dcsimg
Blog
February 18th, 2009

Is GM and Chrysler’s Success Coming At Our Expense?

by

 

The question may sound harsh, but when GM and Chrysler submitted their “midterms” yesterday, their grade wasn’t too good. Granted they’re working on calculating more realistic future projections — but unfortunately that means sending thousands more Americans to the unemployment lines, closing more plants, and oh did I forget to mention the two are requesting another $22 billion between them. The automakers claim they won’t be able to make it to their “final exam” on March 31 without it.

Since early December GM and Chrysler have been urging the U.S. government that if they don’t receive billions more by a certain date, they run the risk of running out of money completely.

The automakers claimed yesterday that they plan to begin repaying their Federal debts by 2012. How many times in the next three years will the government have to “nickel and dime” ($15 billion here, $5 billion there) these automakers to keep them in business?

Here’s how GM plans on staying in business:

GM: Worldwide workforce of around 244,500 will be cut by 47,000 by end of the year — including the 10,000 salaried reductions already announced.

Already said it needed to cut nine North America plants by 2012. New plan calls for an additional five closures, making GM’s U.S. plan to close 14 plants by 2012.

If history repeats itself, as it has already twice in three months, how much more money will the government have to pump into these automakers, and how many more workers will have to be laid off and plants closed before GM and Chrysler can prove their viability? Their crawl back to success is at the expense of the American people.

Are GM and Chrysler costing us more than they are really worth?

Share and Enjoy:
  • email
  • Print
  • RSS
  • Add to favorites
  • Yahoo! Bookmarks
  • Facebook
  • Twitter
  • Technorati
  • Digg
  • del.icio.us
  • Google Bookmarks
  • StumbleUpon
  • Yahoo! Buzz
  • Mixx
  • BlinkList
  • Live
  • Reddit

2 Responses to “Is GM and Chrysler’s Success Coming At Our Expense?”

  1. Eric L Says: February 18th, 2009 at 1:11 pm

    Do you honestly think that the cost of unemploying 47,000 is somehow more than the cost of unemploying 244,500 (and possibly as high as a million once you add in dealerships, suppliers, etc)? The most optimistic cost to the US government for a GM bankruptcy is $30 billion, the most pessimistic is $100 billion. So long as GM is still making progress, it is cheaper to hand them another 10 or 15 or 20 billion than to let them fall apart.

    Chrysler on the other hand is a privately held entity, and frankly the cost of them going bankrupt and dissolving entirely is less than what they want to borrow. So quite a different scenario there, were I given the choice i’d refuse them further funding.

  2. Tim Manni Says: February 18th, 2009 at 4:22 pm

    Eric,

    I’m glad one of your points(your very first sentence) countered the argument I was trying to make. That said it was merely an argument not necess. my opinion. Obviously I agree that losing 47K jobs is better than losing 244K, but I also believe the entire industry is withering away slowly. I don’t believe the crash will necessarily happen at once. I’ve had two Ford dealerships go out of business on me in the last two years. What will be left of these companies in three years?

    I did read GM’s argument that a bankruptcy will cost taxpayers $100 billion. I didn’t read however how they got that number, or any additional info past that. Please pass more info along if you got it.

    Thanks for commenting,
    Tim

Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates

$