According to an article in the Star-Telegram, General Motors Corp.(GM) reported a $30.9 billion loss of revenue for the year of 2008 and burned through $6.2 billion in cash in the last three months of 2008. Facing the worse auto sales climate since 1982, GM is wondering out loud whether they can survive and avoid bankruptcy.
The article said:
GM and its auditors must determine whether there is substantial doubt about the automaker’s ability to continue it operations. Chief Financial Officer Ray Young said the determination will depend a lot on whether GM gets further government loans and whether it can accomplish its restructuring goals. Young said that auditors are studying the future of the company because “there’s uncertainty with how the Treasury will view our viability plan,” and “uncertainty on whether we’re going to be able to execute the terms of our loan agreement.”
That uncertainty about GM’s future is nothing new since the auto industry has begun facing the threat of bankruptcy because of sales declining. Vowing to avoid bankruptcy, the automaker has received over $13.4 billion in federal loans since December but has been unable to prove it’s viability or its ability to avoid bankruptcy. A GM bankruptcy could have catastrophic affects on the U.S. economy causing tens of thousands of job losses and drastic losses in the retirement savings of those who invested in GM believing it was sure bet especially in economic hard times.
If GM does file for bankruptcy be prepared for the number of foreclosures and personal bankruptcies to rise especially in areas that depend heavily on the auto industry for employment.