Is General Motors worth saving? -- Cafferty's 5pm question

[Bozita]

http://caffertyfile.blogs.cnn.com/

Is General Motors worth saving?
Posted: 01:10 PM ET

If General Motors fails the impact would be huge.

FROM CNN’s Jack Cafferty:

As GM goes, so goes the nation…That’s the old motto anyway. Financially neither one is looking so good right now. And General Motors, along with Ford and Chrysler, is looking for some help from our already cash-strapped government to get back on track. Estimates are if the Big Three go belly up, unemployment could hit 10 percent.

But doubts about a bailout for the auto industry grew yesterday on Capitol Hill as Democratic leaders conceded they don’t have the votes to get a measure through in next week’s lame duck session.

If General Motors fails– and it would likely be the first of the Big Three to fall because Ford is in better shape and Chrysler is a much smaller company– the impact would be huge. It’s not just the hundreds of thousands of jobs at GM that would be lost, it’s literally thousands of smaller companies all over the country that sell their products to GM. It’s highly likely many of them would fail as well.

As Time Magazine’s Bill Saporito put it quote, “The decision that Washington has to make is whether we pay for G-M’s survival or for its funeral.”

Because whether G-M gets help from the government or not, as taxpayers, we are on the hook. We’ll have to cover everything from lost tax revenues and higher unemployment costs to G-M’s hefty pension obligations.

Here’s my question to you: Is General Motors worth saving?

Tune in to the Situation Room at 5pm to see if Jack reads your answer on air.

[David Dunham]

1. Yes

[Barack_America]

2. Related question: Is Michigan worth saving?

[onehandle]

4. Not just Michigan. Jobs would be lost coast to coast and Internationally. nt

[onehandle]

3. Millions would lose their jobs. Unemployment would jump by 5% to 10% within weeks.

Yikes.

[This One]

5. Why on the hook for the pensions? They're not federally insured.

[Romulox]

7. Uh, yes they are.

http://www.pbgc.gov/

[This One]

But is it federal money? Their web site says...

"Our financing comes from insurance premiums paid by companies whose plans we protect, from our investments, from the assets of pension plans that we take over as trustee, and from recoveries from the companies formerly responsible for the plans, but not from taxes."

[amandabeech]

16. They will totally run out of money if the Big 3 go down.

They will be treated like the FDIC. The FDIC can borrow money from the U.S. general fund in a crisis. After the crisis, FDIC ups rates and theoretically pays it back.

The same thing will happen to the PBGC.

The question is how much money can the U.S. borrow?

In addition, GM has paid for ALL its retiree health benefits. My uncle is a UAW GM retiree, and he doesn't use Medicare because GM provides it all. It's a throw-back to the days before Medicare which Lyndon Johnson got through Congress in '67 or '68. God bless Lyndon for that one.

If GM goes under, there will be additional strain on Medicare. Also, GM offered long-term care insurance, and my understanding is that it self insured. If that goes down, then Medicaid will be paying for more nursing home stays.

GM offloaded a lot of these benefits to a UAW trust fund a year or two ago. However, GM agreed to put a LOT of money into the trust. If it doesn't get more credit, it will NOT be able to meet its obligations to the trust, and the result will be identical.

[customerserviceguy]

15. Just another Fannie Mae waiting to go belly up

the Pension Benefit Guarantee Corp. is on the same shaky ground that the FDIC is on. When things are going well, the occasional failure can be covered by the rest of the system, when all hell breaks loose, it's worthless.

Imagine every house insured by Nationwide was set on fire tomorrow. The company would be broke, but so would the reinsurers that Nationwide depends on.

[Romulox]

6. LOL, you thought Ohio was a battleground state in '04 and '08.

Let Chris Dodd and Barney Frank come to Michigan and tell us that the New York Financials are worth bailing out, but not working people.

They'll lose this state for a generation. :hi:

[blue_onyx]

14. Yes they would

If Congress passes a bailout but Bush vetoes it (a concerned Sen. Stabenow expressed) then it could push the state even further out of reach for Republicans. If it's the Democrats that don't do anything and just let the companies go down, it could move the state to the Republican column. Michigan's future will likely be decided in the coming months.

[yodoobo]

8. Its two questions.

Is it worth saving? Can it be saved?

I think its definitely worth saving, but I'm not convinced it can be.

Unless GM remakes itself, from top to bottom, it cannot be saved.

[dkofos]

9. Not really. But the thousands of jobs are.

[monktonman]

10. yes

[DJ13]

11. Are we ready for another depression if we let the Big 3 fail?

I wish someone would ask the GOP that question.

[Selatius]

12. Not without sacking the leadership and demanding much higher fuel efficiency standards.

If they want money, they must give concessions to the government such as stopping all opposition to raising CAFE standards and resignations of top senior executives on both the Board of directors and the top management staff. They all must be shown the door.

[This One]

13. Why not just nationalize GM? Market cap is only $1.8B

Then use GM to make fuel efficient cars.

[Lumpsum]

17. It's a loaded question.

How about the MSM asks "Is saving 6 million Americans from losing their jobs worth it?"

Then see what kind of response they get.

Also - fuck Cafferty.

[tammywammy]

18. Yes

[RB TexLa]

19. No. General Motors does not deserve to be saved. The government can

work a deal to shore up a fund for retiree benefits and provide cash to help with the upgrades of GM's assets to new investors and a new company.

GM does not deserve.

GM is not UAW. UAW lives on after GM dies.

[JVS]

20. I agree

[FarCenter]

21. Saved versus not saved is a false dichotomy -- Chapter 11 is the way to go

Declare bankruptcy and get reorganized.

Corporations in Chapter 11 don't shut down, stop producing product, or lay off all their employees. They are sheltered from their creditors, new management is put in, contracts are renegotiated, and they are restarted.

The process would help GM get rid of a lot of management dead wood, strike a better contract with workers, and eliminate a lot of the excess dealer network.

Most of the airlines have been through Chapter 11 in recent years and they are mostly still flying or merged.