You've got to wonder about the mood at RenCen these days. Watching the price of gas crest $3 a gallon must make GM CEO Rabid Rick Wagoner feel like the Captain of the Poseidon as he trains his binoculars on the dark horizon and spies a mountain of water heading his way. It's not just the horror of knowing what's coming that makes the moment so terrifying; it's the crew's utter powerlessness to alter events. Only the Poseidon just happened to be in the wrong place at the wrong time. Wagoner and his mates have spent their entire time on the bridge steering GM into harm's way. And there's not a damn thing Rabid Rick can do about the gathering tsunami. To review…

For more than a decade, the Tahoe, Suburban, Yukon, Yukon Denali and Escalade have been the cash cows keeping The General in cream. As readers of this series know, when the winds of change gathered force, Rabid Rick called out "Steady as she goes!" Instead of developing new hybrids to capitalize on the growing anti-SUV gestalt, instead of spending money on refining and marketing the fuel efficient vehicles already in GM's vast fleet, Rick bet the company on a quick refresh of GM's gas-guzzlers. Last September, Maximum Bob Lutz launched the resulting GMT900-based Chevrolet Tahoe– between the two hurricanes that decimated America's gasoline production facilities. GM's "new" vehicles were born under a bad sign: $3 a gallon gas.

As always, Maximum Bob put a brave face on events, claiming that The General only sought to maintain its dominance over a shrinking market. Early indications were positive. The American consumers' notoriously short memory and sunny disposition helped them shrug-off rising gas prices as a temporary aberration, an Act of God. TTAC has since unearthed GM's carefully-guarded GMT900 sales numbers, broken-out by model year. In the first financial quarter, GM sold 19,739 new Tahoes, 5028 Yukons and 4228 Escalades. As you'd expect, these figures are dwarfed by sales of heavily discounted '05/'06's: 45,104 Tahoes, 14,398 Yukons and 8145 Escalades. Bottom line? GM pushed some 96k full-size SUV's out the door in Q1, adding about $800m to its balance sheet.

Without that profit, GM's would have lost over a billion dollars in the first financial quarter. But the second major spike in gas prices casts a long shadow over the GMT900's and GM's viability. The recent pump price escalation proves that soaring prices are tied to larger, less random forces than errant hurricanes. American drivers are beginning to cotton-on to the fact that the days of cheap gas are gone. If the price of gas crests $4 a gallon and stays there for the summer– as many analysts predict– the gig is up. Sales of GMT900's will tank, inventories will swell, discounts will follow and GM's descent into Chapter 11 will gather pace.

President Bush has directed the Environmental Protection Agency to temporarily suspend rules requiring different blends of gasoline in various cities (regulations designed to reduce air pollution). If state governments follow suit, losing the legal requirement for ethanol blending, gasoline supplies could be ramped-up and trans-shipped to help meet demand. Gas prices will fall and GM's SUV sales will be saved! That's a big "if." There are plenty of variables that could immediately and completely offset any legislative measures designed to free-up supply: conflict in Iran, Venezuelan nationalization, the summer driving season, a terrorist attack on supplies, distribution and/or refineries; etc.

In short, this might not be the best time to be building lumbering gas hogs. Or is it? The Arlington Morning News reports that GM's Texas factories have added overtime shifts to crank out as many GMT's as possible: about 900 per day. Rabid Rick Wagoner has publicly admitted stockpiling parts in anticipation of a strike at parts maker Delphi. GM's Just In Time manufacturing facilities are not warehouses; given the volatility of key components, the best way to store Delphi parts would be… a complete vehicle. Is GM is stashing GMT900's in the Texas sun? TTAC is investigating.

Meanwhile, the General's ability to provide its assembly lines with mission critical parts is under threat. The Financial Times reports that Tier One supplier Yorozu America recently threatened to stop making suspension components if the automaker didn't fork over $3.7m in disputed payments. More worryingly, Yoruza also demanded an irrevocable letter of credit for at least three times its average monthly turnover with GM, roughly $75m. Deep Throat reports that another, much larger US-based supplier is also demanding up-front payment from GM. As reported here, if this trend takes root, GM faces a 'run on the bank' scenario that would capsize the corporate mothership– whether they like it or not.

Clearly, GM faces dangers from all directions. Pity the poor passengers trapped inside the upside down world of GM.

The ancient Greeks knew the truth: character is fate. If Oedipus hadn't been such an asshole he wouldn't have killed his father, married his mother and kept psychiatrists busy for centuries. By the same token, if Rick Wagoner wasn't a corporate narcissist, he would've completed the Herculean tasks left by his predecessors. GM's CEO would have cleansed The General's stable of excremental vehicles, severed its eight-headed brand portfolio, subdued the UAW's cretinous bulls and sent Cerberus packing. Instead, we get to watch Rabid Rick's company sink into the mire, bribing a financial journalist and engineering a sports car whose roof flies off at 60mph. To wit:

Robert B. Reich is a journalist and commentator who once worked for President Clinton in the Labor Department. He currently enjoys a regular slot on NPR's nationally-syndicated "Marketplace" program. On Wednesday, Reich announced that he'd been approached by a "public relations firm working for General Motors." Reich said the flack asked him to praise GM's buyback deal for its workers. He then offered to pay Reich "remuneration" for a positive story "out of respect" for his reputation. Reich declined the unspecified offer.

The man attempting to bribe the twenty-second United States Secretary of Labor was Richard Strauss of Strauss Media Associates of Washington, DC. According to the company's website, Strauss Media uses its "integrity, perseverance, and skill" to help clients "realize the power and influence of radio." The PR company's client roster includes Nike, Eastman Kodak, Coca-Cola and General Mills. Although Strauss Media Associates doesn't list GM as a benefactor, a description of recent projects includes work on the Saturn brand's Second Annual National Donor Day.

Marketplace's host Kai Ryssdal confirms the connection. In a phone interview with TTAC, Ryssdal said Richard Strauss personally set-up a recent radio interview with GM CEO Rick Wagoner. When I asked if the show's producers investigated Reich's claim that he'd been bribed, Ryssdal said they had. According to Ryssdal, Strauss backpedaled furiously; calling the offer a "misunderstanding." Ryssdal also said the program had spoken directly to GM's new PR Supremo, Steve Harris. Harris said he never authorized payments to "sympathetic journalists." When Reich's damning piece aired, GM and their Washington PR firm remained silent.

So, The General's own PR firm didn't have enough confidence in the value of GM's employee buy-out plan to let a journalist draw his own conclusions. Clearly, the General's generals feel embattled and desperate. And why wouldn't they? What has their imperious leader said or done that would lead them to believe that GM is a company that deals with its problems head-on?

Meanwhile, on the same day, Sprite2005 posted two pictures of his semi-decapitated C6 on a Corvette forum, with an accompanying explantion. "I still can't believed this happened. Had just shifted out of first @ around 6900-7000k, hit 2nd and hear a loud crack, pull over and my roof is missing…" Sprite2005 is not alone. On the 23rd of February, GM sent out tech bulletin number #05112A, which states the following.

"On certain 2005-2006 Chevrolet Corvette vehicles, the painted roof panel may separate from its frame in some areas if it is exposed to stresses along with high temperature and humidity. The occupants of the vehicle may notice one or more of these symptoms: a snapping noise when driving over bumps, wind noise, poor roof panel fit, roof panel movement/bounce when a door or hatch is closed, or a water leak in the headliner." Dealers should "apply adhesive foam to ensure proper adhesion, or in a small number of vehicles, replace the roof panel."

