Repper

Big Two Bailout: Likelihood of Success Is Slim

"According to Professor Edward Altman, famous for his Altman z-score company solvency model, he has calculated that with the recent bailout proposal whereby GM was seeking $18 Billion, even with the temporary infusion of cash, GM will be bankrupt within a year unless they continued to receive new funding. This is not a sustainable model and we should not beguile ourselves into this illusion."

He did not take into account any of the changes proposed. That stat is only accurate if the company made no changes in capacity or cost structure AND if the credit market stays locked keeping the auto market at historic lows. Facts are that the company already has made changes from which they will realize more and more of the cost savings. Also the plans they submitted outline many more changes that will make them more viable. Of course it all relys somewhat on the credit market loosening, so that the auto market will start to ramp back up at least a little. (If the credit markets don't loosen the HUGE TARP bailout was all worthless.)