Word: gm
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...moves don't go far enough. The GOP is asking for assurances that the taxpayers will be repaid - like the assurances given by the banking industry - and for a commission to ensure that the money is spent wisely, especially since all three companies are already so deep in debt (GM alone owes $48 billion). To that end, the GOP wants a change in leadership at all three companies. "I have yet to see any semblance of a plan for General Motors to become viable," Senator Arlen Specter, a Pennsylvania Republican, said on the Senate floor. "General Motors and the auto...
...everyone believes the situation is so dire or that the Democrats' efforts are so pure. Some observers speculate that GM, the weakest of the Big Three, can likely hold out until January. Still others say that even if GM doesn't make it, the fallout might not be all bad for the Democrats, who can blame the GOP for inaction without having to put more taxpayer money on the line. "If there's a bankruptcy between now and then, the spin would be that the Republicans let it happen," says Greg Valliere, chief political strategist at the Stanford Financial Group...
...There is no denying that the risks of letting GM fail are high. Economists warn that if it fails, GM is more likely to end up with Chapter 7 bankruptcy liquidation than Chapter 11 restructuring. Given the current credit crunch, the traditional bridge loans available to companies in Chapter 11 are all but impossible to obtain. And few consumers would be likely to buy a car - the sale of which depends on long-term warranties, service and parts - from a company in a bankruptcy reorganization. The Big Three and their affiliated suppliers account for 2% of the U.S. workforce...
...fallout of a single manufacturer like GM failing is huge because of the tightly knit web between manufacturers and suppliers," says Dave Cole, chairman of the Center for Automotive Research, an organization with ties to the industry. "Given the fragile state the supply base is in today, with a lot of them already in bankruptcy, it would likely take the entire industry down. Not because the other manufacturers would fail but because the suppliers would go down. We've been concerned about the cascade effect...
Critics argue that if U.S. car makers have stopped making the vehicles people want to drive, it might not be such a bad thing to force GM to reinvent itself under Chapter 11 bankruptcy protection. However the wider, short-run repercussion might be too much to bear for the North American industry. "There's a real fear if one of the Detroit Three fails it will threaten the future of the others on both sides of the border," says Jayson Myers, president of Canadian Manufacturers & Exporters, the country's largest trade and industry association. Says Buckley...