Do GM's arguments against bankruptcy hold water?

What they need is $20 billion of counterparty risk to Goldman Sachs. Ya, thats the ticket, $20 billion and a retirement nest egg for Hank Paulsen.

I agree that any government intervention be structure like DIP financing. How does anything else make sense for the taxpayer and the economy? And ultimately for GM, which up until now has shown only a halfhearted desire to put its house in order? I have my doubts on whether people won't buy from a Chapter 11 car company, but I imagine it is a risk.

I've been reading the GM posts here and elsewhere and all the comments and what I've realized is that this discussion is really a proxy for much larger questions about the future of our economy. This is a particularly difficult and disjointed one because we just don't know yet how big a hole we've dug ourselves into or exactly what kinds of financial resources we'll have left.

So, on one hand, I want GM to survive because I think we need to have a manufacturing base and this industry is still one of our largest sources of employment and expertise. Plus, I am a mid-westerner and am aware of just how bad Detroit is suffering and Detroit's woes are replicated throughout the midwestern states. But, providing for GM's survival cannot be the equivalent of giving it money to operate as if it can return to business as usual. Thus, we have to start asking the difficult, painful and pragmatic questions. What is the right size for a healthy and sustainable GM? Are any of us really going to be able to spend $20 to $50,000 for a car in the future? If not, what should GM build? How long before GM can realistically expect American and world consumers to have saved up enough money to buy cars without credit? Is this a significant enough period of time to make liquidation the best option? Can the Volt have a successful launch and help transition us off gasoline or would the price tag be so steep that purchases would require large government subsidies? Would the cost of these subsidies ultimately cost less that the future costs of imported oil? Or should we try to get GM to transition to mass transit products instead of personal vehicles? Or maybe try to phase it into some kind of defense contracting work for non-gasoline based vehicles?

What I am trying to express is that we now know that a "free market" can misallocate resources as efficiently and effectively as central government planning and control. But, the "free market" does so in such a way as to make figuring out transition exceptionally difficult. In part, the difficulty is caused by our inability to really assess which resources have been misallocated. But, we have a separate difficulty in that our business models have been based on extrapolating historical data to plan for the future and now that data will not be able to predict our future behavior.

Regardless of whether GM goes into bankruptcy, we will have to make some painful decisions and many of these are political and societal decisions that a bankruptcy court cannot address.

In order for me to root for GM survival, however we do it, is if GM could get some leadership in place (management, labor, and technical) that would make me believe there is a reason for GM to exist. GM is in the place it is in is because the only car they know how to build is the large, gas guzzling boondogle they sold in the 70's and again in the 90's. Toyota, Honda, ect. kick their butts the minute gas prices rise. Any moron could have seen the future, but we need laws to mandate the design changes that are so obvious. They deserve to go out of business. Not one single tax dollar should go into that business (as guarentees or loans) unless the present bunch of idiots are out as penniless as the workers, customers, and citizens they have betrayed. Welcome to the future & it was yesterday.

GM should just file bankruptcy already. We, sadly, are headed for a light and shallow depression. It won't be pretty and it will be fairly painful, but oh well, such is life. The sooner that folks wake up out of dreamland and smell the coffee the faster we can begin dealing with the dawn of a new day.

I'm amazed at where American thinking has gone. Has anyone here reviewed the incredible amount of government interference in the auto industry, and you want to call it "free market"? Do you think management thought it was a good idea to guarantee jobs forever, pay double the labor rate of the competition, offer outrageous health benefits, incredible pay for no work deals, and unbelievable retirement benefits? It's amazing what you'll agree to with a gun at your head. Do a net search and check out some of the crushing strikes the UAW put the industry through to get to where they are today.
Doesn't it seem odd that not only GM, but Ford and Chrysler all had "inept" management, even when Chrysler was run by the Germans, and all at the same time..while Toyota, Nissan and Honda all had geniuses? Or is the common theme here the cancerous UAW? We have the unions, the foreigners don't.
GM didn't make econo boxes because they couldn't make them at a profit in the U.S. You can't hide the extra $2500 in benefits in a $10,000 car, but you can in a $40,000 SUV. After a while, it becomes the only place you CAN make a profit.
As far as FREE MARKET goes, the U.S. auto industry hasn't seen that in decades. But you DO see what happens when a union becomes too powerful.

If the $25 billion auto bailout loan goes to retooling to build almost fuel-free cars like the Volt, the savings on foreign oil purchases alone could pay back many multiples of the principle -- ever year! -- leaving T. Boone Pickens' program for freedom from foreign oil dependence in GM's dust.

Free upgrade to plug-in hybrid?

Reported by Tom Krishner, AP Auto Writer Monday, July 21, 2008: ..."lithium-ion battery packs needed to power even a small car now cost in excess of $10,000..."

A couple of years ago, I came up with the fun dollar-savings equation that: if America needed only half as much imported oil (meaning 5 million bbl/day then) and if we needed to pay only half the price ($30/bbl then) due to said lowered demand, then, we could save $165 billion a year (by spending only 5,000,000 bbl/day X 365 days X $30 instead of 10,000,000 bbl/day X 365 days X $60 = a saving of $164,250,000,000/year)...

...or, exactly enough to subsidize buidling the 16.5 million cars and trucks we manufacture every year as LITHIUM, PLUG-IN hybrids -- at $10,000 per vehicle!

Now, with oil recently approaching the $150/bbl range, we could be shipping $500 billion more a year overseas; potentially justifying any form of subisidy for the manufacture of lithium plug-in hybrids.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/21/financial/f184312D31.DTL&type=autos
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For 30 years it has been known that building lithium ion batteries with silicon wires (instead of carbon wires) could yield ten times the power holding ability but, because silicon wires expanded and contracted too much as they cycled, they quickly destroyed themselves. The development of silicon nano wires – about a thousandth of the width of a sheet of paper -- has solved that drawback -- while potentially making lithium ion batteries more stable (safer) at the same time!

Near term, only the anode side of the batteries will be manufactured with nano wires, yielding the quadruple jump (up powering GM's Volt to go 160 miles on one charge instead of 40?). Long term, manufacturing the cathode side with silicon nano wires is expected to reach the ten multiple target (introducing hybrid, long distant trucks?).

http://news-service.stanford.edu/news/2008/january9/nanowire-010908.html