating
      because all I hear is talk but no action. All I hear is what the Dems are doing no matter who is in Power. President Bush was a disapointment as far as his social policies were concerned.The Republicans have to be decisive and believe In what our founding fathers had in mind and subsequently wrote into the Constitution Of this great nation.It is not about getting reelected, It is about Patriotism and doing what is best for the country and its legal citizens.Self reliance also should be part of the equation for its citizens.

    2. cathie Milwaukee wi says:

      Wouldn't it be nice if we could all just say "Nope not gonna pay you back" GM Chrysler should be ashamed for taking OUR money knowing what they knew. I'm sorry I own one. It will be Ford from now on.

    3. Bart, Michigan says:

      I own 2 Fords, 2 Chevy's, and 1 GMC truck. My next car to replace the SUV was going to be a Cadillac. I will Buy a Lincoln and Replace my Sierra Pickup with a Ford 150. Never again will I buy A Government Motors vehicle.

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