Both GM and Ford presented turnaround plans to Congress today. GM requested a total of $18 billion in federal loans, stressing that it needed an immediate injection of $4 billion to stay afloat until the end of the year. GM's situation is the most precarious as it will likely be forced into a Chapter 11 bankruptcy filing before Christmas without government funds. The automaker began discussions with bondholders in an attempt to cut its debt load by $30 billion by swapping debt for equity in GM. GM will also attempt to restructure obligations to a UAW health-care trust set to begin paying benefits to retirees in 2010. Nevertheless, the company stated that it didn't have a "Plan B," and was depending on help from Congress.
Ford is in much better shape, primarily due to the fact that it borrowed every penny it could raise in 2006 before the credit markets fell apart. Ford is only asking for a $9 billion credit line, in the event that the recession is longer and deeper than expected. Ford estimated that it would return to profitability by 2011 and planned to accelerate the development of new hybrid and batter-powered vehicles. Of course, with the price of gas plummeting every day due to the commodity rout, by the time the vehicles are completed, everyone is going to want to buy a Hummer again. Because when you're living underground in a bunker with your canned goods, and your bars of gold (wondering what the hell they're good for) and you have to go out for groceries, it's going to help to have a Hummer handy. You'll be using the electric car as a toaster.
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