This June 1, 2009 combination image shows various General Motors automobiles new and old. General Motors filed for bankruptcy protection Monday, culminating the collapse of the automaker that once symbolized American global industrial might. The filing in the same New York court that approved a speedy restructuring for Chrysler aims to allow GM to re-emerge as a new, leaner company within 60 to 90 days. GM listed asset of 82.3 billion dollars and debts of 172.8 billion in the case, assigned to Judge Robert Gerber, in one of the biggest bankruptcy cases in US history. (Getty Images)From MSNBC.com:
“The Obama administration plans to take the next step toward resuscitating the American auto industry today, sending General Motors, the storied manufacturer, into bankruptcy protection,” the Washington Post front-pages. More: “The purpose of the bankruptcy is to restructure the automaker, as the government has been attempting do with Chrysler, having GM emerge from the process smaller, with fewer workers and brands, less debt, but also more viable… The United States will invest another $30 billion during and after the GM bankruptcy process, bringing the U.S. commitment to $50 billion.”
USA Today adds, “The government … says this will be the end of the taxpayers’ financial support of GM. Under bankruptcy-court supervision, GM and the task force aim to create two companies: a new GM with its best and profitable assets and the old company left with the rest. They hope the new GM can emerge within 60 to 90 days able to succeed in a smaller market; the old one will be liquidated.”
But, per the Wall Street Journal: “The question now facing 56,000 auto workers, 3,600 GM dealers and the Obama administration: Will it work?… The reorganization faces myriad risks, ranging from legal challenges to the uncertainty of when consumer demand for new cars will rebound. In becoming GM’s new owner, the government is also entering largely unexplored terrain filled with political minefields, notably the possibility of meddling by Congress in the company’s daily operations and business plans.”
Monday GM is going to make it official and announce it’s going through bankruptcy. No one is surprised. GM needs to restructure but many people who either own a part of GM or live in states where there are auto manufacturing and auto parts jobs worried what bankruptcy would mean.
More after jump.
Like, is anyone one going to buy a car from a company that might not even be here a year from now? And since GM is so huge, if it does fail, isn’t it just going to take the entire US auto industry with them? Even the healthy Ford, because if GM goes, the supply chain will die and Ford relies on that same supply chain.
Is GM going out like TWA and PanAm, gone and never to be heard of again despite their iconic status? Or will it just be GM China, since overseas the auto maker is still doing well in the nation of our biggest cheap goods crack dealer?
Who’s fault is it? GM for not adapting for the day when gas prices would be the problem? (The summer of $4 gas was pretty much the death knell.) Or was it just a case of “let the market decide” and we, as consumers, decided we wanted giant hunks of metal? I can remember when GM first started making the Hummer and H2 and they were EVERYWHERE in California. People who I knew for a fact were broke as a joke were pushing one down the street. Now you can’t even give that bloated status symbol of an excessive, crazy, exotic, boutique loan era away.
I’ve always owned a small car and I come from a “Ford Family.” I own a 2000 Mazda Protege (Mazda is part owned by Ford). It was a college graduation gift from my father. I’m not a huge “car person,” so I went for something practical and picked a Mazda because I needed something that could take a beating, last a long time and wouldn’t need a ton of gas. I can remember the halcyon days of 2002 when I drove into a Bakersfield, Calif. gas station and paid 87 cents a gallon for regular unleaded. For $10 I could fill up my tank. Then, when gas got up to $3 and $4 in California I moved to an apartment downtown and started walking to work. Putting $37 worth of gas in a Mazda just seemed unnatural to me.
But I think if money had never been an issue for me as a habitually broke journalist I might have wanted a bigger, fancier, gas-guzzling car. Gas was still cheap when I graduated from college. Many of my peers were about status and the ultimate status symbol for a lot of them were their cars. Their giant, sitting on rims a-spinnin’, shiny, expensive cars.
And now no one is buying any. Not even the small ones because money is tight. I know the auto industry can’t be waiting on me to buy a car. I’ve been pushing my graduation present for almost 10 years now. I’m not getting a new car until I either A) make some serious bank or B) the Mazda kicks the bucket.
As GM goes into Chapter 11, what is that going to mean? The Associated Press’ Jim Kuhnhenn wrote that the Obama Administration will not allow GM to fail. That’s nice to know, but can you actually promise that? Can you keep a car company going if no one buys their cars? How much corporate welfare will THAT take as those GM cars sit on lots to bake in the sun all summer long?
Live Your Best Life. 
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