I'd Own 20 If I Could

GM Bankruptcy Imminent

May 28, 2009 | Categories:

We are approaching quite a turning point in the auto industry.  As has been reported all over the news in the past few days, a GM bankruptcy filing is imminent, likely on Monday, June 1st.  With news today that a group representing GM's major bondholders accepted a "sweeteened" deal from GM, it appears that the bankruptcy could be a relatively "quick" one. In the end, it appears the US government (i.e. us) will own about 70% of the reorganized GM, though they apparently intend to pay us back "quickly."  I'm not sure how I feel about the government owning most of GM.  I'm usually in support of as little government intervention as possible, but being so close to the auto industry for so many years, I understand why they felt it was necessary to rescue GM. The impact of GM going into an "uncontrolled" bankruptcy (with liquidation a real possibility) would have been absolutely devastating to an auto industry - including its suppliers - and the hundreds of thousands of people it employs.  I think it is likely that the impact to the overall US economy would have been tremendous.  Unemployment would have spiked even more than it has, delaying even further the recovery that seems tobe starting in much of the rest of the economy. I hope that both the GM and Chrysler bankruptcies truly allow these two companies to come out "leaner and meaner."  Although I no longer work in the auto industry, I have a great number of friends who still do...

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