Megan McArdle takes a look at the grim report released today:
GM has burned through $13.4 billion in less than six months. What will $30 billion buy us? Another year, at best, with no signs of a turnaround in the market for cars. Autos, like other big consumer durables, are especially sensitive to downturns like this. There’s only so much food you can cut out of the budget, but you can certainly drive the 2001 Grand Caravan for another year.
(…)
It’s time to stop talking about keeping GM out of bankruptcy, and start talking about what measures might be necessary to keep GM as a (smaller) going concern rather than outright liquidation. One thing to look at is warranties: consumers are understandably worried about buying a car where the warranty may not be good in a year. There may be a government role in guaranteeing that coverage.
Perhaps, but where there is no role at this point is in being an open wallet for General Motors to keep dipping into with no sign of actually coming out of the hole that they are clearly deep into at this point.