Although the defect doesn't appear to affect the Corvette's structural integrity, an airborne roof panel raises some pretty major road safety issues. Equally important, the situation does nothing to bolster GM's supposed reputation for improving build quality– or the company's willingness to accept responsibility for customer concerns. Notice that the notice says the roof may become separated 'in some areas,' blames "stress, high temperature and humidity" and recommends replacing the roof panel "in a small number of vehicles." If that attitude isn't familiar to disgruntled GM owners, perhaps this [unedited] response is:

"I can't believe how many of you people are actually defending this and saying its not that big of a problem," writes forum member Sweetvet. "The mans roof flew off his brand new $75K car- thats a pretty big friggin deal to me- I would be livid, and would ensure this car was bought back by GM, and would never buy another GM product again. God, I'll be glad when my corvette is sold so I can get back into something with build quality- something (anything) German"

GM's first quarter losses less than last year? So what? As long as Rabid Rick Wagoner is tempting the fates, GM's is sealed. Ipso facto.

I once complained to my accountant about sky-high UK petrol taxes. An oil-producing nation with the highest gas prices in the world? What's that all about? He laughed. "Bitching about the petrol tax is like complaining about a mosquito bite when your carotid artery's been severed." This Sunday, The Detroit News ran a story about GM's $17m Viagra bill. Reporter Brett Clanton justified the titillating take on GM's health care provisions by claiming "company executives" use the factoid to illustrate runaway costs. Be that as it may, Clanton's story is nothing but an inane distraction from GM's death by a thousand cuts, both literal and figurative. Or is it?

The Detroit News seems to have missed the fact that GM workers go to their doctor, get scrips for Viagra, then re-sell the erectile dysfunction medication on the street. Insiders tell us that a large part of GM's $17m Viagra bill ended-up in UAW workers' pockets. In fact, the Viagra story could very well be the tip of a huge drug re-selling scandal (Vicodin, Oxycontin, etc.). And again, that's without considering the REAL story: all the tens of millions of dollars spent on unnecessary tests and procedures– blithely commissioned by doctors and patients who have no incentive to minimize GM's health care bill.

Of course, GM CEO Rabid Rick Wagoner is tackling this whole health care cost situation head-on, right? Back in October, GM and the United Auto Workers (UAW) negotiated a "historic health care giveback." According to the agreement, some 475,000 retired union workers will now make co-pays, capped at $752 per family per year. The health care deal also stipulates that all 118,000 active UAW members must defer 17 cents an hour in cost-of-living increases, and 83 cents an hour in general wage hikes (which were scheduled to take effect next September).

Bottom line? GM could save roughly $360m a year from the co-paying retirees and $245m from the hourly workers (40-hour week = $2,080 per clock-puncher per year). Put the numbers together and GM trims a total of $605m– roughly 11%– off their $5.6b annual health care bill. Unfortunately, in the last three years, US health care costs have risen by around 10% per year. So the GM – UAW health care deal only saves the company 1% of the additional money they WOULD have paid– not the money they're currently paying.

Or does it? The agreement caps the co-pays of individual UAW retirees' (workers without participating families) at $370 a year. And any UAW retiree with a pension of $8000 or less continues to pay nothing. Although the UAW won't break out the number of individual retirees, union officials claim that 74,000 "low income" members qualify for no-cost health insurance under the new plan. If you remove these workers from the above equations, you reduce GM's savings by around $55m, lowering their total reduction to around $550m. That's less than 10% of GM's total tab. So it's a wash, or if you prefer, GM's health care deal with the UAW lets them tread water– until inflation catches up.

Of course, there's more (or less) to this agreement than meets the eye. When the health care deal went down, The General agreed to create a $3b fund ($1b over three years) to cover the co-pays of workers who couldn't afford them. Do the math: GM plunks down $3b to save itself $550m a year. I make that and five-and-a-half year's savings paid in advance. Obviously, there's a whole lot of tax law and actuarial stats in all this, but the fact remains that the UAW's "givebacks" were GM's "pay forward." And though GM's new plan initiates at least some kind of accountability, the UAW's gold-plated health care coverage continues apace.

And while we're at it, who gets the interest on this $3b fund? Five percent interest on $1b is $50m; times three is $150m. Neither GM nor the union will answer this question, but if the cash goes into the UAW's coffers, what effect will that have on the UAW's motivation to play ball with GM come contract negotiation time in '07? Should they get that far. As everyone now knows, a Delphi strike could scupper the mothership. Of course, the union would need a pretty large strike fund to bring Delphi/GM to its knees. Money that GM's health care deal could be putting into union coffers.

Meanwhile and anyway, neither UAW members nor this writer considers Viagra a "lifestyle" drug. Pfizer's erectile dysfunction medication is critical to its users' mental well-being and the cohesion of their family unit. Making Viagra jokes about GM's ED patients (should they exist) is cruel. Besides, if GM's PR department has suddenly decided it's open season on sexual chemistry, what of Rick Wagoner's testosterone levels? Surely Generous Motors should pay for the drugs Wagoner needs to increase his testicular fortitude, and sort out his company.

At yesterday's New York International Automobile Show, Bob Lutz provided the hook for GM's PR counterattack. Of course, the Car Czar's rallying cry wasn't planned. As usual, the former Marine aviator simply greeted the press, opened his mouth and OoRah! came out. 'GM has the worst behind it.' Whatever else you can say about Maximum Bob Lutz, the man is an idiot. While GM's first quarter results will be a lot less bad than last year's annus horribilis, Lutz' statement flies in the face of the growing, looming, unresolved, irresolvable conflict over at bankrupt parts supplier Delphi; the fact that GM's gas-guzzling SUV's are heading straight into a $3 a gallon shit storm; and a shoal of dangers so extensive that GM CEO Rick Wagoner has taken to calling it "stuff." But wait; there's more!

"Soon all will be revealed,' Lutz said. 'I can't mention figures, because I'd get in big trouble." So, Mr. 'Don't Tell Mommy' wants the nattering nabobs of negativity vulturing GM to believe that his company's management team (whom MB has just placed in harm's way) has a secret plan to pump-out GM's umpteen flooded compartments and restore the company to preeminence. Well, profit. Never mind that GM watchers have been waiting for an aggressive restructuring plan since 1973, or that every time Rabid Rick Wagoner steps up to the dais these days and says "Ta Da!" he's closing, cutting and/or buying out something or someone. If we're looking for company-saving revelations, what could possibly top the still only potential sale of 51% of GMAC for $14.1b? The mind boggles.

Or maybe I misunderstood. Maybe Maximum Bob's saying that GM's financials are about to get better. That would be odd. In March, GM's market share tumbled from 26.5 to 23.3%. Car and truck sales fell 15%. As for new product, The General has shot its wad, placing its bets on gas-guzzling GMT900's. Although Bob and his Booster Brigade are cheered by the supposed surge in sales of these brand new-ish Tahoes, Yukons, etc., it's best to remember that GM books fleets sale on "allocated preference" (i.e. when they're scheduled for production) and/or as soon as an SUV ships to the dealer. Also, Rabid Rick's publicly admitted stockpiling parts in preparation for a Delphi strike; perhaps Bob's optimism is based on "phantom" figures…

In fact, GM might be teetering on the brink of financial collapse. No one outside the company knows how low GM's US cash hoard has gone between balance sheet dates. And while Maximum Bob was busy entertaining the press corps, GM's purchasing guy publicly stated that The General is stretching its account payables to 55 days, essentially financing itself on the back of its vendors. That's not good. Nor is the recent revelation that the GMAC sale will NOT improve GM's credit rating and WILL slaughter GM's cash cow, starving The General of ANY dividends for five years. As one correspondent put it, "This deal does nothing to facilitate a restructuring of North American operations, but rather lets them keep the lights on until the UAW calls the end game."

