I am not suggesting that a GM bankruptcy is a good thing. It isn't but the alternative government loaning more money to GM is worse.
GM's balance sheet is simply to ugly too many liabilities and not enough assets and each and every quarter GM loses more money and the situation gets worse.
The situation is much different than bank or even an AIG, when housing prices stabilize most banking problems go away. When this will occur is anybody guess.
But there is simply to many troubles at GM, Gas is back to two bucks in parts of the country, GM should be able to make money in this environment but of course they are no where close.
One possible compromise would be for the government to step in and provide bankruptcy financing. These are loans that help a company emerge from a bankruptcy reorganization, companies make these loans because they are at the front of the line for being paid back. Given the current treasury rates, we could afford to loan money at the TARP rate of 5% but have taxpayers at the front of the line. GE capital used to be a big provider of bankruptcy loans but they have there own problems.
But in order to have a chance of long-term survival GM needs to be reorganized, shareholders wiped out, and all creditors share in the pain. There is a system to do this reasonably equitable way and it is called bankruptcy court. Without bankruptcy I fear we taxpayers are just shovel dollars into a black hole and we can't afford to do this.
Personally, I am not to hung up on calling GM a US company and Honda a Japanese company. Honda long ago started building and selling the majority of there cars in the US and relying heavily on domestic suppliers. GM had a large overseas work force. Now it is true that most profits and taxes on the profits will flow back to Japan from Honda, but GM is such a long long way from making a profit much less paying taxes that that hardly matters. They are interwined as Chicano has said, it is like saving GM means we are only saving American cars, or buying a Toyota or Honda risk throwing a US autoworker out of work. Not all money given to GM would be used domestically and not all US autoworkers work for the big 3.
No, I dont need a truck..
