The short answer is NO. Not unless GM can be fixed, not just kept on life support indefinitely.
I'm going to try to do an objective analysis, but I must admit that I have mixed feelings about GM. My first car was a 1974 Camaro; I loved that old car. However, in the mid-1980s, my father finally saved the money to buy a Cadillac Cimarron. He was a veteran, and always bought American, when he could. Having grown up in the Great Depression, he didn't buy anything on credit; if he couldn't pay cash, he didn't buy it. He saved for years to buy that car. He had always wanted a new Cadillac. Even though it was just the bottom-of-the-line model, he was so proud that he owned a Cadillac. It should have been painted yellow, the color of lemons. It was a steaming pile of you-know-what. He tried his best to make excuses for all of its problems, but it was no use. After his high expectations, he was so disappointed that it would almost make you cry.
But GM's descent from its glory days to the practice of selling high-priced lemons at the cost of their reputation are all in the past. That was then, this is now.
Let's tell the truth here. GM's lobbyists have been saying the economy
would lose millions and millions of jobs if we allow it to go
bankrupt. The truth is that while GM has 255,000 employees worldwide,
it only has 72,000 union workers left in the U.S.; the majority of its
work force are based in other countries. IF the lobbyists are telling the truth, and the failure of GM would lead to a chain reaction that would cause the collapse of thousands of busiinesses and cost
tens of millions of Americans their jobs, resulting in a financial
Armageddon that would destroy the entire U.S. economy, then it is "Too
Big To Fail", just like the huge mega-banks, and would cause a death
spiral ending in the end of Civilization if it were allowed to go
bankrupt. I don't buy the lobbyists' BS, but it really would hurt an already weak
economy for several thousand more people to become unemployed. Let's examine this a little closer.
If GM went bankrupt, not only wouldn't it cause the death of the economy, it wouldn't even put all of its own production workers out of a job. Some of them work in the area of parts;
even if GM never produced another car, AC Delco would still sell parts
for many years. GM's non-union white collar workers at GMAC don't neet to worry; the financial arm is valuable; it would remain open for business. Besides, Cerberus owns more than half of that division. And many of GM's plants could remain open during a bankruptcy, and even after a liquidation. Other automakers would buy several former GM plants; they may begin producing Toyotas or Hondas, but they would still be making something. Out of the 72,000 current GM US workers, about 1/3 would probably lose their jobs. But they will lose their jobs anyway, as GM tries to cut all of the product lines that cannibalize each other. Only a complete moron will make 5 or 6 almost identical vehicles, put different names on them and call them different product lines, then say that they won't cannibalize each other's sales.
In other words, a GM bankruptcy would probably cost about 25,000 jobs or less. And the government could force GM to assure those workers that they would be retrained and given financial assistance for a year or so. $100,000 per displaced worker would just be $2.5 billion, a pittance compared to just the down payment on the bailout.
Another problem with bailing out GM is that GM's share of that $25 billion initial bailout will probably be about $12 billion. That's like spitting in the ocean. GM has less than $110 billion in assets and nearly $169 billion in debts. It lost $43 billion dollars last year, and expects to lose another $40 billion or so again this year. It lost $15.5 billion between March and June, and it lost another $4.2 billion from July thru September. In terms of cash flow, it lost $6.9 billion this last quarter. It had about $16 billion in cash left on September 31, but it had $6 billion in bills due on October 2nd. In other words, it has about $10 billion left, and it's losing over $2 billion per month. Unless it sells something big, it will run out of money by spring. $12 billion just means that it will have enough money to last till the fall, IF the economy improves. If the economy continues to be as bad as it was during this past summer, that $12 billion will last less than 3 months. In that case, it will need another $12 billion by mid-July. Unless GM can get its burn rate under control, it's going to need $40 billion PER YEAR, EVERY YEAR just to stay alive, even more if we expect it to keep doing research so it can build those new electric and fuel cell vehicles that it should have been working hard to produce 10 years ago. And it's just ONE of the Big 3. It is going to cost $60 billion dollars per year to keep the auto industry alive through this recession.
But then we have another problem: if it just keeps doing business as usual, like the current CEO wants to do, will people still want those gas hogs, when some of the smaller, more efficient, more technologically savvy companies from China and Japan, and even here in the U.S., for that matter, begin producing viable fuel cell, hybrid and electric vehicles? Here are some of the first-gen electrical vehicles that are coming onto the market right now.
GM: Big 3 US auto company.
2010 Volt. Range: 40 miles. Performance: N/A. Expected to be 0 to 60 in about 15 seconds Top Speed: 100 mph Price: about $40,000
Tesla: U.S. specialty electric auto company.
2008 Tesla Roadster: Range: 244 miles. Performance: 0 to 60 in under 4 seconds. Top speed: 125 mph Price: about $100,000
This car is produced by Lotus in England and imported to the U.S.
Nelico: car company based in India.
2008 NEL 4000 XP: Range: 100 miles. Performance: N/A. Estimated: 0-60 in about 10 seconds. Top speed: 70 mph. Price: about $5,000
Wuxi Chituma: Chinese auto company.
2007 CTM B: Range: 100 miles. Performance: top speed; 65 kph (about 50 mph). Price: $5,000
Golden Motor: Chinese auto company.
2008 4000 W: Range: 100 miles. Performance: top speed; 65 kph (about 50 mph). Price: about $5,000
Thunder Sky: Chinese battery company: They make electric buses. VERY nice buses.
http://www.thunder-sky.com/pdf/6100EV.pdf
2008 6100 EV: This 40 passenger bus has a top speed of 60 mph and a range of 300 miles.
If Thunder Sky decides to enter the electrical passenger car market, they could easily dominate the Chinese EV market within a couple of years, if they produced the same quality and range available for their commercial vehicle offerings at reasonable prices.
None of the foreign companies could sell their products here; our auto industry has used our regulatory agencies to pretty much eliminate any competition from smaller companies. However, several large auto companies will be mass producing practical EVs and fuel cell vehicles soon. Everything from Toyota to VW will have the millions of dollars necessary to get regulatory approval to sell their offerings here. Unless GM can compete with the upcoming 2nd generation hybrids, fuel cell and electrical vehicles, its days are numbered.
In short, GM is a bad bet for individual investors. It might be a good investment for the government, but only if the government actually BUYS the company, fires the management, and remakes it into a company that is focused on research and innovation, until it is capable of competing against the rest of the world by producing technologically superior, fuel efficient vehicles. If it just keeps making those third-rate gas hogs that it has been pushing for the last decade, as its current CEO seems to want to do, it will fade to oblivion no matter how many times it is bailed out.
We REALLY need a competitive auto industry if we are going to remain a superpower. If we let China, India and Japan produce practical, reasonably priced hybrids and EVs while our own auto industry claims that it's beyond their ability, we are going to lose our reputation as a leader in technology and innovation.
While I am in favor of more regulation in the banking industry, my solution for the auto industry would be LESS regulation, a much faster and cheaper method of approving new vehicle models for small companies, and financial incentives for new, competitive car companies to be incorporated, rather than trying to keep this aging titan alive. If we had 26 small, competing car companies, like China does now, several of them could go bankrupt without causing much damage to the economy as a whole. The whole US policy of allowing companies to become near-monopolies that are "too big to fail" is preposterous.