I reckon the light at the end of Bob's tunnel is the headlight of an oncoming General Motors FP59 diesel-electric locomotive. But hey, that's just me. And Bob thinks I'm full of shit. 'Most of the analysts living in New York don't even own cars, and have never even visited one of our dealerships,' Maximum Bob proclaimed. 'At some point, I start to question whether they're holding short positions on the stock.' (FYI: This writer owns a car but not GM stock. And thanks to GM blacklisting, I've visited several GM dealerships for test drives.) As Detroit News reporter Brett Clanton pointed out, Lutz' analytical anti-Christs are the same effete intellectual snobs who heard GM predict that the company would be solidly profitable in '05– the year it lost $10.6b.

But Bob's not done playing the dozens with us financial and media mavens, announcing that "The imminent bankruptcy at GM is a myth created by Wall Street and our beloved media." It's nice to be loved, however sarcastically, but this website has been begging to differ on the Chapter 11 front for over a year now. Bob's said nothing to change our perspective and plenty to reinforce it. Sure, Maximum Bob's blend of feistiness and anti-intellectual, anti-media paranoia played well with his dealers and GM's decimated, dispirited troops. Maximum Bob's force of will even gave GM's beleaguered (not-to-say overvalued) stock a temporary boost. Be that as it may, Lutz is, at best, guilty of premature recapitulation. At worst, he's completely divorced from reality. Bob says "the last skeptic in America will [soon] be convinced that we are well on the way to recovery. GM has its best days ahead of it.' We say, well, good luck with that.

I wonder what Billy Durant would have made of Rick Wagoner. GM's founder was a man of great honesty, intelligence and drive. He was also a high school drop out who started the company with a $1000 loan– and ended-up penniless. Twice. Perhaps that's why historians tend to credit General Motors' epic growth to the man appointed president in 1923; about whom an observer wrote, 'The manufacture of correct assessments, not physical products, is what most gratified Alfred Sloan.' Billy was the "car guy." Alfred was the "bean counter." The history of GM is the history of the struggle between these two opposing forces: passion and, um, accounting. Rick Wagoner is, of course, a Harvard MBA.

I suppose Durant would have liked Wagoner well enough, at least at first. Durant's legendary charm was based on a simple but effective strategy: "Assume that the man you are talking to knows more than you. Do not talk too much. Give the customer time to think. In other words, let the customer sell himself." Rabid Rick is pretty good at selling himself these days. With a new PR guy pushing the buttons, Wagoner's making the rounds, defending his chairmanship on CBS' 60 Minutes and Face the Nation, and in the pages of The Wall Street Journal and other carefully-selected publications. So if Rick and Billy were schmoozing about GM, Wagoner would have done the talking.

What would Billy have thought if Rick repeated his recent kvetch to Newsweek? 'It's not so easy to do stuff, particularly if you can't do it yourself, if you've got to do it in cooperation or in conflict with unions, if you do it with Delphi, if you need partners to consider a partial sale of GMAC. What has been done in the last six months borders on unprecedented accomplishments and advances. This stuff didn't happen because somebody decided on Jan. 15, why don't we do stuff? This stuff happens because we're working on it, we're ready to do it, we're talking to people, and then when we have it ready, we announce it.'

Durant would have been alarmed at Wagoner's use of the word "stuff." Billy may have been the yin to Alfred's yang, but he was every inch the detail man. He knew every nut and bolt of every vehicle, every nuance of the production process. Durant would not have been pleased with a GM CEO who spoke with such thinly-veiled buck-passing imprecision. As a risk-taking deal maker extraordinaire, Durant would've also wondered why Wagoner hadn't already united GM's "partners," or taken the bold action necessary to avoid GM's current morass. Equally important, as a man who lost his company to conservative-minded "insiders" (twice), Durant would've also had problems with Wagoner's "company men know best" hubris. To wit:

"These are sophisticated problems with historical tails that run back 80, 90 years. The chance of someone coming in and not understanding our business, making the right calls and doing them in cooperation with key constituencies like dealers and unions, is absolutely microscopic. That would be the biggest risk I've ever heard of." Risk? What does a man who's never worked a day outside Generous Motors (its former CFO no less) know about risk– except how to avoid it at all costs? Even so, Durant would have kept his trap shut. And then, at some point, Billy would want to go for a ride.

Durant believed that great products make great companies, and vice versa. GM began when Durant was so impressed by a horse-drawn buggy's innovative suspension that he bought its manufacturer: the Coldwater Cart Company. One wonders which vehicle Wagoner would choose for Billy's test drive. A Corvette would certainly swell Durant's heart with pride. Anything else and… there would be questions. Why doesn't this Tahoe have a hybrid engine? What makes a Pontiac G6 better than a Toyota Corolla or Honda Civic? Why isn't the Cadillac STS as good as/as expensive as a Mercedes S-Class?

Durant would have listened to Wagoner's responses thoughtfully and concluded that GM's CEO had an answer for every objection, every fault, every danger; and the answer was always the same: we're working on it. Things are getting better. We'll sort out the jobs bank, the quality gap, the Delphi situation, the GMAC finance deal, our car sales, this car, all of it, everything, later, soon, sooner or later. In that sense, Durant might have seen something of himself in Wagoner. Like his father before him, Billy squandered his fortunes on stock market speculation. Gamblers understand denial. They know that some men will always believe– no matter what– that their salvation, their resurrection, is only a deal away.

So, if William C. Durant were Chairman of GM today, would he fire Rick Wagoner? Truth is, Billy never would have appointed Wagoner CEO in the first place.

[For more info., please read 'Billy, Alfred, and General Motors' by William Pelfrey.]

When things are going well, when the US economy's humming along and the right models await eager buyers on dealer lots, being the world's largest auto maker in the world's largest automobile market is a license to print money. When the stars are aligned, GM's economies of scale, eight brand range and vast dealer network make it an almost obscenely profitable enterprise. Lest we forget, The General earned tens of billions of dollars in the SUV-mad 80's and 90's. If you're wondering why GM's fortunes have reversed so quickly, dramatically and irrevocably, there's your answer: they're victims of their own success.

GM execs have two ways to stand out: make more sales (by striking out in new directions) or make more money (by doing more of the same). Since it's hard for GM NOT to make money in good times, GM managers invariably opt for the safer option. Sure, every now and then, someone sets a lofty new goal: selling Cadillacs in Europe, building fuel cell cars, reinvigorating a struggling brand, etc. And then the next group of suits comes along and ignores them. After all, THEY didn't come up with the idea. And big ideas take time. How could a highly-paid exec use a long-term project to score career-boosting credit? No wonder every new generation of vehicles has a new set of names; no one wants to share credit with an old project.

Bottom line: GM execs know that hitching their star to a long-term project like hybrid engines is a quick ticket to a dark basement. No, it's far better to glom onto less adventurous, less expensive ideas that show immediate profit: a rebadged minivan for Buick, a rebadged roadster for Saturn, employee discounts for everyone, a range of newish SUV's, etc. Even if an exec succeeded on a more audacious venture– should he still be alive when it came to fruition– which looks better on their resume: 10,000 conquest sales or an extra three hundred million dollar profit?

GM's inherent timidity has lead to a slow erosion of the company's presence in the marketplace. Even when profits were flowing, The General's general lethargy and allergy to innovation kept its products at least a full model cycle behind Toyota, Chrysler, Hyundai, etc. GM held up its bottom line, but it lost precious market share. Round after round of downsizing has cost the company dearly, perhaps fatally. For every active employee, The General pays pension benefits and health care for 2.5 retirees. That's a Hell of a lot of deadweight. And it's about to get worse; GM recently announced its intention to buy out tens of thousands of active UAW members.

