Washington worried about a GM bankruptcy

[lovuian]

http://feeds.bignewsnetwork.com/?sid=42a2a6b58ab8f473

Washington is worried that General Motors Corp.'s big layoff program could lead to the federal Pension Benefit Guaranty Corp. getting swamped.

The financially ailing carmaker offered early retirement buyouts worth as much as $140,000 per person to 113,000 workers Wednesday.

Many observers wonder if the move is calculated to prepare GM for bankruptcy.

Barry Bosworth, a Brookings Institution economist who advised U.S. President Jimmy Carter, called the early retirement buyouts a prelude to bankruptcy.

snip...

With GM's pension obligations underfunded by about $31 billion, a bankruptcy could swamp the overburdened PBGC.
more...

This company is a viable company with great workers ...its management sucks!!! and now America has to bail them out... I blame Congress!!! and BUSH!!!

[rmgarrette64]

1. Sarcasm?

I'm not sure I get it. If the management sucks, why is Congress or Bush to blame? Was it a sarcastic comment?

I don't know enough of what's going on at GM to comment, so just asking.

R. Garrett

[MichiganVote]

3. Fat cat management has gutted GM for decades resulting in

stultifying business practices. Why is Congress or Bush to blame? They're not to blame, they're partners in the same parallel universe= We HAFTA to NAFTA and CAFTA so we can all stay rich and Americans can all stay poor paying for it.

[lovuian]

4. Yes Cafta Nafta and just sat back and watched GM fail

when they could have encouraged instead of gas guzzling Escalades get mandatory gas reduction vehicles like Toyota...

[Boojatta]

6. That's one great thing about discussion boards.

There is no easy way to distinguish between error and satire. Some errors that would deceive an audience of listeners will provoke an audience of readers to think or laugh.

[benny05]

2. Management sucks alright

But it is because many workers who are idle are getting paid for doing crossword puzzles and learning how to play Trivial Pursuit at the moment in their "schools"; management should have set up retraining programs for future work. Meantime, the executives are worried about how to save their options and parasails, and we all pay for the problems.

[AndyTiedye]

5. GM Mgt Bet The Company on Selling More Huge SUVs -- Again! As Gas > $3

There's DUMB. There's DUMBER. And there's senior management at GM.

[stevekatz]

7. it's more

complicated then just that

[AndyTiedye]

14. How Much More Complicated Can It Be?

They were banking on a quick and successful takeover of Iraq's oil fields,
leading to lower gas prices for years to come, and Americans celebrating the
low gas prices by buying huge gas-guzzlers. Some GM execs would have been in
that "energy task force" meeting in 2001 where they divvied up Iraq's oil fields,
so they figured they had the inside scoop.

But when the invasion turned into a total clusterfeep, they stayed the course,
heading straight for the rocks. They're still heading that way, and the rocks
are now plainly visible and not very far away. They still think they can sell
bigger and bigger SUVs, even with thousands of them rusting on dealers' lots.

It would be absurd (though quite Republican) to blame the workers and their unions
for negotiating a decent wage and pension. If you keep on building what nobody
wants, it doesn't matter what your cost structure looks like.

[cliss]

8. I've got news for anyone who's wondering....

Will they or won't they?

Answer = GM will file for bankruptcy. There is absolutely no doubt in my mind. They will file because they want to get out from under their pension obligations.

They will dump their workers. Then, management will sit back and add up the numbers. There will still be plenty left.

GM will reorganize. They'll start up again, and the shafted workers will have to go to the federal government for some kind of pension guarantee.
The problem is, that program is now overburdened because other companies were there before them.

[daleo]

13. I agree

The writing was on the wall ever since United Airlines was given this out. Plenty of corporations will take it.

[Delphinus]

15. So, is it better for those workers

to go ahead and take the buyout? Get their money now before this happens?

[cliss]

16. Hard to tell, Del.

If I was affected by this, here's what I would do: I would get on the phone and find out what my options are. Check with management, double check to make sure that what I was being told is correct.

I would probably meet with some HR person, to try and assess the situation as closely as I could. What's the rumour? Do things look OK for now? (maybe they won't tell the whole story, but at least I would get some clues). What are my friends doing? Are they taking the buyout, or are they planning to wait?

Next, I would start listening to the "jungle drums" to find out what's really going on. I'd check the Internet. Check the stock. That tells you a lot.

I say this with some authority because I belong to an organization called CMA (certified management accountants). About 3 years ago, we found out through the grapevine that many companies were planning to get out of their pension obligations. In other words = file bankruptcy, dump their employees, and start over. Sure enough, it's happened.

[Roland99]

9. No worries! The Federal Reserve will just start printing more money

And they'll make more money for themselves.

[Sadie5]

10. Planted story???

Things are not adding up here. GM is not broke(money wise). They would like you to think they are, but they have many resources. Allison Transmission and Raytheon alone would pay these pensions. If they cut the salaries of the CEOs then they would have even more money, but this is not likely. The SUV(new Hummer) they are building has a smaller engine that the older model. The gas mileage is much better.

[susanna]

11. Shhhhh....don't tell anyone that!

They might start thinking for themselves and stop listening to the B$ from Wall Street and the American sorta-kinda-free-press.

[Ouabache]

12. well pre-W the US treasury might have been able to help out

another ailing automaker with loans like the ones made to Chrysler (and paid back EARLY by them) in the 80's. But unfortunately, some war-mongering regime has seized control of our government, drained the treasury on foreign adventures, and so that is probably not a possibility this time.