GM Declares Itself Essential to World As We Know It Scott Reeves Nov 17, 2008 2:40 pm |
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The video is heavy-handed propaganda and cornball to the max, but here’s betting GM will get something from the government - probably a lot.
Ron Gettelfinger, head of the United Auto Workers, told the New York Times that “we are in a crisis that could have a major negative impact on this country.”
But opponents of the bailout say a Chapter 11 bankruptcy filing would allow GM to reorganize and become more competitive with major rivals Toyota (TM) and Honda (HMC). Should the government have bailed out Enron without demanding, you know, a few changes in the way it does business? (Yes, yes, Enron was close to a criminal enterprise and GM may be just poorly run.)
GM counters that a bankruptcy filing could cripple the nation’s industrial base, because few would buy a car from the automaker with the warranty in doubt. Reduced sales would hammer suppliers, dealers and sharply reduce advertising - a wave of unintended consequences that could damage other sectors of the economy and throw thousands out of work.
GM says it needs breathing room as it develops hybrids to compete with Toyota's successful gas-electric Prius. GM is also developing lithium ion batteries that could power a new generation of electric cars and again make it competitive in the global market.
The details of the proposed bailout have yet to be defined. Can Congress oversee a plan that, for example, rolls GM’s bonds into equity and renegotiates its labor contracts? To answer a question with a question: Do Amtrak and the United States Postal Service give you any confidence that it can?
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