Detroit, MI – General Motors has filed for bankruptcy this moring at 8:00 AM, GM officials said, forcing the 100-year-old automaker once seen as a symbol of American economic might and dynamism into a new and uncertain era of government ownership.
Subscribe to our Daily Roundup Email
The filing, would be the third-largest in U.S. history and the largest-ever U.S. manufacturing bankruptcy.
The decision to push GM into a fast-track bankruptcy, and provide $30 billion of additional taxpayer funds to restructure the company so it can better compete with lower-cost Asian
automakers, is a huge gamble for the Obama presidency.
But the Obama administration saw few other options at a time when the jobless rate is soaring, given that GM employs 92,000 in the United States and is indirectly responsible for 500,000 retirees.
The filing in a federal court in Manhattan before U.S. markets open caps a three-decade-long decline for the Detroit automaker that ended in outright crisis after the weak global economy, high oil prices and tight credit slammed sales and left it unable to raise cash.
“Now the hard part begins, which is making GM and Chrysler competitive. If they don’t do that, then we’ll be doing this all over again in a few years,” said Christopher Richter, auto analyst at CLSA Asia-Pacific Markets in Tokyo.
“The immediate implication is that the companies are going to get smaller and so market share is up for grabs, which means that rivals like Toyota, Honda, Nissan and Hyundai are going to gain share.”
Shame they didn’t foresee this back in the 90’s when after inventing the electric hybrid engine dropped it because it was “unprofitable”, letting Toyota come and takeover promising US technology. Shame GM didn’t foresee this back in 2003 when they killed the EV1, in favour of gas-guzzling SUV’s such as the ostentatious Hummer. Shame.
Fuel efficiency wasn’t in their lexicon – to their ultimate detriment.
When oil rose over $100, this result was all but inevitable.
What happens to the $$$$$ that they “borrowed”?? Who pays it back?? The taxpayers?????
“a huge gamble for the Obama presidency”
What is the gamble? What other option is there? The idiotic bailout did not work so what else is left? Bush should have told GM to go into bankruptcy. Why not? With a chapter 11 they can get an automatic stay and restructure. The creditors are not getting their money anyway so under the circumstances this is the best option. The huge gamble that Obama took was this bailout by gambling away the future of this country.