Monday, June 1, 2009

GM Bankruptcy: End of an Era or New Beginning for Detroit?

GM's bankruptcy filing Monday was widely expected but nonetheless has been accompanied by a lot of hand-wringing over the "end of an era."
Clearly there's much to be concerned about, not the least of which being:

- GM's $173 billion of debt vs. $82.3 billion of assets -- as revealed in Monday's bankruptcy filing.
- More job losses as GM closes dealers, closes or idles 12 plants, and the UAW accepts more layoffs as part of its deal with the government and the automaker.
- The perils of government ownership: With the Uncle Sam now the majority owner of GM, the opportunity for political mischief - such as the pressure on GM to sell its Opel unit to Magna - and just plain old bureaucratic inefficiency could stifle any attempt to revive the automaker.

But what if GM's bankruptcy really is a new beginning? As Henry and I discuss in the accompanying video with Jon Najarian of, Chrysler's "quick rinse" bankruptcy and even rising oil prices provide an opportunity to think optimistically about the future for U.S. automakers.