Will the GE Capital bailout make a GM bankruptcy easier?

By Justin Fox | November 12, 2008 | +

GE has just announced (pdf) that GE Capital has been approved to participate in the FDIC’s Temporary Liquidity Guarantee Program. The FDIC will now guarantee all GE Capital debt (subject to some limits) issued between this Friday and June 30, 2009. Banks already have this deal. Now GE Capital does too.

As an interesting side-note, GE Capital is the country’s biggest provider of debtor-in-possession (DIP) financing for companies in Chapter 11 bankruptcy. Executives at GM have said that one reason the company can’t be allowed to go bankrupt is because there’s no DIP financing to be gotten, meaning that if the company went bankrupt it would be forced to shut down and liquidate rather than keep operating while negotiating with its creditors. Now maybe that excuse is about to disappear.

Related Topics: Wall Street & Markets

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While Paulson and co. figure out what they’re doing…

BAILOUTS ARE COMPLEX BEASTS

Here is a workable plan with common sense for the U.S. Auto Industry -

http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

Do not leave it to Paulson or Congress to come up with a creative plan or consider taxpayers’ interests.

There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW.
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It appears that the government is reluctant to bailout GM, the complete meltdown of which will be a matter of time.

With whatever little left, the Treasury simply cannot afford to keep bailing out failed industries or entrepreneurs. GM bankruptcy would mean the loss of jobs by hundreds of thousand. And this is absolutely worrying yet scary.

Dow dips further to near the 8000 level, causing great concerns to the world markets. One would suppose things can only get real worse in 2009 – nothing to be euphoric about. What say you, Mr. Fox?
(Tan Boon Tee)