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GM's `Time Is Very Short'



Nov. 5 (Bloomberg) -- General Motors Corp., hammered by the worst auto market in 25 years, needs U.S. aid because ``time is very short'' to stop its collapse, says Roger Altman, the former Treasury official advising GM in merger talks with Chrysler LLC.

With the government offering a $700 billion rescue for banks, it should have enough to assist GM, Chrysler and Ford Motor Co., Altman, 62, said in an interview. Altman, now chief executive officer of Evercore Partners Inc., helped with the 1979 Chrysler bailout plan as an assistant Treasury secretary.

``The consequences of a collapse by GM or all three would be very severe,'' he said. ``The impact would be widespread,'' with jobs lost by the companies and their suppliers.

The completion of yesterday's U.S. elections gives GM and other automakers a chance to renew their case for aid with President-elect Barack Obama, who said last week that helping the industry would be a top priority.

One or more automaker failures ``would be a difficult way for a brand-new administration'' to take office, said Altman, an Obama supporter whose Treasury Department service also included working as deputy secretary under President Bill Clinton.

GM fell 16 cents, or 2.8 percent, to $5.56 at 4:01 p.m. in New York Stock Exchange composite trading, while Ford dropped 7 cents, or 3.2 percent, to $2.09.

Altman has been leading the Evercore team advising GM. Two people familiar with the matter say the group includes William Repko, co-chief of Evercore's restructuring unit, and Daniel Celentano, a former Bear Stearns Cos. banker who has done work for GM. Morgan Stanley is also representing the biggest U.S. automaker.

Merger Discussions

GM, Chrysler and Chrysler owner Cerberus Capital Management LP aren't commenting on the merger talks, which come with U.S. auto sales slumping last month to the worst since 1983 and Detroit-based GM posting almost $70 billion in losses since the end of 2004. A JPMorgan Chase & Co. team led by James B. Lee Jr. is advising Chrysler, the third-largest U.S. automaker.

GM sought about $10 billion from the government last month, with Chief Executive Officer Rick Wagoner lobbying in person for help, people familiar with the plans said.

Treasury Secretary Henry Paulson wants any assistance to come from a $25 billion low-interest loan program through the Energy Department, not the bank-rescue funds, the people said last week.

Conditions on Aid?

Altman declined to say what strings ought to be attached to any aid, though he said such conditions were ``appropriate.''

``That's a decision policy makers will have to make, but time is very short,'' he said. He wouldn't say how much time GM had to avoid a collapse and said he wasn't authorized to disclose how much money GM needs.

Former Treasury Secretary John Snow, now chairman of Cerberus, joined the call for federal help for automakers today, telling CNBC that the government needs to ensure ``that a vital industry like autos, which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn.''

A collapse of three U.S. automakers in 2009 would cost almost 3 million jobs in the first year and reduce personal income by $150.7 billion, according to a study released today by the Center for Automotive Research in Ann Arbor, Michigan.

The study takes the worst-case scenario of a shutdown of U.S. automotive production.

Obama Promise

Federal loan guarantees might help stabilize the U.S. automakers, Obama said in an interview last week on NBC's ``Nightly News With Brian Williams.''

Obama said he would meet with the chiefs of GM, Ford, Auburn Hills, Michigan-based Chrysler and the UAW to develop a plan for an industry overhaul, according to a transcript released by NBC.

``GM welcomes President-elect Obama's pledge to support our nation's domestic auto industry,'' the automaker said today in a statement. ``This support comes at an especially critical time as our industry confronts one of the most difficult economic periods in our nation's history.''

The UAW is seeking an additional $25 billion in loans for the automakers for health-care costs and Treasury or Federal Reserve aid for ``immediate liquidity,'' Alan Reuther, the union's legislative director, said today in an interview.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a3VYXICU5_MM&refer=home
 

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Cerberus made a poor decision on buying Chrysler and does not deserve a bailout.

GM doesnt' deserve a bailout either - any kind of financial help should come with two conditions:
1. Removal of all Senior Executives from the company
2. Prohibition of a merger with another company
 

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Cerberus made a poor decision on buying Chrysler and does not deserve a bailout.

GM doesnt' deserve a bailout either - any kind of financial help should come with two conditions:
1. Removal of all Senior Executives from the company
2. Prohibition of a merger with another company
Both should not be bailed out PERIOD! Conditions won't make a difference. Giving them a loan or bailout is wasted money. Given both company's track records over the last two decades, any money they get will only lessen their debts in the short term. In the end, both will end up in brankrupcy.
 

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None of these institutions should have been bailed out, but if the gov't sees fit to bail out it's friends in the finance industry how can you argue against bailing out GM? That's what happens when you bail out one industry: all the others come running for their handouts because they had become dependent on the false economic growth just like everybody else.
 

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Both should not be bailed out PERIOD! Conditions won't make a difference. Giving them a loan or bailout is wasted money. Given both company's track records over the last two decades, any money they get will only lessen their debts in the short term. In the end, both will end up in brankrupcy.
You have to remember the old adage: "When you owe the bank $100,000 it's your problem. When you owe the bank $100M it's the banks problem."

Right now, the feds are looking at $50B to GM and Ford or losing $500B+ in taxes and other factors due to suddenly having 2.5M+ employees out of work and not paying taxes and instead receiving government assistance via unemployment insurance, welfare, etc. With the meltdown on Wall Street they can't afford another massive hit. They're already dumping nearly $1T and if GM goes under it might be another $1T! And all that gets added to the US debt.

No, a loan or bailout is the only option for the US government. And my guess is that on Friday the announcement will be a massive injection of cash from the US government at least equal to what the EU pumped into their auto industry just recently.

If it's not a loan announcement, then it's GM playing chicken with the feds claiming they'll lay off hundreds and, if need be, head into Chapter 11 and all that entails. The US economists already know having GM fail is the worst scenario EVER.
 

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None of these institutions should have been bailed out, but if the gov't sees fit to bail out it's friends in the finance industry how can you argue against bailing out GM? That's what happens when you bail out one industry: all the others come running for their handouts because they had become dependent on the false economic growth just like everybody else.

Remember, the US has bailed out the airlines and other corporations repeatedly. It's not like the US gov't isn't used to doing this.
 

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You have to remember the old adage: "When you owe the bank $100,000 it's your problem. When you owe the bank $100M it's the banks problem."

Right now, the feds are looking at $50B to GM and Ford or losing $500B+ in taxes and other factors due to suddenly having 2.5M+ employees out of work and not paying taxes and instead receiving government assistance via unemployment insurance, welfare, etc. With the meltdown on Wall Street they can't afford another massive hit. They're already dumping nearly $1T and if GM goes under it might be another $1T! And all that gets added to the US debt.

No, a loan or bailout is the only option for the US government. And my guess is that on Friday the announcement will be a massive injection of cash from the US government at least equal to what the EU pumped into their auto industry just recently.

If it's not a loan announcement, then it's GM playing chicken with the feds claiming they'll lay off hundreds and, if need be, head into Chapter 11 and all that entails. The US economists already know having GM fail is the worst scenario EVER.
You know, you seem to be one of the few on this board who thinks before responding to a lot of these comments/posts. For the most part I can't help but agree with you.

The announcement on Friday will be nasty, but may have some good news to it all.
 
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