GM wants another $30 billion in aid - time to cut it loose

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GM wants another $30 billion in aid - time to cut it loose

General Motors has a net worth (in 2007) of negative $5.4 billion. To keep that money black hole operating they want an extra $30 Billion dollars. I didn't realize that the US government had that sort of money around just to throw away, its about time they cut the ropes and let it go bankrupt.

DETROIT (Reuters) - General Motors Corp (NYSE:GM - News) said on Tuesday it could need a total of up to $30 billion in U.S. government aid -- more than doubling its original aid -- and would run out of cash as soon as March without new federal funding.

The request for additional aid from the top U.S. automaker came in a restructuring plan GM submitted to U.S. officials on Tuesday.

The request came on the same afternoon that No. 3 U.S. automaker Chrysler requested an additional $5 billion from the current $4 billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years.

GM also said it had not reached deals with bondholders and its major union to reduce some $47 billion in debt but would work to reach those agreements by the end of March.

GM has been kept afloat since the start of the year with $13.4 billion in loans from the U.S. Treasury. Its expanded aid request for up to $30 billion includes a $7.5 billion credit line in the event that the autos market remains depressed.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100 billion in financing that could have to be provided by the U.S. government.

GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter.

Facts .... from 2006 ...

* GMís "as stated" net worth is negative $5.4 billion
* By fully discounting intangible assets, which includes deferred tax assets, GMís net worth is arguably negative $48.5 billion (refer to Note 13 of GMís 12/31/06 financial statement)
* GMís as stated working capital is negative $3.7 billion
* By fully discounting current deferred tax assets, GMís working capital drops to negative $14 billion
* General Motorsí total liabilities amount to a staggering $190.4 billion

From http://www.financialsense.c...
By netchicken: posted on 18-2-2009

The human cost of the auto manufacturing collapse can bee seen in this article on life in Detroit.

For all the ups and downs, and more downs, that white-collar workers here have lived through, they have always managed to put on a brave face, assuring one another that the American auto industry will come back stronger than ever.

But now that resolve has given way to grim resignation, as General Motors, Ford Motor and Chrysler have announced wave upon wave of job cuts.

After closing plants and shrinking their blue-collar work force, Detroitís troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace ó more than 15,000 in the last year, with more to come.

Unlike union workers laid off from idled factories, salaried workers have no safety net of health care or guaranteed income for a year. At best, itís a small severance or buyout, and a voucher for a discount on one of the hundreds of thousands of unsold cars that G.M. or Chrysler has sitting in inventory.

White-collar workers who walk out of the headquarters of the auto companies face few prospects in the Michigan economy. And with G.M. and Chrysler surviving on federal loans, facing a deadline Tuesday to submit new and broader restructuring plans to the government, the outlook grows only more bleak.

The market for the skills of auto engineers or designers in the prime of their careers has evaporated, with no hope in sight for a turnaround. Moving to another city is hardly an option when there are so few buyers for the suburban homes that would have to be sold first.

ďI know itís not great everywhere, but this is probably the worst place to find a job,Ē said Doug Zupan, a designer who took a buyout in November after working at Chrysler for six years. He was one of 5,000 salaried workers who accepted a buyout the day before Thanksgiving from his job at the Chrysler Technical Center in Auburn Hills, Mich.

Much more on the link
By netchicken: posted on 18-2-2009

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