D.F.

Krause

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July 14, 2008

GM Bankruptcy Impossible? We Return to the Fanciful World of Rick Wagoner

I’d like to issue a statement:

Reports that this column is stupid are inaccurate.

You got that? Good. Now move on to criticizing The Laughing Chef column. I have spoken.

I guess you didn’t know you can take something that seems obviously true and end all such obviousness simply by using the word inaccurate. Neither did I, until I began acquainting myself with the wordsmithing skills of one Rick Wagoner, CEO of General Motors.

Now regular readers of this column will of course remember Mr. Wagoner. In February, Mr. Wagoner pronounced himself “pleased” at GM’s 2007 earnings report, which contained the news that the company had lost $38 billion. That’s “billion” with a B. Rick Wagoner was “pleased” with a P.

That’s nutz with a Z.

In the months since, GM has continued to lose money – so much money that it needs to find a way to raise $15 billion in cash by the end of the year just to continue operating. That can be a little hard to do when your stock has fallen so far that your entire company isn’t even worth $15 billion, and that’s what has happened to GM.

With this in mind, Merrill Lynch (which I always find myself typing as “Merrill Lunch”) last week produced the headline-grabbing but still rather obvious observation that GM is a candidate for bankruptcy – more specifically, that it’s “not impossible.” This sent shivers down spines in Detroit, almost as bad as when Magglio Ordonez went on the disabled list. GM bankrupt? It couldn’t be!

Well, yes, it seems hard to believe. But if you need to raise an amount of money that no one outside an insane asylum would lend you, well then, you just might be facing bankruptcy. Even Kirk Kerkorian won’t invest money in GM anymore, and he’ll invest in anything!

So this analysis hardly seems controversial. But don’t tell that to Mr. Wagoner. The man who was pleased with the loss of $38 billion – perhaps figuring he could always just go get another $38 billion – informs us that it’s not true. Merrill’s statement, according to Wagoner, is “inaccurate.”

Now I’m not one to parse words. I leave that to my nitpicking editors. But let’s think about this. What Merrill actually said is that GM going into bankruptcy is “not impossible.” Wagoner said that statement is “inaccurate.”

So if Merrill’s statement is inaccurate, that would mean that bankruptcy is impossible for a company that needs to raise $15 billion in cash by the end of the year and has no idea where it’s going to get it.

And you thought Wagoner was whistling past the graveyard when he commented on last year’s earnings.

I’m going to go out on a limb here, but I’d say that for a company in GM’s financial condition, bankruptcy is indeed possible. It’s made even more possible by a CEO who refuses to consider selling its brand names – which are among its few valuable assets.

But don’t ask me. What am I? The chairman of General Motors? According to Rick Wagoner, it’s pleasing to lose $38 billion and it’s impossible to go bankrupt when you’re running out of money. Honestly, this has me worried. After all, I write the Business Ridiculous column! I understand that Mr. Wagoner will probably need a new job pretty soon, but I wish he would stop auditioning for mine.

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