General Motors: From the deathbed to the gurney

The auto maker's losses fall into the single billions, providing room for GM to pay back its government loans. Huh?


Andrew Leonard
November 16, 2009 8:35PM (UTC)

Rarely has an article reporting quarterly financial numbers for a major American automaker included so many unintended opportunities for hilarity as Monday's Wall Street Journal detailing third quarter earnings for General Motors.

Let's start with the lead sentence:

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General Motors Co. reported a $1.15 billion loss for a shortened third quarter, providing the first evidence of the auto maker's improvement since emerging from bankruptcy protection.

GM CEO Fritz Henderson announced that "today's results provide evidence of a solid foundation we're building for the new GM."

Only in today's Detroit: A $1.15 billion loss can be considered an not only an "improvement" but a "solid foundation."

But it gets much better:

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The results also don't comply with generally accepted accounting principles and exclude key items such as valuation changes for its pension and health-care accounts.

So the "improvement" and the "solid foundation" that led to $1.15 billion loss can be partially accredited to accounting shenanigans. That is encouraging!

But here's the capper: Henderson also announced that next month GM would start paying back its government loans, beginning with a $1.2 billion installment in December. If you are confused as to how a company that just lost at least a billion dollars is in a financial position to start paying down its debt in billion-dollar chunks, well, here's the answer.

In what could be a controversial move, the company plans to use other money it received from the U.S. government to pay back the borrowing.

Hope that clears everything up.

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Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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