You know things are pretty bad for GM when Bloomberg starts sounding like TTAC. Doron Levin's column "GM Turnaround Collides With Dismal U.S. Car Demand" begins by turning around GM's "poor poor pitiful me" PR spin, which would have us believe they're unlucky rather than stupid. "Don't be fooled. That interpretation of GM's latest woes ignores years and years of dallying and denial. The No. 1 U.S. automaker delayed drastic action, hoping that growing automotive revenue might be enough to outstrip ballooning costs. GM has known at least since the early 1990s that its business model in the U.S. was defunct." Levin dismisses the foreign profits as life preserver argument, tosses aside GM's new products and predicts a cash crunch. And here's the twist: Sovereign Wealth Funds to the rescue! "The lenders include the governments of Kuwait, Singapore and Saudi billionaire Prince Alwaleed bin Talal. Perhaps sovereign funds willing to take a flyer on the second biggest U.S. bank [Citigroup Inc.] might be inclined to invest in its biggest automaker." Where did they get that $8.9b for the union health care VEBA from anyway? Meanwhile, Levin says "Without a financial cushion, GM no longer has the luxury of putting off until tomorrow what it should have done yesterday." We say: it's too late.
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RF, These loans come from capital that is controlled by goverments that are named in the article. This does not feel right to me and I think some controls need to be put in place for possible future problems with this arrangement.
If outside investors did come to GM’s rescue, I bet the investment collateral would be the non-union, GM international operations. The Big-3 have been ‘naturally’ protected from takeover by the repulsion of dealing with the mongrel UAW all these years. Nobody is stupid enough to voluntarily step into that mess, (well, except for Cerberus). By the way, I’m not really down on the UAW in general, if they can dupe the Big-3 out of cash, fine. Those guys spend money, and it’s distributed into the economy. I think it’s great the UAW have been around to taunt and aggravate those overpaid, underperforming auto executives; they only learn via a fist in the face.
Agree with Frontline – GM now will be owned by Foreign governments, like our eternal friends, the Saudis.
It doesn’t stink but it definitely smells.
Why, this is the best Chrysler news I’ve heard all month!!
That’ll motivate them to reduce their fuel consumption!
If this happens, and the public gets it, I could see the sales due to “buy American” sympathies going right down the (oil) well.
Yikes.
Bunter
This is what they deserve. The Detroit 3 with the exception of Ford fought tooth and nail to not change or to let true outsiders in to make the changes.
So instead of Ghosen and Kerkorian, you will have
Cerberus and the Saudis and maybe the Chinese. It ccould not happen to a more deserving group.
It’s still my belief that Kerkorian wanted to actually transform either GM or Chrysler and not just strip and flip.