levin70

I Was Wrong About GM Bankruptcy

The only real alternative was the liquidation of the company, which would have yielded very little to the creditors

I've seen this bandied about so many times, but I have yet to see anyone, including the OP, back up this statement with facts.

And as for GM shedding its liabilities, the only liabilities shed were those of the bondholders. Correct me if I am wrong, but the UAW took no cuts in pay or benefits, so GM is still as unprofitable making cars today as it was before bankruptcy. The only difference is a reduction in total losses for $2 billion per year in reduced interest expense. But what;s the real difference between 6 billion annual loss and 8 billion, it;s still losing money on every car it builds.

Regards

Appraising the Auto Industry Wreck

I expect to see GM/Chrysler back in bankruptcy within 12-24 months, tops, unless the President decides that 40,000 autoworkers are worth another 30 billion or so, which I think given the state of the US economy he will be unable to do so.

Since GM isn't using bankruptcy to actually cut its costs other than about 1.5 billion in interest, how exactly is it supposed to make it for the next 2 years? In 2008, operating cash deficit of 12 billion, adding back 1.5 billion in interest costs and taking that 8 billion in PP&E and increasing that for the spend to cover re-tooling to smaller cars of 10 billion per year puts GM at a yearly cash burn rate of approx 20 billion. LOLLERSKATES

Regards