I’m glad this is working out so well


I’m glad this is working out so well

GM is reporting that it lost “only” $1.2 billion in the third quarter, showing that as a sign of progress. This after the US government swept in, fired its CEO, forced it into bankruptcy, cheated its bondholder, and shored up the company to the tune of $52 billion. The Chief Financial officer says that the uptick in revenues and down tick in losses can only be used as a harbinger of a “trend” because the accounting procedures used don’t meet the test of normal accounting practices. In addition:

The company also says it will begin repaying $6.7 billion in U.S. government loans with a $1.2 billion payment in December. It could pay off the full amount by 2011, four years ahead of schedule, but the money will come from funds loaned by the government.

Is there anyone out there that thinks that this company can possibly survive? Particularly since the United Auto Workers now own a large part of it.

Sort of reminds me of when Arthur Skargill, leader of the coal miners in the UK, demanded a mine be kept open. The problem was there was no coal left in the mine. He didn’t care.

Just think. If GM had gone under a year and a half ago, the other car companies would be picking up the slack, most of its workers would be working for them, and its assets would have been sold to companies that could actually make cars at a profit. But no. It’s just too large to fail. It would seem to me that one of the requirements of “coming out” of bankruptcy be that the company must operate at a profit. But then, that’s impossible. With its legacy retirement program problems and untenable union demands, it has no where to go. Its competitors have either cut better deals with the unions (Ford) or are non union (virtually everyone else except Chrysler). Their costs are much less than GM. I guess GM plans to lose money on every car it sells, but make it up in the volume.



Picture of John Van Horn

John Van Horn

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