Saturday, April 25, 2009

General Motors, going, going, nearly gone

I haven't yet written about the enormous changes we have seen over the last year or so - when the capitalist system and imploded into a chaotic mess of greed, dishonesty and confusion.

I am talking about the 2008 crash, when the world's financial system and economies unravelled in a very conspicuous manner. More on that later.

I have been watching the demise of General Motors with some interests. The company has been manufacturing mostly large an inefficient cars and trucks over a quite a long period. They have remained seemingly oblivious to the previous oil shocks and more recently, the arrival peak oil.

The crash and subsequent recession in the United States has hit GM hard. Nobody is buying their cars (mostly gas guzzlers) any more. However, GM employs a lot of people in the US and across the globe, including Australia.

So the Obama administration's automotive task force has overseen a massive bailout to try and keep them afloat.

Since late 2008, GM has received $US15.4 billion from the US Treasury to keep it afloat.

On April 22 2009, GM received an additional $US2 billion ($2.8 billion) in federal assistance.

So far, the best they can do is to "ditch the Pontiac brand", while keeping the GMC, Chevrolet, Cadillac and Buick brands.

Who would have thought the United States government (and hence taxpayer) would give a failing corporation over $US 18 billion in bailout payments?

It is clear that to survive, GM needs to reinvent itself and start making cars or other products that people actually want to buy.

They should retool to make electric vehicles and think about getting into transport manufacturing for a low carbon economy future - perhaps very fast trains?

The latest deadline for GM is the threat of a bankruptcy filing if it can't meet a June 1 US deadline. Time will tell if the $18 billion of taxpayers money to keep them afloat is good money after bad.


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