GM falls deeper into the hole

Even though it is good news for General Motors (NYSE: GM) that the economy may not be forced all the way to it knees by the credit crisis, one by-product is that oil did bounce higher. Almost anything that helps GDP and consumer spending could put pressure back on commodities.

GM still hopes that the government will give it and the rest of the U.S. car industry $25 billion or more in loan guarantees. The companies say they can't afford to rebuild their plants to manufacture more fuel-efficient cars without the cash.

GM showed that it is drifting toward greater financial trouble when it drew down on its line of credit yesterday. According to The Wall Street Journal, GM "said it intends to draw down the remaining $3.5 billion of an existing $4.5 billion secured revolving credit facility to boost its liquidity amid uncertainty in the capital markets."

No one looking at the action would think that it is a sign that GM is doing better than it was earlier in the year. Due to falling car sales, it is doing worse. By exhausting one of its last life lines, GM is getting very close to a liquidity crisis of its own.

The government has, in theory, endless access to capital. It can print money and drive up inflation. It can increase tax bills and bring in more capital. Yesterday, GM sent out a loud signal that it needs cash. But, Congress may be sick of writing checks. GM is trying to get money at a time when the bank is closing.

Douglas A. McIntyre is an editor at 247wallst.com.

Get the latest on cars and trucks
from GM and all brands at AOL Autos.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA-89.2312,801.23
NASDAQ-23.352,903.88
S&P 500-9.311,342.64

Last updated: February 12, 2012: 04:10 PM

Hot Stocks

General Electric

18.875-0.255(-1.33)

Alcoa

10.29-0.35(-3.29)

Apple Inc

493.42+0.25(+0.05)

Google Inc 'A'

605.91-5.55(-0.91)

Bank of America

8.07-0.11(-1.34)

Wal-Mart Stores

61.90-0.06(-0.10)

Exxon Mobil Corp

83.80-1.08(-1.27)

Ford

12.44-0.25(-1.97)

Citigroup

32.925-0.735(-2.18)

IBM

192.42-0.71(-0.37)

Yahoo

16.14+0.14(+0.88)

Starbucks

48.82-0.38(-0.77)

Microsoft

30.495-0.275(-0.89)

Home Depot

45.33+0.06(+0.13)

Learn More About GM Cars

General Motors Brands:
Find Your Next Car

AOL Autos New Cars and Used Cars

DailyFinance Headlines

Benzinga Headlines

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

DailyFinance BlackBerry App

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

BioHealth Investor Headlines

Page Loaded in 1329081003744 ms.