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GM’s ‘Time Is Very Short’

user profile picture Chris Martenson Nov 05, 2008
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A friend of mine in the RV business, who has owned his own place for 35 years, says that his business has never dropped off as far or as fast as it has over the past 6 months. Manufacturers in his industry that have operated for more than 50 years are simply shutting down. 

Even as the nation focuses on an election and the "improving credit markets" the real economy is still spiraling downward at a fast rate.

The 45% "decline" in GM’s sales are a stunning drop-off more consistent with the worst recession (depression?) in several generations than a simple "decline".

The collapse of GM is now an imminent possibility.

Nov. 5 (Bloomberg) — General Motors Corp., hammered by the worst auto market in 25 years, needs U.S. aid because “time is very short” to stop its collapse, says Roger Altman, the former Treasury official advising GM in merger talks with Chrysler LLC.

With the government offering a $700 billion rescue for banks, it should have enough to assist GM, Chrysler and Ford Motor Co., Altman, 62, said in an interview. Altman, now chief executive officer of Evercore Partners Inc., helped with the 1979 Chrysler bailout plan as an assistant Treasury secretary.

“The consequences of a collapse by GM or all three would be very severe,” he said. “The impact would be widespread,” with jobs lost by the companies and their suppliers.

The ripple effect of a GM collapse would spread throughout hundreds of small supplier companies and involve tens, if not hundreds of thousands of jobs.

Out in the real economy, the collapse of credit-fueled consumer spending is not going to be fixed by the high level application of government borrowing and gifting of money at the institutional level.

Sure we could give GM a lot of public money, but if not enough people are buying their products for them to survive we might ask "why?"

The problem is that 25 years of excess consumption has suddenly come to a halt and many companies, like GM, were not prepared.