Even with a bailout GM will still be slashing production and the related downstream economic activity. The same thing happens in every downturn whether it bottoms out at equilibrium below full employment (depression) or not. That the automakers are trying to scare people with that garbage from the CAR study and not mention that they'll have to cut at least that much to even survive is a huge fraud. Here's a cut & paste from Google finance of their balance sheet
Code:
Income Statement
Quarterly Annual Annual
(Sep '08) (2007) (2006)
Total Revenue 37,941.00 181,122.00 205,601.00
Gross Profit 3,020.00 14,543.00 18,912.00
Operating Income -883.00 -4,390.00 -5,823.00
Net Income -2,542.00 -38,732.00 -1,978.00
Balance Sheet
Total Assets 110,425.00 148,883.00 186,304.00
Total Liabilities 170,364.00 185,977.00 191,956.00
Total Equity -59,939.00 -37,094.00 -5,652.00
Cash Flow
Net Income/Starting Line - -38,732.00 -1,978.00
Cash from Operating Activities -7,473.00 7,731.00 -22,896.00
Cash from Investing Activities 997.00 -1,760.00 19,695.00
Cash from Financing Activities 3,473.00 -5,593.00 -3,767.00
Net Change in Cash -3,547.00 694.00 -6,603.00
Their immediate issue for survival is with cash. No cash, no pay bills, bankruptcy. Their mid-term issue is right there in the middle where their liabilities outweigh assets by about $60B. I'm sorry, even a bridge loan cannot rectify that. Some of their creditors will have to swallow a bitter pill. Most aren't going to budge. That's why we have Chapter 11.
Also, please note that their stock price is in the dumps precisely because the shareholders will assuredly lose everything within the next few months. If GM files bankruptcy the equity is wiped out, whether they survive or not. If GM gets bailed out, chances are the deal will wipe out shareholders just the same - the Feds want their pound of flesh, and it's easy to target the shareholders who stood idly by as GM dug themselves a huge hole in the past few years. Years where the economy was doing quite well, I might add.
Perhaps the best summary was from a poster on Google finance
Quote:
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Originally Posted by Thread 41718b9128ba813e
ABANDON SHIP! ABANDON SHIP! WOOOT! WOOOT! WOOOT! ALL HANDS ABANDON
SHIP!
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