By Robert Farago
January 8, 2009
From WLNS Channel 6 (Lansing, Michigan): “GM Bailout Appears to be Working” “The federal rescue of General Motors appears to be working. It’s a glimmer of hope in a dismal automotive scene. General Motors says it does have enough loan money to survive. Bloomberg News reports a spokesperson for GM says last month’s government rescue should be enough to cover even a worse case scenario for 2009. GM received a four billion dollar check from the treasury department last week with an additional 5.4 billion due later this month and four billion more in February. The company reportedly now says it will not need additional loans unless the economy worsens.” From the Economist: “No end to the nightmare” “Realistically, the most GM can hope for is that it will have done enough by March to keep the drip-feed going until the second half of 2009, when things may start to improve. As for Chrysler—don’t even ask.”
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January 8th, 2009 at 12:30 pm
Excellent, then there is no more need for no more bailouts. Fact, they can pay back, with interest, the bailout they just got.
January 8th, 2009 at 12:51 pm
Why does the old biddy in that pic look vaguely like Lee Iaccoca?
January 8th, 2009 at 12:51 pm
Nothing greases capitalism’s wheels better than free taxpayer money. The government should stay the hell out of its way the rest of the time.
January 8th, 2009 at 1:09 pm
“…will not need additional loans unless the economy worsens.”
Well now, there’s the out. If you think the economy is going to pull out of its crash dive enough to stabilize, or improve enough to allow people to feel so secure that they go back out & start buying Detroit iron… I’ve got some hot beach property in Fargo you’re gonna love.
January 8th, 2009 at 1:10 pm
Unfortunately all the people I know who should buy a new car because they have the money and their cars are old heaps of junk won’t buy a new one.
January 8th, 2009 at 1:23 pm
And that Davey49 is why they have money.
January 8th, 2009 at 2:17 pm
Isn’t GM burning though about $3 billion a month in losses for 2007/2008? That gov’t bail out isn’t going to last long even if sales are steady.
January 8th, 2009 at 2:20 pm
Don’t believe Rick Wagoners’s reassurances. He knows right now he will need mega, mucho taxpayer dollars and soon.
First quarter production cuts which are justified given the sales implosion we are seeing will decimate the gross profit and revenue numbers for the first quarter. They are cutting production for the first quarter by almost half in North America which will do the same to gross profit . Those remaining profit dollars already woefully inadequate to cover costs will now have to do double duty.
In business you watch your breakpoint which is where expenses equal gross profit. A dollar of gross above is profit and vice versa. The farther away from that break point you get profits or losses tend to grow exponentaly. This cut in production is already baked in the cake and Wagoner knows it.
But when we get into april he will put on his act and be shocked how bad the economy is and line up for more free money.
We the public are getting put together big time. Same rationale as the Vietnam War and the Iraq war get the commitment and then oh we can’t back out now and waste all that money we foolishly gave them . It goes on and on.
January 8th, 2009 at 3:07 pm
My guess is that Rick is walking the tightrope by saying things are great in order to reassure potential buyers while he tries to paint a more realistic (i.e. gloomy) picture to bondholders and the UAW in order to get more concessions. My only hope is that he falls from the tithtrope with a leg on each side. (if you get the picture.)
January 8th, 2009 at 3:26 pm
Well put, Sherman!
GM needs the sort of concessions they would get through bankruptcy, but they say they couldn’t make it through bankruptcy for some reason. Seems to be the destiny for GM to be caught between rocks and hard places. Too bad they chased off anyone with the initiative to get them out of those places long ago.