Earthside Comments: Yes, it is a very sad and tragic thing ... but mismanagement, bad judgement, and greed have their consequences.
It is our opinion that until this debt crisis is allowed to unwind, until failure is acknowledged, until some harsh consequences are accepted -- this catastrophe will only be agonizing slow and torturous for many, many years. The gamblers and speculators, the unscrupulous borrowers and lenders and bettors, have to be wrung out of the system.
Letting GM go into bankruptcy is going to hurt everyone ... but there comes a point where hard-nosed reality must be acknowledged, the faith-based reality of the Bush-era is over.
Ramifications, outcomes, repercussions ... that is the way the real world works. We're just going to have to deal with it.
"Sooner or later everyone sits down to a banquet of consequences."
Robert Louis Stevenson
GM: 'Substantial Doubt' About Survival | CNNMoney.com
General Motors Corp. said in a government filing Thursday that its accounting firm has found there is "substantial doubt" about the automaker's ability to survive.The embattled automaker made the disclosure in a 480-page filing with the Securities & Exchange Commission.
GM has sustained large and continuing losses, while saying it needs additional federal loans to remain in business. Thursday's statement from the company's auditors presents another hurdle the automaker will have to clear as it makes the case that it deserve additional taxpayer support going forward.
The Obama administration, under the terms of the $13.4 billion in federal loans GM has already requested, must determine that the company's plans make it viable in the long run.
The government must determine that GM has a "positive net present value" or else demand repayment of the loans within 30 days - a development that would almost certainly plunge the company into bankruptcy and quite possibly force it out of business. ...
... But even if the Obama administration continues to give support to GM (GM, Fortune 500) and rival Chrysler LLC, which has also received federal loans, Thursday's filing could create problems in its relations with suppliers and banks.
For example, concerns about GM's future could cause companies that supply it with parts start to demand cash on delivery from the cash-starved automaker, according to GM's filing.
While parts makers would be reluctant to damage their largest customer with such a demand, they may have no choice because of GM's filing. Those parts makers' own auditors and banks could use the doubts raised by GM's auditors to raise questions about their own future. ...
... Meantime, GM also said it needs additional federal loans to stay in business.
GM received $13.4 billion so far, and it has asked for up to $16.6 billion more. In addition, it is seeking $7.7 billion in loans to convert production from light trucks to more fuel efficient cars under an Energy Department loan program.
"The failure to obtain sufficient funding from the U.S. government or governments outside the United States may require us to shrink or terminate operations or seek reorganization for certain subsidiaries outside the United States," the filing said.
"If we fail to obtain sufficient funding for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief under the U.S. Bankruptcy Code," GM added.
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