SHOULD GM BE ALLOWED TO GO BROKE?

So after all these years, some would say decades, General Motors is so close to filing for chapter eleven in the US that the Fed is rumored to be planning a twenty seven BILLION dollar bailout package for the giant failing automaker. Perhaps the buzz phrase "GM's too big to fail" will become a self fulfilling prophesy. Needless to say, the ramifications of GM actually going bankrupt would be wide reaching, no doubt touching deep into the hearts of communities far and wide and affecting millions of people who in one way or another make a living or who's incomes are supported by the manufacturing of automobiles.
The water cooler, on line, talk radio and tavern talk runs the gamut from comments like "it's only because of the global economic slowdown that GM has run into tough times". And, " GM has shot itself in the foot by building huge, lousy cars that use too much fuel and that nobody wants to buy. These are urban myths.
Of course, the real reasons why GM is going broke are complex and GM has been going broke for a long time. Some of the reasons are the result of bad management decisions, like buying Hummer for example, but many are the result of market conditions that are and have been out of control of even a market player as big as GM. For example, the fact that the import/export market has been a one way street for a long, long time. Japanese cars go to America, American cars don't go to Japan. And to complicate matters further, there's GMAC. A subject that is so big in itself that I'll have to leave it for another day. Even though GMAC is a critically important player on GM"s stage.
For an eye opening account of just how long GM has been bleeding to death I urge you to read Porter Stansbury's articles "Letters from the Chairman of GM". Reading these articles will crystallize just how dire GM's situation is and how the current situation is NOT a result of the most recent and dramatic economic conditions.

http://www.growthstockwire.com/archive/2008/sep/2008_sep_20.asp

http://www.dailywealth.com/archive/2007/nov/2007_nov_10.asp

Mr Stansbury's ( http://www.stansberryresearch.com/ ) letters were controversial at the time of his writings because so many people were unaware or disbelieving of just how dire the situation was and is at GM and based on my observations, THEY STILL ARE.

So given this long preamble about how GM came to find itself at the "end of the world as we know it" I must ask the following questions, " should GM be allowed to fail" and " can GM really be saved anyway. Well my answers are yes to the former and no to the latter.
Here's why. I'm philosophically opposed to pumping taxpayers' money into specific companies.
That only amounts to a subsidy for a failing company that gives it an edge over its competitors.
It's far better to let those affected by changing conditions in the market take advantage of social support systems already in place as they need them. As examples, employee pensions are insured, unemployment insurance is there for displaced workers.
And GM as a viable business cannot be saved anyway. Because GM itself with all of the tools and resources available to it for the last twenty years has not been able to turn a profit. Providing a massive bailout package for a huge, long failing company simply postpones the inevitable at taxpayer's expense and in a very inequitable way.
The elephant has been shot a hundred times already...it just hasn't fallen down yet. GM should be allowed to fail in the normal course of business and its assets and debts absorbed by the remaining investors in the marketplace
Regards,
Julian.

Copyright JulianOnePlanet Publications 2008