I bought a new car recently. As it happens, it wasn't a GM model. But it doesn't matter, because it's increasingly likely that we'll all be paying GM anyway.
General Motors Corp., nearing a federally imposed deadline to present a restructuring plan, will offer the government two costly alternatives: commit billions more in bailout money to fund the company’s operations, or provide financial backing as part of a bankruptcy filing, said people familiar with GM’s thinking.
The competing choices, which highlight GM’s rapidly deteriorating operations, present a dilemma for Congress and the Obama administration. If they refuse to provide additional aid to GM on top of the $13.4 billion already committed they risk seeing an industrial icon fall into bankruptcy.
None of this is especially surprising, of course. The problems that GM is facing were decades in the making and there was no way that they could turn it around without finding a way to lower their operating expenses. And that cannot happen as long as GM is on the hook for all the guaranteed benefits and pensions that they agreed to with the UAW years ago. And the UAW ain't biting. And why would they? There's no incentive to make these hard choices as long the government is willing to keep funding things.
If GM goes into bankruptcy, it would force the hard decisions. A lot of people are going to take it in the shorts on this, no matter what happens. The auto industry is hardly the only industry that is hurting right now, though. And it's awfully difficult to see why GM and the UAW should be insulated from the consequences of their actions and the vagaries of the marketplace.