Besieged union members like to point out that GM made this bed. They're right. Back when GM had a mountain of money, The General's generals traded a significant proportion of their immense wealth for labor peace– and then backed themselves into a corner. The General's switch to just-in-time inventory and production elevated labor peace from reassuring to essential. Slim inventories are a great thing for a cost-conscious company (and a stick that GM's competition used to beat them with), but the process handed enormous power to GM's unions. [Note: before giving your partner a loaded gun, make sure you both mean the same thing by the word "partner.']

And now GM is cash-strapped. Oh wait, it isn't. If the sale of their GMAC finance unit goes through, it'll dump $12b into the corporate coffers. And if history serves, GM will use the cash to pay off the unions, keep making the same short-sighted decisions that brought it to the brink, and hope the market turns in their favor. Using the cash to hive-off two or three companies would be better for both the corporation and its assets. Cadillac is eminently saleable. Chevy is a respectable budget car company with a good truck arm. Someone's bound to buy Hummer. A foreign brand might buy Saturn just for the dealer network. Alternatively, GM could spin off SAAB and Hummer, kill Pontiac and Buick, and grow Chevrolet and Cadillac.

In whatever guise, a smaller GM would be a wiser GM. Constricted resources would increase accountability and force the company to sort itself out for both the short and long term. Once again, the problem is… too much money. For one thing, the $12b from the GMAC sale will make it virtually impossible to wrest concessions from the UAW. For another, the current downturn may shake-up GM's Board of Bystanders, but the stock price is still too high for a hostile takeover. Sooner or later, bankruptcy looms. Can the world's largest automaker survive bankruptcy intact? Will the pieces still be viable after Chapter 11? Watch this space…

At 9:30am this morning, a group of lawyers representing bankrupt auto parts supplier Delphi will appear in front of Federal Bankruptcy Judge Robert Drain. The lawyers will file legal motions for Sections 1113 and 1114. It's a legal request to void Delphi's current collective bargaining agreements with the United Auto Workers (UAW). The moment the judge says the word "granted," he will terminate the wage structure, post-retirement health care and life insurance plans for the company's 33k US hourly workers. The UAW will respond with a strike against Delphi. Starved of its former subsidiary's parts, GM's assembly lines will fall silent. The General will begin its final slide into Chapter 11.

There will be a gap between Delphi's filing, the judge's final ruling (May 9th) and industrial action. During this highly fraught interregnum, Delphi President Steve 'Quotation Marks' Miller may make a fourth wage and benefits offer to the UAW. The proposal would fall somewhere between the workers' current compensation ($27 per hour) and Miller's last last stand ($16.50 per hour). As we've said before, the UAW will accept nothing less than the status quo, and that's somewhere where Miller won't go– at least not without GM footing the bill. Common sense says if GM CEO Rick Wagoner was going to ride to Delphi's rescue, he would have done so already. Chances are he can't.

Analysts estimate that the General's got about $20b lying around. Take away the $10b GM needs to run its business, add in its line of credit, discount its line of credit (the company just got locked-out of $5.6b worth of previously available funds), add in recent and upcoming sales of overseas assets (including Isuzu), discount the cost of recently announced worker buyouts and plant closures, add back the cost of worker buyouts (it's unlikely that many workers outside the infamous jobs bank will take-up GM's offer), discount ongoing losses from its automotive operations, ponder the possibility of more "accounting adjustments," throw your hands in the air regarding the possibility of GM selling majority interest in its GMAC finance unit (The General's only remaining lifeline), and you'd be forgiven for wanting to check Rabid Rick's wallet.

GM's inability/reluctance to pay off Delphi's UAW work force may be the clearest indication of The General's true financial situation. In fact, despite a stock price still hovering around $20 a share, the world's largest automaker could very well be worthless. I write that with some trepidation. I'm aware that any large institution in extreme financial crisis is susceptible to the fatal effects of negative perception. So much so, it's entirely possible that GM's fate will be sealed somewhere well away from federal bankruptcy court, by someone who simply loses faith in The General's future. For example…

Although The General has pledged to reduce sales to rental car fleets, the automaker still sells as much as 15% of its US production to these volume/discount buyers (roughly 600k vehicles). All of the purchases are financed by large banks, who lend money to the fleets based on the strength of GM's buyback guarantee. All of these banks have industry analysts who now admit (if not actually forecast) the possibility of a GM bankruptcy. Should the banks suddenly decide that GM's buyback guarantees are meaningless, financing for GM products would dry up quicker than the Mojave Desert after a light drizzle. Without rental sales, well, as TTAC's Deep Throat eloquently puts it, GM would soon be Tango Uniform.

Alternatively, GM's suppliers could be its ultimate downfall– a poignant reversal given how harshly The General has treated its parts-providing "partners." While GM's biggest suppliers aren't anywhere near as short-sighted as the UAW (i.e. they know better than to kill the golden goose, no matter how pitted and pathetic it may seem), a smaller, mission critical, non-GM dependent supplier could look at the lay of the land, get up its gumption, and refuse to give GM credit on terms. GM would have to put cash up front for its parts. Once news of the deal got out, all of GM's suppliers would seek similar protection. GM couldn't survive this "run on the bank" scenario.

And so it goes. As anyone who's been following this story knows, we're at the point where if it's not one damn thing, it's another. Critics who call for Wagoner's head are missing the point. GM has expended all its capital: political, creative, financial, moral and, now, psychological. When I started this GM Death Watch, TTAC was one of the few places where the words "GM" and "bankruptcy" appeared in the same sentence. Those days are gone, and it's not our fault. Time and time again, GM had their chance to do the right thing. To stand up, admit their failures and change their business. Now, it's too late.

Ward's Automotive recently profiled Pete Gerosa, GM's former Vice President for Field Sales, Service and Parts. Although Gerosa's heading for retirement, he's still on the road, selling the company line to GM's dealer network. Reporter Steve Finlay painted the 42-year industry veteran as a living link between GM's past and professed future: selling the vehicle, not the deal. While Finlay pressed Gerosa on GM's so-called value pricing, the scribe failed to confront the exec about GM's recent sales incentives or The General's March Madness campaign. In any case, Finlay's feature contained a telling tale.

At a dealer conference, David Latshaw, finance director at Shaver Pontiac in Thousand Oaks, CA, asked Gerosa why GM can't build enough Solstii to meet demand. "Our dealership had 600 initial orders and only got thirteen cars,' Latshaw said. "What is the right number?' Gerosa answered. 'Too many, and you discount. Too few, and there are waits. But thirteen is too low." Ya think? Latshaw: 'We put a sold Solstice in the showroom just to display it, and people were saying, 'I want to buy that car!' They got mad when we told them they couldn't. They were freaking out. We had to hide the car in back." Before we file that one under defeat, from the jaws of victory snatched, note Gerosa's inability to accept responsibility for the company's screw-up or promise any kind of resolution to an ongoing problem.

Mr. Gerosa may be a tenacious and dedicated foot soldier. His efforts may have earned The General tens of millions of dollars. But his career arc and atttitude reflect and reveal a company without the slightest hint of personal accountability. Where middle management fails upwards or, at worst, sideways. Where assembly workers' jobs are secure whether or not there's a market for the products they produce. Where a CEO and his team can oversee the inexorable dimunition of their company's market share, losing $8b in a single financial year, and continue to get paid millions of dollars to hold the tiller. Where GM's Vice President of Global Product Development can threaten American jobs without repercussions.

