Late in the afternoon of that long day, however, there was a slight change. His press secretary began saying his condition was “extremely critical, as to life.” It was clear what that meant, even to my then-unsophisticated self. It meant he was going to die.
Fast forward forty-one years, when the stricken patient is General Motors. Here, in tortured English, is how the general’s press secretary put it yesterday:
“GM and its auditors must determine whether there is substantial doubt about GM’s ability to continue as a going concern.”
What that means is the equivalent of “extremely critical as to life.” It is time for the government and the industry to have an honest conversation with us about the future of what, through most of my life, was the biggest and most successful corporation in the world.
We need to look at the balance sheet -- not just for General Motors, but for society. We need to know how many people work there and how many people depend on GM pensions.
Then we need to calculate what the ripple effect of something happening to that safety net would be. Not how much that would cost in tears and anguish, but how much a collapse of GM would cost all units of government in dollars. That then needs to be weighed against the cost of keeping General Motors going in its present form.
Once we have those figures, or some approximation thereof, we may know better what to do. Right now, it is impossible for me to say what would carry the higher cost -- some form of bankruptcy, or expanded government loans, not only for GM and Chrysler but for their suppliers, and almost certainly, before long, for Ford too.
It may be true that nobody saw, or could have seen, the Wall Street crash coming. But while I am not an economist, I can tell you that everybody should have foreseen some version of what is happening now to the auto industry. For years, the major automakers have been sustaining multi-billion dollar losses.
Anyone who got past simple arithmetic had to know that if this trend continued, someday they would run out of cash. Today, more financial experts than ever are saying that some form of bankruptcy reorganization is inevitable for General Motors, and perhaps for the others as well. Indeed, it is hard for me to see any other way ahead.
However, if there is a silver lining to all this, it is clear that the present crisis is not a Detroit problem but, as economist Sean McAlinden put it, “a worldwide macroeconomic disaster”
Regardless of your politics, it is clear that the government’s top priority has to be to get credit flowing again. Otherwise, the eventual question is bound to be… buddy, can you spare a dime?