GM to Collapse Without Government Aid

Although the global economic crisis has smashed sales of most carmakers, US-based General Motors is probably the most important victim, with shares reaching the lowest point in 60 years. More importantly, market analysts already predicted that GM may collapse in case the government does not help the carmaker minimize the consequences of the global recession.

"Without government assistance, we believe that GM's collapse would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome for automakers, suppliers, retailers and sectors of the U.S. Economy," Deutsche Bank's Rod Lache was quoted as saying by msnbc pointing to GM's shares which reached the lowest point in 60 years.

According to figures provided by the same source, General Motors' shares “dropped $1, or 23 precent, to close at $3.36.”

General Motors unveiled a third quarter loss of no less than $2.5 billion and underlined the need for government funds that could help it avoid bankruptcy. Sales are already extremely low, with several thousand job cuts and lowered productions in most plants across the world.

Deutsche Bank's Rod Lache estimated that US government should help General Motors with approximately $10 billion in loan to help it “survive” until 2010 plus $25 billion “to fund its cash burn and recovery.”

“The 1,900 additional layoffs will come in the first quarter of next year at parts stamping, engine and transmission factories in North America as GM cuts expenses to deal with a worsening cash crisis,” msnbc added in the report.

However, the layoffs will be indefinite, GM spokesman commented on the consequences of the global economic crisis, explaining that no production facility closure is planned for the near future.