G.M. to Seek Bankruptcy and a New Start

GM headquarters in detroit

A sad day indeed when America's icon of industry files Chapter 11. There is an old saying "as goes GM so goes the nation", not very comforting. The taxpayer gets the majority ownership of a corporation losing billions in exchange for $50 billion, great deal (not). The dollar is hitting fresh lows at 6:30am and the US bond yields are rising again. Gold, silver and oil all up smartly as the reflation trade is alive and well. The stock market cares not about the dollar or rising commodities prices or bankruptcy of one of the countries largest corporations, Dow looks up over 100 points-go figure.-Lou

G.M. to Seek Bankruptcy and a New Start

WASHINGTON (NYT)— President Obama will push General Motors into bankruptcy protection on Monday, making a risky bet that by temporarily nationalizing the onetime icon of American capitalism, he can save at least a diminished automaker that is competitive.

The bankruptcy, to be filed in New York, is a moment of reckoning for an industry that was once at the heart of the American economy. It culminates a remarkable four months of confrontation between Washington and Detroit that is expected to result in a drastic downsizing of the company.

It also places the government in uncharted territory as a business owner, as it takes a 60 percent ownership stake in the company during its restructuring.

Reflecting the government’s extraordinary intervention in industry, aides say, Mr. Obama plans to tell the nation on Monday that he believes G.M. can be brought back from the brink of insolvency, even if the company looks almost nothing like the titan of old.

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http://www.nytimes.com/2009/06/01/business/01auto.html?_r=2&hp