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To no one's surprise, the White House is saying this evening (May 31) that General Motors will go into bankruptcy tomorrow morning. President Obama will speak to the nation. The company will be shrunk drastically. American taxpayers will own 60% of the stock and Canadian taxpayers 12%. The company will jettison 21,000 union workers and shut up to 20 factories, as 6,000 dealers -- 40% of the current total -- will be shuttered. Bondholders, who reluctantly approved the plan this weekend, will turn in their bonds for stock worth ten cents on the dollar. The government will strongly encourage GM to build smaller, more fuel-efficient cars. There are some big questions: will the overall auto market, down 46% from recent high levels to only 10 million a year, bounce back any time soon? And will the bankruptcy of GM (and earlier Chrysler) scare buyers form U.S. cars? Chrysler, which has sold its assets to Fiat, may emerge from bankruptcy tomorrow after only a month in the tank.
To no one's surprise, the White House is saying this evening (May 31) that General Motors will go into bankruptcy tomorrow morning. President Obama will speak to the nation. The company will be shrunk drastically. American taxpayers will own 60% of the stock and Canadian taxpayers 12%. The company will jettison 21,000 union workers and shut up to 20 factories, as 6,000 dealers -- 40% of the current total -- will be shuttered. Bondholders, who reluctantly approved the plan this weekend, will turn in their bonds for stock worth ten cents on the dollar. The government will strongly encourage GM to build smaller, more fuel-efficient cars. There are some big questions: will the overall auto market, down 46% from recent high levels to only 10 million a year, bounce back any time soon? And will the bankruptcy of GM (and earlier Chrysler) scare buyers form U.S. cars? Chrysler, which has sold its assets to Fiat, may emerge from bankruptcy tomorrow after only a month in the tank.