Check it: At the Geneva Auto Show, Maximum Bob Lutz addressed the pressing issue of US labor costs and dropped this pearl upon the press: 'Hourly workers in the U.S. no longer are faced with a choice between high-paying jobs and low-paying jobs. They must choose between jobs or no jobs at all… In a few years time, it's clear that the Chinese automobile industry will be capable of exporting products. There's no doubt that someday we will be (using) GM China as a source of products. I'm very optimistic." Even if it's true, it's not exactly what you'd call helpful– given GM's do-or-die labor negotiations at bankrupt parts supplier Delphi.

But who's going to stop the septuagenarian Car Czar from shooting his mouth off? Rick Wagoner? Like Gerosa, GM's CEO is a lifer. Rabid Rick's learned that there's no comment or action or inaction that doesn't disappear off the face of the earth if you just give it enough time. Drop $4b on FIAT? Pontiac G6 a sales dud? Hybrids and muscle cars ten years too late? GMAC sale a bit… delayed? SEC probe unearthing some nasty accounting problems? Forgeddaboutit. Literally. It's a logical corollary of unaccountability: all failure is temporary, survivable and, ultimately, irrelevant.

GM watchers who are shocked by the lack of urgency over at RenCen don't understand that GM's corporate culture is the ultimate defense against reality. Nothing can go that wrong because even if it does, well, life goes on. Rabid Rick cashes in GM's chips at Suzuki, uses the money to pay off Delphi's workers and everyone goes back to business (or lack thereof). That fire burning-up GM's cash reserves? Oh, we'll put it out eventually. It's the same mentality that the UAW displays in its negotiations: tough it out, give them nothing and everything will be OK. That's the way we've always done things around here, bankruptcy or no bankruptcy. Even if the union leadership knows better, they know their members don't.

It's Pan Am redux. The international airline once enjoyed a clear playing field: no significant competition and enough money to give the unions whatever they wanted. When deregulation arrived, the company considered itself too big to die– even as it lost market share, sold off assets, wiped billions off shareholder equity, suffered union strife and floundered in an endless sea of red ink. An article by Jon Marcus and Gretchen Voss quotes a financial advisor to the company: 'Half of Pan Am's problems were caused by circumstances. The other half was caused by the culture, which seemed to make perfectly rational men think they were invulnerable once they walked through Pan Am's doors.' Nuff said?

As GM fast approaches the day when it surrenders its world's largest automaker title to Toyota, it's important to remember that we're still talking about a corporate colossus. If you include fleet sales, The General makes one in every four vehicles sold in the United States. Obviously, GM's problem isn't volume. It's profitability. GM's US operations are still designed to cater to a third of the US car market. That's Hell of a lot of fat to trim– especially with a union that hears "efficiency" and thinks "downsizing". Meanwhile, The General has an even bigger problem: it doesn't have a heart.

An automotive brand's "heart" is the car that the average customer associates with a given brand. It's the vehicle whose character most clearly personifies the brand's values. Toyota has the Camry. Honda has Accord. Nissan has the Altima. Ford had the Taurus (and demolished it to push the Explorer). GM has nothing. More importantly, Chevy has nothing. Remember "the heartbeat of America"? It's on the crash-cart, waiting for a transplant.

Ironically, Chevrolet sells The General's halo car: the Corvette. The 'Vette is a world-class sports car whose style, power and handling has met with universal approval. It's a sexy, well-engineered vehicle that should instill pride into the heart of every American enthusiast. And yet the 'Vette is not Chevrolet's heart. How could it be? At $50k plus, it's far too expensive for the average car buyer's pocketbook. Even if were affordable, a two-seater does not speak to the average car buyer's real world aspirations. If it does, the Corvette says one thing: toy. Just like the Pontiac Solstice, the 'Vette is little more than showroom eye candy.

Meanwhile, at the other end of the financial spectrum, the $10k Aveo is an equally unlikely candidate for becoming Chevy's "people's champion." Even without considering its flaws, the Korean car's point of origin rules it out. The new Impala is a sensible, well-built car, but it's the automotive equivalent of a straight-to-video movie: a rental car wannabe from the word go. The Malibu is decently equipped, reasonably frisky, sensibly priced and no rental slut (unlike its predecessor). But it's another slab-sided scoop of low-calorie vanilla with a Motel Six interior: one of the few cars that can make an Accord or Camry look sexy. As for Chevy's trucks, that ship has sailed.

Chevrolet seems to think that selling something that doesn't suck is enough to fill this gap. It's not. Chevy needs one bullet-proof, brand-defining car. The company needs to build one superb machine that buyers can examine inside and out and instantly "get it". An inherently desirable car that tells the world what it means to be a Chevy. The heart car should have a modern engine (a baby Northstar), the best possible cabin materials, plenty of standard equipment (in recognizable trim levels), superb build quality and just enough style that you know who built it.

Profit margins have nothing to do with it. The only way Chevrolet can claw their way back to credibility is to take the financial hit and build something so outstanding in both form and function that it redefines GM's home brand for years to come. Profit can come later– and it will. Good niche vehicles grow off of good roots. (Weak trunks grow into Azteks.) While the heart car's volume grows, it will provide a decent base for more profitable spin-offs. A good heart car could spawn a sport coupe, and some of those vaunted "crossovers", including the original crossover, the minivan.

In fact, Chevy's flagship model could be a minivan. There are over a million of these family haulers sold in the US every year. (Chrysler, Honda and Toyoda own 75% of the market, with the Japanese skimming the cream, and Chrysler doing the volume.) GM's current minivans are warmed-over nose-jobs grafted onto overly-narrow European platforms– more proof that GM doesn't have a clue. A feelgood proletarian minivan with genuine American style and plenty of class could be a profitable volume seller, and an appropriate model to show the world what a "real" Chevy is all about– well, these days.

Why go on the attack now? Because the best defense is a good offense. When GM abandons a market, the competition consolidates and goes for it. Backing only the profitable lines built GM's bottom line– barely– but it kills brands. Even now, Toyota and Nissan are taking aim at the full-size pickup truck market. They've been at this for years; they haven't got it all together yet. But they're going to keep whacking the door with an axe until it opens. (We've seen this movie before.) In both pickups and mass market motors, GM hasn't pushed back. It can't. Not because it lacks guts or talent or money. It simply doesn't have the heart.

It's official: bankruptcy is good for GM. In their recent ass-covering exercise for the Securities and Exchange Commission (SEC), The Ford Motor Company listed 'adverse effects from the bankruptcy or insolvency of a major competitor' as a significant risk to its financial future. Translation: if GM goes bankrupt, The General will slough off its excessive labor costs and become… wait for it… competitive. So competitive, in fact, that Ford reckons GM's products would gain an important price advantage. Well how about that?

Obviously, there's more to it than that. Ford's SEC filing also alerts investors that GM's Chapter 11 could destroy The Blue Oval's supply chain. Both automakers share a large number of mission critical parts suppliers; if GM's submersion sucks vital parts makers into bankruptcy– which it most assuredly would– Ford will lose access to the bits and pieces it needs to build Fords. In fact, it's hard to see how Ford could survive a GM bankruptcy. Or why it would want to. The automotive community is slowly (and quietly) beginning to conclude that bankruptcy is both the only thing and the BEST thing that can happen to GM, and, by extension, Ford.

To review: GM can't build competitive vehicles at a profit. It's got too many models, brands and dealers. Too much bureaucracy, waste and inefficiency. Its labor costs are too high, its capital investment is too low and its supply chain is about to snap. And GM can't change a thing. The United Auto Workers' contract prevents any wage or benefits cuts, and precludes any alteration to their Byzantine working practices. Legal obligations also stop GM from trimming its distended dealer network or euthanizing fatally wounded brands. To survive, GM needs to lower its costs and revamp its business. And it can't do that without Chapter 11.

