Government Motors
by Tom on May 29, 2009
in Market Musings
Alex Taylor at Fortune Magazine has a good overview of what’s happening with the GM problem. Let me throw a couple of thoughts into it:
- I’m amazed at how many people “assume” that having GM go through bankruptcy is going to be a relatively painless and “certain” outcome. It’s sort of like they don’t want to acknowledge that things could go differently than what the President says.
- There are very few people talking about the “right size” for GM. Do they need to shed 25% of their size? 50%? The focus is all on what the UAW will agree on and what the bondholders will agree on. While those are important, they are not the things that will impact the economy most of all. How many dealerships will get closed? How many plants will be closed? How many people will get laid off? How big of an impact will that have on surrounding businesses? How many people will lose their homes because of the bankruptcy?
- What happens if things don’t go the way the government says? Will we ever get our “investment” back?
- What happens if people stop buying GM cars?
- How will the 50 employee tool and die shop survive if GM “stiffs” them out of $500,000 they are owed for work already done?
The bankruptcy of GM has been talked about for a long time and it has been analyzed by the media forever. So much so that I think many people are not giving it the seriousness that it deserves and aren’t seeing the implications it’s going to have for the economy.
Tom Vanderwell
Bankruptcy will force lots of changes on GM – May. 29, 2009
With General Motors poised to enter Chapter 11 reorganization, the question arises: What will the bankrupt company look like and how will it be different?The answer to the second part is “a lot.” The answer to the first is nobody knows for sure, but it may not be pretty.
The government will own 75% of GM. Would buy a car from the post office?