Restructuring is essential and the only way to accomplish that efficiently is a Chap 11 bankruptcy, replacement of management, downsizing, elimination of redundant models (too many choices) and better quality. What also needs to take place is cessation of the cycle of “government as lender of last resort” where everybody just expects that if they get into trouble, they can dump their problems on the taxpayer. Under our fractional reserve fiat money system the government has to borrow at interest just like the rest of us and then raise our taxes to cover the cost, or just roll the debt over and leave it for our children and grandchildren to pay!

Whatever happened to old fashioned capitalism where there was real competition, you produced a QUALITY product that people wanted at a price they were willing and able to pay, or you went out of business?

Seems too me our whole society has developed the “gimmes” all rights and no responsibilities for bad decisions!

The government created all the safety and epa regulations that the car companies had to adhere to.

The democratic congress has spent the last two years talking about no drilling, raising taxes on oil companies, raising taxes period.

Management for the financials and the auto industries have not shown much expertise or common sense over the last thirty years either but I think government has been the biggest problem and now they sit in judgement on problems they are mainly responsible for and try to lay the blame on everybody else.

The major problem over the last two months has been the credit freeze up. What happened to the 67 trillion dollar credit default swap (CDS) problem the media including “Money Map” has been pushing the last several months, thats what caused the credit freeze and then pushed the correction into a recession. According to the Depository Trust Clearing Corporation (DTCC) the problem was grossly over estimated, primarily because the data was created by a survey. The survey included info from both buyers and sellers so some info was included twice or even three times or more. The DTCC handled the sale info of Lehman’s CDS auction. Their $72 billion turned into a net funds transfer between sellers and buyers of $5.2 which is 7.22% of $72 billion. DTCC says the total CDS contracts as of 10/9/2008 was $34.8 trilllion so if you apply the Lehman net funds transfer of 7.22% the liability is $2.5 trillion. Still a lot of money but a long ways from the media number of $67 trillion. Just like yelling “Fire” in theater, you go to jail for that. Any people in the media want to go to jail for yelling $67 trillion CDS problem?????????

“Comment by Ronald Smith on 5 December 2008: I stongly disagree with the excuses for failure of GM stated in the article, blaming its demise on government regulations related to emmisions and fuel economy. GM has plenty of fuel efficient models that compare favorably with foreign automobiles. Labor costs are not the culprit either. Many of the foreign brands are built here in North America paying similar wages. The real problem is the mindset that we will buy American cars just because they are built here and look good. Consumers want dependability and durability at a reasonable price, a concept that has totally escaped the big three. GM might look a their cometitors distribution networks as well. They do not have grand showrooms with hundreds of autos on the lots in every small town in North America!”

While I agree with your suggestion concerning Citicorp, you are far too easy on GM in your assessment of their woes. Successive CEOs have made abysmal product and financial decisions, signed irrational labor agreements with greedy unions and offered substandard products to the US domestic market.

A trip down memory lane brings back unpleasant memories of Chevy’s Corvair, Vega, Citation, Cavalier and the miserable Cobalt. GM also gave us modified gasoline engines sold as diesels, the Cadillac Cimmaron (aka, the Chevy Cavalier), lookalike Buicks, Pontiacs, Oldsmobiles and Chevies in the 1980s courtesy of Roger Smith, and more recently, the Hummer.

GM’s financial woes can also be traced to a dealer network that is far too large to support the market share it has, and to the brand proliferation GM has continued despite continued loss of market share. Does it really need Pontiac, Buick, Saturn, GMC, Hummer, Saab, Chevy and Cadillac, when Toyota, Honda and Nissan all manage to do quite well with only two brands?

GM needs to enter a “pre-packaged” Chapter 11 to rid itself of unnecessary dealers, brands, restructure health care and labor agreements and create a much leaner organization.

GM shouldn’t receive a dime from Congress, i.e, the taxpayer, until it demonstrates a credible business plan that is a blueprint for profitability, not years of dependency.

One final comment. Rick Wagoner is without doubt one of the worst, if not THE worst, CEOs of all time. Under his watch GM has run up over $50 billion of losses in the past four years, including the writedown of $30+ billion of tax benefits because of an abortive partnership with Renault. Wagoner and his stooges need to be fired, without any golden parachutes, for their incompetence. Unless GM cleans house at the highest levels, and “recovery plan” it presents will be little more than a joke.

Whoever we decide to bail out needs to operate by different rules than they have in the past.

A) The government should provide the troubled auto companies a one year Federal Tax Hoilday. This should greatly increase their cash flow available to retool and manufacture since they could skip making their quarterly tax payments. Consider that ultimately their tax losses will be so great that most of their taxes would be refunded anyway. So why not save the trouble and allow them to beter utilize those dollars to help themselves for the next 12 months.

B) Offer revolving lines of credit, say at 2% interest, to be used to finance the purchase of new cars or trucks that are either: electric or natural gas powered, or get 30 MPG fuel efficiency.

These two proposals along with the already provided $25 Billion by the Bush Administration and approved by Congress is quite substantial and should be adequate without requiring further taxpayer assistance. After all GM for example can sell GMAC or other assets or car lines to manufacturers in other countries. The American taxpayer should not be required to foot the entire bill.

Done this way the soultions can be considered a helping hand not a bailout!