Oh, OK, it could, if everyone pulled together: investors, management, unions, dealers, suppliers and customers. But they won't. It's not in their nature. And even if it was, GM CEO Rabid Rick Wagoner is singularly incapable of tackling this monumental leadership challenge. And even if Rabid Rick could unify all the negatively charged particles in the GM universe, it's too late. The General doesn't have enough cash to weather the turbulence between business-as-usual and the end result of a difficult and dangerous overhaul. Nobody's going to give them the extra money– at least until The General declares bankruptcy. As Ford publicly acknowledged, only bankruptcy can give GM the wiggle room it needs to implement necessary changes to the way it goes about its business.

So be it. As I said at the beginning of this odious odyssey, GM will emerge from this multi-decade debacle a smaller, leaner and better automaker or, preferably, automakers. And that's why Ford's worried. Of course, they're not the only ones. The prospect of revolutionary change is making everyone involved a little, well, crazy. We're already seeing some strange behavior emerge from GM World: a public pledge to end national incentives followed by the announcement of a "March madness" sale, exciting new cars playing one-two-three green light, red light, green light; a Board Member and Car Czar squabbling over a moribund Swedish car brand, etc. It's the End of Days, Detroit style.

As GM's fate reaches its terrifying conclusion, workers will get all the attention. The moment the axe falls, whether by a slow strike or a lightning default, the spotlight will shift to "the little guy." Needless to say, the media will depict them as victims. They'll highlight the most desperate cases and blame their fate on management incompetence, outsourcing, the Japanese, the Chinese, foreign trade policy, currency manipulation, oil prices, George W. Bush, the anti-GM press, anyone and anything other than the workers themselves. Never mind that a huge number of these workers performed two hours work for eight hours pay. Never mind that thousands were willing to receive full pay and benefits for doing nothing whatsoever. It will always be someone else's fault.

Understand this: GM's workers are no better or worse than any of the other players in this sad saga. All of them work for a company where personal responsibility doesn't exist. Where everyone thinks they deserve to be well-paid, no matter what they or the company does, or doesn't do. Yes, there are plenty of good people within GM. And here's the kicker: most of them can't wait for the company to file. They want to see an end to the waste, laziness, greed, corruption, inequality and stupidity they see around them. When GM becomes the world's largest bankrupt, these good men and women will be satisfied, knowing that there is justice in the world. And they'll be hopeful; that something good will replace something bad.

Yesterday, The Detroit News caught-up with Maximum Bob Lutz at the Geneva Auto Show. GM's Car Czar was busy unveiling Saab's Aero-X, a Corvette-based concept car from a brand that's lost GM several billion dollars over 17 years. It probably seemed as good a time as any to ask Maxi Bob about GM Board of Directors' member Jerry York's call to axe the Swedish brand. 'I've spoken at length with Jerry York,' Lutz said. 'And he's off this get-rid-of-Saab thing.' Thing? Calling the Turnaround King's strategic recommendation a "thing" is so condescending it qualifies Lutz for a British knighthood. More importantly, Maximum Bob's summary dismissal tells you all you need to know about Saab's future, and it ain't good.

Lutz' alternative to York's Saabicide is badge engineering. Or, more specifically, MORE badge engineering. Yes, now that The General has sold off its share in Subaru, the plan to transform Japanese Scoobies into Swedish Saabs has been ditched in favor of turning German Opels into Swedish Saabs (with an Ohio SUV thrown in for good measure). In other words, GM is fully committed to integrating the Saab brand into the bureaucratic clusterfuck known as GM's "global vehicle development system." Saab's ignition key slot will remain in between the front seats, but the decisions about its major components will now be taken somewhere a long way away from Sweden. And the choices will be made by a series of committees with far greater responsibilities than "just" Saab.

Never mind that GM Marketing Maven Mark LeNeve recently swore on a stack of Solstii that GM would no longer slap a badge on a standardized GM product and call it a Pontiac Torrent (oops). Don't confuse Maximum Bob with the company line; the man's talking about returning Saab to profitability by lowering the division's cost per unit. 'Soon.' Anyway, as the Saab faithful will tell you, it's too late to worry about the brand's identity; the Opel Vectra-based Saabs drive remarkably like… Opel Vectras. If you still cling to the belief that this platform sharing arrangement serves the greater glory of Saab, or, alternatively, justifies its destruction, Maximum Bob's happy to dispel either proposition. 'Saab is no longer an independent company that you could sell off as a unit.'

Now there's a bit of auto industry theater for you: Bob Lutz proudly admitting that GM has killed its Swedish goose before it could lay a single golden egg. Yes, proudly. As far as Maximum Bob is concerned, the de-Saabing of Saab is not only desirable, it's overdue. 'We left it independent way too long. Three years ago, Saab had its own capital budget. They ran the business as if it didn't belong to General Motors. Now, it's totally blended into the worldwide architecture plan.' Saab has its own budget? Who the Hell do these Swedish guys think they are, a car company? We've got a business to run here, Sven.

If you want to know why GM makes such a broad range of substandard products, why they can't or won't build a truly magnificent Saab, there's your answer: centralized power and control. The ends of the The General's vast Empire constantly fight against the center– and lose. Can you imagine the difficulty Saab has– I mean would have had– sourcing a seat bracket? Can you imagine the difficulties they would face if they tried to make a NEW seat bracket? Theoretically, the GM corporate mothership helps each brand achieve its goals. In practice, The General's overarching bureaucracy sucks the life force out of everything it touches, until all its vehicles are as bland and lifeless as a Pontiac G6.

The opposite of corporate synergy is… GM. The "global architecture" that makes Lutz' heart beat that little bit faster was designed by the company, for the company. Putting as many models as possible on the same platform using the same bits will reduce each brand's unit costs, but it won't enhance each brand's character or the consumer's pleasure. In fact, Saab never stood a chance against the legions of GM pencil pushers, bean counters and union reps: people who couldn't care less if a Saab looks, feels and drives like an Opel as long as its sales, marketing and production don't violate GM's corporate practices.

All of which makes the Aero-X concept a fitting memorial for Saab: a striking vehicle whose beauty and imagination will never see the light of day. Oh sure, Lutz dutifully mouthed the usual crap about incorporating the X' "design cues" into Saab's lineup, but it's hard (not to say nauseating) to imagine GM adding the X' aeronautic themes to Saab's rebadged Trailblazer. The Aero X is physical proof that "crisis what crisis?" GM is happy to celebrate its corporate diversity– even as it grinds its divisions, and itself, into the dust.

[UPDATE: After receiving an email from Jerry York, Maximum Bob Lutz has publicly retracted his contention that the GM Board member favors the continuation of the Saab brand.]

A couple of days ago, I was talking to an auto industry analyst about the world's largest automaker. We were discussing the cracks in GM's hull, trying to figure out which of The General's compartments were already breached, which are filling with water and which remain viable. A wistful tone in the analyst's voice indicated head-shaking dismay. "I'm no longer hearing anything positive about GM," he revealed. "The conversations range from how bad it is, to how bad it's going to get." I didn't want to sound like a paranoid fantasist to a new source, so I tried not to out-pessimist the doomsayers. But it wasn't easy.

GM's supply situation is dangerously dire. If former subsidiary and mission critical parts supplier Delphi doesn't reach an agreement with its unionized workers by March 30th — the third and "final" deadline — a judge will void the company's labor contracts. Pundits poo-poo the possibility; they reckon the UAW will make concessions and GM will fork over the necessary union blood money to keep Delphi chugging along. But… over at Tower Automotive, the smaller but equally bankrupt GM supplier tried to cut $1.50 to $3 from their union members' $13 to $15 hourly wages. The United Auto Workers (UAW), United Steel Workers and International Union of Electrical Workers (IUEW) said no. On Monday, a judge will void Tower's union contracts. The inevitable strike will deprive GM's Hail Mary GMT900 SUV's of vital suspension components (amongst other things).

