GM filed for bankruptcy this morning.
Two Marc Ambinder posts, here and here.
Key sentence in the government’s GM bankruptcy release (via Ambinder) highlighted:
The U.S. Treasury is prepared to provide approximately $30.1 billion of debtor in possession financing to support GM through an expedited chapter 11 proceeding and transition the new GM through its restructuring plan. The U.S. Treasury does not anticipate providing any additional assistance to GM beyond this commitment.
Hmm. If $50 billion ($30B plus an earlier $20B) really is the limit of the taxpayer subsidy, fine. Then GM and the still-privileged UAW will have to make some tough choices down the road–and whatever happens the bailout could be justified by the backup, background rationale of ‘we delayed the end until the economy could handle it.’ But is the Obama Administration really planning to cut off GM’s intravenous drip of federal billions, if when the $50 billion doesn’t put the company back on its feet? It doesn’t look that way, from this quote in the NYT:
“We don’t think that after this next $30 billion, they will need more money,” one administration official said. “But the fact is there are things you don’t know — like when the car market will come back, and how much Toyota and Honda and Volkswagen will benefit from the chaos.”
Jonathan Cohn in TNR:
GM was the symbol of American industrial might and, for three-quarters of a century, the world’s largest carmaker. Now, in order to qualify or government financial assistance, GM is eliminating half of its brands, shedding dealers by the thousands, and laying off a third of its already diminished hourly workforce.
Even if the Obama administration’s plan works–even if GM re-emerges from bankruptcy as a leaner, more competitive company–it will never regain its iconic status. It will be just another company, albeit one whose majority owner is the U.S. government, at least for the time being.
It’s not the kind of result that inspires great enthusiasm. And perhaps that helps explain why the administration has been collecting critics not only on the right but, lately, on the left as well.
Nick Gillespie in Reason
EARLIER: Like A Rock… Not So Much
UPDATE: James Poulos
Via K-Lo, Keith Hennessey
Naked Capitalism on Robert Reich
GM’s main problem is not that the market is unreasonably unwilling to finance a potentially profitable company. Nor that it can’t produce an awesome small car that shockingly few people want to buy. (Believe me, as the owner of a tiny, ultra-efficient car, I would that there were higher demand for my rapidly depreciating asset). GM’s main problems are
1) A terrible, bloated cost structure
2) A terrible, bloated bureaucracy
3) A bunch of meh car linesWhich of these is the government going to solve? That terrible, bloated cost structure supports a bloated union whose jobs are the entire rationale for the government intervention. Leaning on the parts suppliers just risks UAW jobs further down the supply chain. Maybe we can take it out of the budget for copy paper and pencils.
UPDATE #2: Michelle Malkin
Michael Moore at Daily Beast
UPDATE #3: John Cole and Ed Morrissey
UPDATE #4: Robert Reich in the Financial Times
Seyward Darby at TNR
UPDATE #5: Henry Payne at The Corner
UPDATE #6: Jim Manzi in the New York Post
UPDATE #7: Jennifer Rubin in Commentary
UPDATE #8: James Bennet in the Atlantic
Jacob Sullum in Reason
2 Comments
June 1, 2009 at 10:36 am
[...] likely to be severe. GM says it plans to close 11 factories and idle another 3, and that was before the filing. There will likely be a big cut in the company’s workforce, [...]
June 2, 2009 at 9:39 pm
[...] It’s The End Of GM As We Know It [...]