It seems that GM swallows bailout money faster than the fed can feed it. GM reported a loss for the three month period October 2008 to December 2008 of $9.6billion- that’s almost $85million a day. Considering GM received the first bailout payment of $13.4billion two months ago, how long will the next $18billion last? By applying simple arithmetic the money would be devoured in less than five months at the rate that GM is sucking up cash. In addition GM will lay off an additional 10,000 American workers and is currently late with payments to the UAW employee benefits fund of $20billion.
Let’s do some simple math. If you take the loss from the first quarter of this year- $10billion and add the $20billion GM currently owes in employee benefits, the total equals -$30billion. Now if the Fed writes a Stimulus Package check for an additional $18billion that means the day that Rick Wagoner (GM) accepts the bailout money, GM will be $12billion in the hole without paying any other creditors.
What’s the Story Rick? Rick Wagoner is forecasting that by 2011 GM will be able to start to make payments on this federal loan. This forecast will be included in Rick’s viability plan to apply for more bailout money. Do you believe this? GM’s- Rick Wagoner’s past business plans have not been accurate since his first application to borrow money from the TARP fund. There already have been 50,000 jobs cut and 11 factories closed which have not yet stopped GM’s daily increase of debt. The employees at GM have been through this roller coaster before and should be aware of the smoke and mirrors technique that Rick continues to stand behind.
Under Rick’s plan- GM will keep closing factories, laying off autoworkers and have no recovery plan in place to stimulate the sales of GM’s products to the consumer. Is it time for an employee takeover of GM? Experienced employees may have the best solutions to consolidate, cut costs and be viable while streamlining the manufacturing of autos. The staff and workers at GM need to face the reality that Rick is dragging the corporation to a near dead end.
To the average taxpayer, $30billion is a tremendous amount of money and it is hard to comprehend the total amount of GM’s financial problems. The facts that that never get posted in GM press releases is the total $debt GM has on the street. GM’s current cash flow is a leveraged -$10.7 billion, plus monthly losses of $3.5billion and add to that over $1trillion of other GM liabilities. It is very clear to see that the economic stimulus package or bailout money is not going save GM or its employees jobs. Unfortunately the future looks grim as daily news stories unfold about General Motors financial troubles. Once known as the “Heartbeat of America”, GM now needs a heart transplant and we are trying to treat it with an aspirin. It is time to stop prescribing the aspirin.