This ominous development reflects the indisputable fact that the UAW and its brother unions are not prepared to surrender a single dime in their salaries, pensions or health care benefits. Not one. Not ever. (I doubt UAW Boss Big Ron Gettelfinger has ever said the word 'concession' in public.) What's more, the unions are literally spoiling for a fight. To wit: members of IUEW will vote today to authorize its leaders to strike Delphi as and when. That's 33,000 Delphi workers ready, willing and able to walk at a moment's notice. It's not posturing; it's preparation.

The unions own GM. If organized labor strikes even one key supplier, they'll be giving The General a 90-day death sentence. While some analysts believe that's no bad thing– the situation forces the unions to accept responsibility for the fate of the company paying its wages, leading them to take the hit needed to keep those wages coming– nothing could be further from the truth. The UAW and its fellow unions are like a cancer: they will feast on their host until it dies. End of story. Why would they walk out on Delphi and send GM into Chapter 11? Because they can. Look at the Rust Belt. How avoidable was that? By the same token, General Motors gives in to union demands when it can't afford to because that's what they do.

GM didn't rush in, bail out Tower and protect its new SUV's because the supplier is only the tip of an iceberg that's gouging a hole in the General's hull. GM's constant efforts to low-ball its suppliers, its poor credit (downgraded by Moody's on Tuesday to B1, five rungs below investment grade) and the looming prospect of bankruptcy are all inflicting fatal wounds to its supply chain. Suppliers are caught in the squeeze between rising commodity costs, declining production (due to lost market share) and contracts that reduce pricing over time. TTAC's Deep Throat reports that an inferior part for the GMT-900 recently forced GM to return to a "quality supplier." The supplier refused to invest its own money to create the part and demanded a contract stipulating that the automaker would pay a true market rate for the finished component.

This is not an isolated case. GM used to provide suppliers an advanced payment program arranged by GE Credit. Late last year, GE bailed on the entire business, in favor of GMAC (yes, the same GM-owned finance company currently on the block). If that wasn't a bad sign of GM's financial situation in and of itself, GMAC then tightened the restrictions. The payment program is no longer available to the broad spectrum of GM suppliers. Bottom line: GM's current procurement process fails to assure parts manufacturers adequate financial compensation, doesn't provide protection against program termination due to budgetary constraints or model "realignment", and can't possibly guarantee payment if GM files for Chapter 11.

It's not too much of a stretch to imagine that at some point, one way or another, GM's entire supply chain will collapse. How's that for dark? You want light? How about this: I've received dozens of emails from frustrated workers, designers and administrators inside GM. No question: there's an enormous amount of creativity and passion locked-up inside General Motors. Once The General shakes off its union, deep-sixes its insufferable bureaucracy, dumps unnecessary brands and gets down to the business of building a limited number of great cars, it will build a limited number of great cars. When it comes to GM, the parts are greater than the whole.

This is a tale of two Tahoes. The first is a wildly successful SUV that's flying off the lots at full price: a Hail Mary pass that will put General Motors back in the end zone, saving them from the unthinkable humiliation of bankruptcy, with only moments to spare. The second is a gas-guzzling truck that's being swept out to sea by the vast receding tide of SUV buyers: a four-wheeled indictment of GM's inability to build what America wants to drive at a price that makes the company enough money to stay in business. For the time being, which vehicle you see depends entirely on which one you want to see.

Over at The Detroit News, Brett Clanton paints a portrait of the new Tahoe as the corporate lifesaver The General needs it to be. His article on the Tahoe's initial fortunes is sprinkled with the kind of upbeat non-contextual factoids that German newspapers relied on at the end of WWII: "Tahoe sales were up more than 50 percent in January. The 2007 model is fetching a higher average selling price than its predecessor… Only on sale since Jan. 10, GM has booked just more than 4,000 sales and is still in the process of shipping Tahoes to dealers." To be fair, Clanton mentions Wall Street's unenthusiastic response and sensibly states that "a true verdict on the vehicle is probably still months away." But the article's overall tenor is reflected by the headline "Hot Tahoe fuels GM Optimism."

If Tahoes are 'hot,' Antarctica is 'tropical.' Four thousand Tahoes per month equals 48k per year– as compared to the 152k examples Chevy sold in '05. Meanwhile, down on the showroom floor, I was offered a $2k discount on a brand new LT without asking for it. No wonder: in his February 6th newsletter, automotive journalist Ed Wallace reports that GM is offering a $1750 fleet rebate on new Tahoes and Yukons. (So much for GM's "Value Pricing Program": the highly-touted plan to keep vehicle sticker prices– and incentives– low.) What's more, GM isn't putting an actual number to '07 Tahoe sales or breaking out sales by model year. In other words, that "50% increase" represents sales of both the new and the old Tahoe. Add in the fact that dealers are selling the '05 Tahoe with an $8k rebate, while the '06 models are leaving dealer lots with $5k off sticker, and the rosy picture takes on a more deathly pallor.

In fact, Wallace's assault on GM optimists extends well beyond carefully shrouded Tahoe sales. The talk radio host points out that The General's dealers sold slightly fewer than 300k vehicles (discounting fleet sales) in January. Yet the company currently plans to build 1.26 million vehicles this quarter. That's 25% more vehicles than it will sell at the current pace. You don't have to be an economist to know that there's only one way prices can go when supply exceeds demand. Talk about duality: GM can't afford to discount its products; it can't afford not to discount its products. Unless sales pick-up quickly and dramatically, GM CEO Rabid Rick Wagoner's recent production cuts won't be enough. The General's death spiral will continue.

Depending on what happens tomorrow, we might be spared the agony of watching GM lingering on life support. We'll know whether or not Delphi has hammered out a deal with the United Auto Workers (UAW) that allows the parts maker to continue making parts for the Tahoe, Yukon and the rest of The General's lineup. The smart money says the UAW will accept some cuts to their members' compensation, while GM foots the multi-billion dollar bill for a continuation of the status quo. The smarter money says the UAW will agree to nothing more than window dressing, while GM foots the multi-billion dollar bill for a continuation of the status quo. If not, the UAW will strike and no one will have to worry about Tahoe sales for quite some time, if ever.

If you hear "deadline extension", think strike. Anyway, either way, this is a fight GM can't win. In fact, we're back to twins, and they're BOTH evil. The world's largest automaker can't survive a strike (UBS analyst Rob Hinchcliffe reckons a moribund GM would burn through its $19 billion cash hoard in about 10 weeks) and it can't afford to subsidize Delphi's UAW workforce (GM is ALREADY on the hook to Delphi workers for $12b). All of which means the new Tahoe's sales are… unimportant. Even if the Tahoe and its platform siblings fly off the forecourt at full retail for months– reversing a deeply entrenched industry trend– it couldn't keep GM's sinking ship above water. So the General's pride and joy, its last, best hope for financial salvation, is destined to become what anti-SUV campaigners saw all along: an irresponsible irrelevance.

