The Money Pit

The fact that General Motors Corp. will almost certainly file for bankruptcy protection in the coming days comes as no surprise. The mammoth automaker is burdened by so many debts that it can’t continue without significant action.

What gets me is the amount of money the U.S. government is willing to throw at the company — another $50 billion. I recognize that there is a lot of industry and a couple hundred-thousand jobs tied to GM, but the company is bound to lay off thousands more as it restructures in bankruptcy. And who’s to say that the government doesn’t throw even more money at the company a few months down the road? Where’s the limit?

Back in November Congress grilled the automakers’ CEOs for days to figure out how they planned to make use of $17 billion that was ultimately doled out, and here there are no hearings, no solid plans put forth. This seems like a classic example of “too big to fail.”

Tags: bailout, bankruptcy, fail, gm

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Comment by David Ruggles on May 28, 2009 at 12:13pm: I get the idea that there is no limit. I guess they feel that preserving the American auto business is worth it in the long term. Having said this, Honda, Toyota, MB, etc. manufacturer here so I don't know what the big deal is. And Chrysler saved will be owned by Fiat. I do understand that GM in liquidation is hard to comprehend given the ripple effect throughout the supplier chain. I've given up trying to predict or justify any of this. I'm just sitting and watching.

I found it interesting that in a court document Jim Press, Chrysler President, said he didn't feel reducing the Dealer count would help Chrysler's viability. Restructuring specialists are running the show, seemingly without listening to any advice from car people. There is no model to go by so its "by guess and by golly!"