As predicted in a gazillion places, GM is ready for the taxpayers to pay their salaries and benefits for another quarter.
They are out of money as of April 1, just as they were out of money as of end of last December–and they will be out of money again as of July 1, and……
NEW YORK (CNNMoney.com) — General Motors posted a $9.6 billion net loss in the fourth quarter, a period in which its sales plunged and it needed a federal bailout to avoid filing for bankruptcy.
The company also disclosed that it burned through $6.2 billion in cash during the last three months of the year. The company ended the quarter with cash of $14 billion.
If not for the $4 billion federal loan it received on Dec. 31, GM’s cash level would have fallen below the $11 billion to $14 billion in cash the company has said it needs to continue operations.
I imagine Chrysler is next in line to meet payroll. At this point, the government of the USA is GM and Chrysler’s payroll employer.
Analysts say the future of the company now depends almost solely on whether it receives more loans. Efraim Levy, an auto equity analyst with Standard & Poor’s, said he thinks GM could very well burn through more than $14 billion this year.
“Do they get money or not get money, and do we prolong this or not prolong this?” added Kevin Tynan, an auto analyst with Argus Research. “I think all the other questions are answered. Right now the companies and analysts are looking at 2009 as being a lost cause. This first quarter’s results are going to be even more brutal.”
Tynan poses an interesting question. Allowing two auto manufacturers to go down will create huge additional unemployent to an already horrible picture. But bankruptcy and restructuring is an option, which would get the USA off the hook and still save most, but not all, jobs. We will have to pay for that bankruptcy as well. But the financial responsibility of the USA would end there.
As it stands now, there is a pattern emerging, and it looks like we will be asked to meet payroll for GM quarterly for an unknown period of years–until we say “No”. Then we will be paying for a bankruptcy and restructuring besides. If all we are doing is delaying the inevitable, wouldn’t it be wiser and less expensive to just get on with it?
Another question from the Bigger Picture is: If we keep handing out trillions we don’t have, how much will a dollar be worth by the end of the year? This is a question that impacts EVERYONE in America.
Apparently GM had talks earliet this week with the Auto Recovery Program leaders, Geithner and Summers–and both of them drive foreign cars. In fact, out of the 8 people on their committee and their 10 aids, only two own American cars. Just saying.