Last Thursday, GM's Vice President of Global Communications sat with the suits and outlined his plan to rescue The General's image from public crucifixion. The man in charge, Steve "Twisted Sister" Harris, had been lured out of semi-retirement from a PR firm specializing in "reputation challenging situations." Ironically, The McGinn Group's website lists GMAC and The US Department of Justice as customers (although the federal seal is too blurry to be sure exactly which federal agency spent our tax dollars burnishing its image). More to the point, the opening animation silently intones "Experience. Accountability. Judgement". Talk about foreshadowing…

Yup, GM's Judgement Day is on its way. Meanwhile, Twisted Sister wants American consumers to know what a great job General Motors has done, is doing and will do, bet your bottom dollar, tomorrow. We're talking high mileage vehicles, clean-running ethanol engines, JD empowerment, we-must-be-doing-something-right sales figures, that kind of thing. Like most people paid to spin straw into gold, Sister doesn't trust the media with this message. He prefers working with cappucino-fuelled creatives to fashion fabulously expensive TV, print, radio, direct mail and web-based campaigns– rather than sitting down with cynical journalists prone to going "off message" and arguing about silly things like facts.

Although GM recently trimmed $200m from its '06 ad budget, it will still spend $1.2b flogging its products. There's bound to be enough loose change down the back of the corporate sofa to subsidize Operation Love Me Tender. Besides, with all this press about plant closures, layoffs, billion dollar losses, a Presidential f-off and the "b-word", Sister's sledgehammer PR campaign seem a reasonable idea. Unless something's done to alter GM's tragic trajectory, consumers are heading straight for the 'you can't touch this' tipping point, where buying any GM product will seem like throwing money into a black hole. Why not sell potential customers a little automotive anti-gravity?

Simply put, the harder GM pushes the fact that they're doing well – or will do well, you know, eventually – the more people will believe they're headed for oblivion. GM's spinmeisters fail to understand the depth of consumer ill-will towards The General. For decades, millions of people spent their hard-earned cash on poorly made, unreliable and (come trade in) expensive GM vehicles. Their complaints were met with arrogance, deceit and indifference. These disgruntled customers told their friends, neighbors and co-workers about their misery and vowed "never again." In fact, the GM resentment bank is so full that any claim that "we're different; we've changed" will sound like a junkie's pleas for his twelfth chance.

Twisted Sister beware: it's American car buyers who are cynical about GM, not journalists. (As far as I can tell, the automotive press is desperate to see a GM turnaround.) So how do you convince deeply skeptical consumers that the new, new GM is worthy of their patronage? You sure as Hell don't launch a glossy ad campaign exhorting them to share your pride in a reborn American institution, to buy into GM's new spirit of honesty, resilience and determination. No, you start somewhere else: the only place where you have the slightest hope in Hell of changing public perceptions about General Motors. You start with the product.

The best promotional device in the world was, is and always will be a great product. Any PR or ad campaign touting GM's imminent recovery that isn't specifically and credibly tied to product excellence is doomed to failure. That's because the average customer doesn't care about the company that makes their car, any more than they care about the company that makes the electricity powering their home. They care about their car. If The General's products fail to live up to the automaker's promises of reliability, quality or style; if there's the tiniest gap between expectation and reality, all the money spent "selling" that promise will be wasted. And that's provided you can devise a way to get customers to drop their barge poles.

Sure, GM makes some great vehicles: the current Chevrolet Corvette, Cadillac CTS-V and um, whatever. But the vast majority of The General's vast product range simply isn't good enough to give Sister's band of brothers the rustoleum they need to save GM's tarnished image from corroding into dust. (You try and build a "This ain't the same old GM" around a Pontiac G6 or Saab 9-7X.) Of course, even if GM made Carreras, Camry's and F150's, it still wouldn't stop the company's slide into bankruptcy. Until The General sorts out its sky-high labor costs, trims its dealer network and ditches its moribund brands, they're a dead automaker spinning. On the other hand, if The General DID make great products– and ONLY great products– at least they'd have something to talk about in the meantime.

As our GM Death Watch series gains traction, I've taken to scanning the skies for black helicopters, stashing Glocks around the house and avoiding the fine city of Detroit. But I would have loved to been at RenCen to see the look on Bob Lutz' face when his boss sliced the Car Czar's salary by 30%. If you recall, Turnaround Tycoon Jerry York originally suggested executive pay cuts as a way to send a clear message to workers throughout the world's largest automaker: WE'RE IN DEEP SHIT. At the time, Maximum Bob responded to the suggestion with characteristic bravado: "I gave at the office." I guess he's learned that bankruptcy is the gift that keeps on giving.

To be fair, Mr. Lutz had something of a point. Although his employment contract isn't a matter of public record, much of Bob's compensation package is tied to the company's performance, both directly (through incentives) and intimately (through stock options). As GM bleeds out, shedding value like a dot com bomb, Bob's lost theoretical millions. OK, it's more than partially his fault. But as an employee stockholder, Lutz has GOT to be worried. Yesterday, Deutsche Bank took a hard look at the state of GM's finances and issued a Lutzian pronouncement: "sell."

The recommendation came despite the fact that a newly independent Jerome P. York finally joined GM's Board of Bystanders. (An SEC 13D/A filing for Tracinda Corp states that Jerry won't share confidential info with his capo, GM stockholder Kirk Kerkorian. Yeah right.) What's more, The Bored of Defectives ordered GM CEO Rabid Rick Wagoner to bring Mr. York the head of Alfredo Garcia. And so he did, making across-the-board cuts in accordance with York's rescue plan: trimming white collar pay, pensions and health care; reducing GM's annual dividend by 50% and, get this, signing-off on a significant reduction in The Board of Bystanders $200k annual "retainer." Message received?

Not where it counts. Let's be clear about this: the cuts will not stanch GM's massive wounds. The General lost over eight billion dollars last year. The largest measure in this package– the dividend reduction– will save GM $566m. Add up all the rest of the bits and pieces, double it and it still doesn't cover GM's losses. Or its recent "charges against earnings." Or the cost of keeping idled GM workers in the "money for nothing and your checks for free" Jobs Bank. And then remember that GM is about to fork over multiple billions in blood money to keep bankrupt parts supplier Delphi's unionized workers working.

Again, Wall Street was suitably unimpressed with GM's black February. More importantly, so was United Auto Workers (UAW) President Big Ron Gettelfinger. Lest we forget, convincing the UAW to take one for the team was the whole point of the exercise, as Rabid Rick quickly pointed out: 'I think it's clear, now more than ever, that we very much have a shared fate." Indeed they do. Unless GM can lower its union labor costs, alter union practices and sell some product by, say, last May, it's all over bar the filing. And… According to the Detroit Free Press, "The union chief dismissed any suggestion that [the cuts] set the stage for GM to push the UAW for more concessions." So, that's that then.

Reporter Daniel Howes over at The Detroit News says Big Ron's stonewalling is nothing more than a bit of pre-election, pre-negotiation posturing. In yesterday's editorial, Mr. Howes said the union boss called for "shared sacrifice" and claimed that "Union folks are smart enough to know that tough times demand tough calls, including concessions they never expected to give." I guess Mr. Howes would also see UAW Vice President Richard Shoemaker's same day statement that Delphi's insistence on pay concessions "will surely lead to a long strike, and that is true whether it involves other corporations or does not involve other corporations" as more posturing.

If Rick Wagoner is a religious man, I bet he's praying that Daniel Howes is right: the union will see sense and do what needs to be done to save the corporate host upon which they feast. Judging from his bankruptcy-proof pension, Rabid Rick's not a betting man. Which is just as well, because unions don't posture. They threaten. If you don't capitulate to their demands, they make good on their threats, come what may. GM has paid billions to the unions. There's no way the union officials that would lead the rank and file into a strike are going to miss a meal because of an anti-Delphi or anti-GM union action, short or long term. They have nothing to lose. As far as they're concerned, you can pay us now, or you can pay us later. Only thing is, white collar cuts or no, GM can't afford either option.