Thursday, March 5, 2009
GM should fold for the nation's good, taxpayers
The auditor for General Motors concluded three months ago that the automaker should go into bankruptcy, according to a government-required report to stockholders.
Since then, the automaker's plight has worsened, leaving little doubt now that it should fold despite the White House's intent to bail it out. That would hurt many communities, including Spring Hill, TN. But tazpayers cannot afford another AIG.
GM sales fell 53 percent last month. With the economy not expected to improve for the remainder of this year and into the next, GM's survival is not fiscally wise.
Here is a report on the shocking findings from the auditor:
(MarketWatch) -- General Motors Corp. shares fell as much as 17% in early trading Thursday, retreating as the automaker and its auditor stoked more doubts that the company can keep its assembly lines running amid a historic dearth of new-car buyers.
GM said in a filing to the Securities and Exchange Commission that bankruptcy was a possibility if its Viability Plan, as submitted to the Congress, didn't succeed.
The Detroit-based giant is seeking up to $30 billion in loans from the U.S. government, as well as loans from foreign governments including Canada, Germany, the U.K., Sweden and Thailand for up to $6 billion more.
Vehicle sales, which have dropped 40% in the U.S. from their peak, need to recover next year under the plan submitted to Congress.
GM's survival also depends on its ability to obtain liquidity and financing to establish an appropriate level of debt, cut costs and have consumers convinced of its viability -- as well as partly owned GMAC's ability to obtain funding from both wholesale and retail financing.
Deloitte & Touche made a similar analysis, concluding that GM's "recurring losses from operations, stockholders' deficit and inability to generate sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern."