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What a GM Bankruptcy Will Mean for the Economy

The nation’s largest auto company General Motors has filed for Chapter 11 bankruptcy and a majority government ownership. Under the complex deal the public will get a 60% share in the company for $50 billion. The Obama administration negotiated the deal with GM, as well as its creditors and the United Auto Workers. GM will have to close a number of plants and auto workers will lose more than 20,000 jobs. Retirement benefits are also being negotiated to save GM money. However GM’s very profitable business in China will not be part of the deal. The other major auto manufacturer, Chrysler, just went through a bankruptcy proceeding and will merge with Fiat to stay on its feet. However, in the case of GM, analysts are concerned that the plan to keep the company afloat will only work if there are strong sales. In this economic climate, that’s a long shot.

GUEST: Richard Wolff, Professor of economics at the University of Massachusetts at Amherst

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