Another crisis for the economy?

With the possibility of General Motors going bankrupt does this mean that the economy will further lessen? General Motors is one of the leading motor vehicle businesses in the United States with Ford Motors and Toyota not far behind, but with GM going bankrupt the possibility of these other big businesses falling is a thought that no one wants to think about. With the housing market already in a state of crisis it would be devastating to the economy for the motor business to go under the water as well maybe even causing more of a problem in the economy than people believe.

General Motors filing for bankruptcy would cause many problems not just for the United States economy but also for the economies of other countries, "if any of the "Big Three" went bankrupt, many suppliers would also fail; because car companies share suppliers, all U.S.-based manufacturers would suffer part shortages. American production would virtually stop until new supplier arrangements emerged." Apart from this problem there is also the issue of the unemployment rates that will be in direct effect to the bankruptcy of General Motors leaving an estimated 2.5 million people unemployed.

Although General Motors is suspected to have to file for bankruptcy Chairman and Chief Executive G. Richard Wagoner Jr. has made it clear to his employees that he has no intention of filing for Chapter 11 for bankruptcy saying that it would be, "contrary to the interests of our employees, stock and bondholders, dealers, and our suppliers and customers." But the protests of Chairman Wagoner might have come to soon, with investors starting to come to terms with the fact that General Motors is becoming more and more in debt and may not be able to get themselves out of it. Although, General Motors does in theory have enough money to get themselves out of this situation, GM has $34 billion dollars, the company might not have the man power to release them of this problem. Without investors support and the support of their customers it is going to be a difficult fight to get out of the debt that General Motors has created for themselves.



http://www.realclearpolitics.com/articles/2008/11/how_to_bail_out_general_motors.html
http://www.businessweek.com/magazine/content/05_50/b3963114.htm