Daily you discuss with friends and family the problem of GM's financial woes being heatedly discussed around town. Whether we should send GM into bankrupsy or have the government intervene with financial support. It's obvious that not everyone can agree on the same solution. This is a complex situation, and there are good and bad arguments for each side of the debate. It seems that, for now, the government has taken the position that supporting GM is the best course of action, as long as GM's board makes adequate changes to their business model with the funding.

What are GMs Real Problems
There are dozens of causes for why this company is in the current financial disaster. There is the long-term loss in their sales volume, due to various reasons, including product quality, uncompetitive fuel efficiency, and attractiveness to customers. Then there are the huge union labor and "legacy" costs, including pensions and benefits to current and former employees. The company and labor have both made financially poor decisions in the past that helped in the short-term but hurt in the long-term, which has caught up to them. This includes paying lower salaries in exchange for larger, longer-term benefits. And finally, there is the recent financial failure in the global economy, which reduced sales immediately and the credit crisis, which has reduced sales even further. Evidence of the iminate death of this company can be seen by this once DOW 30 stock dropping to penny stock status.

Experts have stated that American car companies are producing too many cars right now, so they basically need to {{{shut down some plants to trim their expenses. However, the companies have proven to be slow to make big changes like that. With a huge drop in sales and cash this year, it is more important than ever that the automakers downsize immediately.

Too Big to Fail?
This phrase is way over used. Most Americans believe this is true and that the president will do anything they can to keep GM alive. The new government feeling is that a quickly executed bankruptcy could help them keep them in business rather than putting them out of business.

If GM Must Shut Down
Hundreds of thousands of GM employees could get laid off, and many of them have good compensation. This includes the work force at companies related to the auto industry, such as parts suppliers. So the loss of so many wages would directly affect local and national economies. Of course, a restructuring of the company does not mean it ceases to exist and all employees are left without jobs. Layoffs are a definite possibility, but without employees a restructured company cannot exist.

Should GM Go Bankrupt?
A bankruptcy could help lower labor and legacy costs dramatically, including salaries, benefits, pensions, and debt obligations. However, there are important consequences. For example, the government insures the pensions via its agency, the Pension Benefit Guaranty Corp. That means if GM restructures and cannot pay the pensions anymore, the government would be forced to cover some or all of the bill, which would basically come from you and me. Also, consumers would be less likely to buy GM vehicles if the company was near or in bankruptcy, which would further exacerbate the problem.

Conclusion
If this company files for bankruptcy, hundreds of thousands of people will be affected, employees of GM and third party employees. However, if the government continues to prop up the failing company with bailout money or loans, it may simply suspend the inevitable and waste taxpayer money in the process. One of the best scenarios is for GM to turn itself into a viable, profitable company as soon as possible. That would prevent billions of more dollars from being wasted or lost for shareholders, bondholders, creditors, employees, dealerships, and taxpayers. This is probably why the government so far has decided to help them with some temporary cash to keep them afloat for a little while longer, hoping they will make drastic changes to their business model. Fortunately, the government and the Obama have put conditions on that money, basically saying if they don't make enough effort to turn themselves around, the loans will be recalled, which would likely force a bankruptcy. So, at this point, it is up to GM's management to pull a rabbit out of its financial planning hat.