GM at the edge of BK

[Americano]

GM auditors raise doubt on viability
DETROIT (Reuters) - General Motors Corp (http://financial.washingtonpost.com/custom/wpost/html-qcn.asp?dispnav=business&mwpage=qcn&symb=GM&nav=el) <GM.N> on Thursday said its auditors had raised "substantial doubt" about its ability to survive outside bankruptcy if it fails to stem its losses and stop burning cash. The "going concern" warning from the struggling U.S. automaker had been expected, but underscored the stakes for GM as it seeks up to $30 billion in U.S. government aid to restructure outside a court-supervised bankruptcy process.



http://www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR2009030501507.html


I say let it fall.

[Michael]

Getting to the point that it is becoming a moot point I'm thinking.

I was more shocked by the second item listed in your link - the one that states 1 in 8 American homeowners were in default on their mortgages as of Dec 31/08. :eek:

[Americano]

This one is even more shocking:

http://online.wsj.com/article/SB123630125365247061.html

The FDIC is seeking $500B in additional funds. 25 banks failed in 2008, in the first two months of 2009, 16 have failed.

The FDIC is the US federal agency that insures bank deposits up to $250k per account.

It looks like 'too big to fail' may become a highly selective process.

[Michael]

Indeed, the bailout bank is bankrupt. Surprise, surprise.

Btw, there is no rational need to insure $250,000 per account since that amount far exceeds what 95% of the US population is able to put into a bank account. But as always, such programs are always structured to benefit the top few percent the most.

[The Drunk Guy]

The problem with GM is that, since the '80s, American car quality has dropped dramatically. Due to safety regulations and "design features," the cost of production has increased dramatically. Cars aren't lasting as long as they used to, but they are becoming increasingly more difficult to afford. You don't see many '90s model American cars on the road (although you can still see plenty '80s or older models).

Meanwhile, Nissan, Honda, Mazda and Toyota are producing good quality vehicles that last 200k+ miles. Not only that, but these brands, until the past few years, were offering "basic" packages on most of their vehicles, making them much cheaper than the "flashier" American products. I think I could skip on the third row monitors and On*Star (which is a fucking evil product anyway) for a reasonably priced vehicle THAT LASTS.

So, no, GM is not going to last in their current format. Does that mean they should close shop? Maybe. Can they alter their vehicle platforms to become more affordable? Can they focus on the motors and chassis that should be the true focus on every automobile? Will the government wake up and see that their innumerable safety regulations are slitting the throats of the automakers? And, ultimately, will Americans buy cars that will get you places without television/media center/GPS/quintuple-side airbags/mp3 player/27 outlets(without one goddamn cigarette lighter)/panoramic windows/massaging seats/retina-scan starters/vibrators?

I would happily pay $10,000 for a new Jeep Wrangler. And they can produce one and profit at that price, but they throw in all the flash and bang which more than doubles the price.

More and more, I feel that the economic collapse is my age group's fault (25-35). We wanted stuff and didn't have the money to buy it, so we financed everything. We wanted the H3s and F150s with all the gadgets they sell with them just as much as we wanted the house next to Mom and Dad's, so we looked for a short cut. And the banks answered with balloon payments and ARMs and tied the noose. It seems that they forgot to tie the other end to the gallows and, instead, tied it around their own neck.

America needs to grow up. My age group needs to realize that we're no longer the kids that watch American Pie and get drunk on the weekends. We're fucking adults with responsibilities and repercussions. Until that happens, we're not going anywhere.

And we all should have a SHTF plan ready for when us assholes have to take control of everything. We may well bounce back from this one, but what happens when our parents aren't around to help us out the next time?

[Americano]

Indeed, the bailout bank is bankrupt. Surprise, surprise.

Btw, there is no rational need to insure $250,000 per account since that amount far exceeds what 95% of the US population is able to put into a bank account. But as always, such programs are always structured to benefit the top few percent the most.

The increase from $100k to $250k per account FDIC insurance was a government feel-good publicity stunt, nothing else.

[Americano]

The problem with GM is that, since the '80s, American car quality has dropped dramatically. Due to safety regulations and "design features," the cost of production has increased dramatically. Cars aren't lasting as long as they used to, but they are becoming increasingly more difficult to afford. You don't see many '90s model American cars on the road (although you can still see plenty '80s or older models).

Meanwhile, Nissan, Honda, Mazda and Toyota are producing good quality vehicles that last 200k+ miles. Not only that, but these brands, until the past few years, were offering "basic" packages on most of their vehicles, making them much cheaper than the "flashier" American products. I think I could skip on the third row monitors and On*Star (which is a fucking evil product anyway) for a reasonably priced vehicle THAT LASTS.

So, no, GM is not going to last in their current format. Does that mean they should close shop? Maybe. Can they alter their vehicle platforms to become more affordable? Can they focus on the motors and chassis that should be the true focus on every automobile? Will the government wake up and see that their innumerable safety regulations are slitting the throats of the automakers? And, ultimately, will Americans buy cars that will get you places without television/media center/GPS/quintuple-side airbags/mp3 player/27 outlets(without one goddamn cigarette lighter)/panoramic windows/massaging seats/retina-scan starters/vibrators?

I would happily pay $10,000 for a new Jeep Wrangler. And they can produce one and profit at that price, but they throw in all the flash and bang which more than doubles the price.

More and more, I feel that the economic collapse is my age group's fault (25-35). We wanted stuff and didn't have the money to buy it, so we financed everything. We wanted the H3s and F150s with all the gadgets they sell with them just as much as we wanted the house next to Mom and Dad's, so we looked for a short cut. And the banks answered with balloon payments and ARMs and tied the noose. It seems that they forgot to tie the other end to the gallows and, instead, tied it around their own neck.

America needs to grow up. My age group needs to realize that we're no longer the kids that watch American Pie and get drunk on the weekends. We're fucking adults with responsibilities and repercussions. Until that happens, we're not going anywhere.

And we all should have a SHTF plan ready for when us assholes have to take control of everything. We may well bounce back from this one, but what happens when our parents aren't around to help us out the next time?

China and India are concentrating on under $10k cars. China was at the point of offering an $8k, 40mpg vehicle in the US until the US house of cards began to collapse.