I hate and I love. Perhaps you ask why I do so. I do not know, but I feel it happen and I am tormented.
CATULLUS, CARMINA, 85
So it is done. GM, General Motors, the American heart is no more. Today GM filed for bankruptcy, something they should have done nine months ago if not longer.
Depending on who you talk to people have different opinions of why GM failed.
It refused to build automobiles that the public wanted, cars that got great gas mileage, were as safe as they could be, and were exceedingly comfortable to drive. Oh — and that wouldn’t start falling apart after two years. GM stubbornly fought environmental and safety regulations. Its executives arrogantly ignored the “inferior” Japanese and German cars, cars which would become the gold standard for automobile buyers. And it was hell-bent on punishing its unionized workforce, lopping off thousands of workers for no good reason other than to “improve” the short-term bottom line of the corporation.
In its bankruptcy petition, G.M. said it had $82.3 billion in assets and $172.8 billion in debts. Its largest creditors were the Wilmington Trust Company, representing a group of bondholders holding $22.8 billion in debts, and affiliates of the United Auto Workers union, representing nearly $20.6 billion in employee obligations. In a court affidavit, Fritz Henderson, G.M.’s chief executive, said that bankruptcy and a Treasury-sponsored sale of General Motors’ assets to a so-called “New G.M.” were the automaker’s only option to move forward. Failing that, he said, the company faced liquidation. “There is no other sale, or even other potential purchasers, present or on the horizon,” Mr. Henderson said.
Of course there is the usual scapegoat, the Union. This is not necessary something that was said out loud in the media, though politics as well as the news media never tired to say how much the Union needs to make “concessions”. This all harks back to the “Golden Days” of GM and the Big Three. Of course a bit of envy by the average Joe who spent thousands to get a degree why a guy who had a high school diploma got excellent benefits etc. for putting tyres on cars.
But the reality is probably something rather simple: The North American consumer.
There is no desire by the average consumer to drive a small car when they can get a big one. That is unless they get forced into it by high gas prices. This is where GM failed the most, they sold lots of cars for a long time and management clearly did screw up along the way with horrible cars and a God like attitude thinking it would all be fine.
Everybody is to blame in the fail of GM, but in the end GM is just a reflection of North American society as a whole, the seeking of the quick buck, the idea of entitlement when it comes to ones own possessions all contributed to it.
Maybe the people who considered a failure of GM the failure of (North) American society right. What will be left after it is said and done? The official line is that GM will rise from bankruptcy as a new company and will make cars and come back to glory; as will Chrysler apparently.
But I doubt it. I think the days of GM and Chrysler are done. The reason for a “structured insolvency” is simple: A complete failure would reflect badly on the politicians and the country as a whole. GM, although probably no longer the heart of America it still has an iconic status. I predict that in a year from now what is left of GM and Chrysler will be quietly brushed under the carpet in the hope that nobody will notice.
Oh, and watch the DOW next week, both Citi Group and GM are going to be taken out of the index and will be replaced with Cisco, I expect the DOW will see a rise next week, but don’t be fooled.