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GM begins discussions on how to restructure debt, become viable

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In a series of historic talks expected to be tense and sweeping at times, General Motors Corp. will launch formal negotiations this week with the United Auto Workers, bondholders, dealers and others to transform the automaker into a smaller, viable company.

GM has pledged to revamp labor contracts, reduce debt and shrink the number and type of vehicles it produces to satisfy conditions imposed after the federal government granted the automaker and Chrysler LLC $17.4 billion in emergency federal loans. The loans will ensure the companies survive through March, but each automaker must develop plans by Feb. 17 to ensure long-term viability.

GM needs financial concessions to implement a restructuring plan unveiled last month that includes eliminating up to 31,000 jobs, shutting nine plants and renegotiating its 2007 labor contract with the UAW. GM also wants to close 1,750 dealerships, possibly eliminate Saturn and convince banks and bondholders to swap some of the company's debt for equity.



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That's a tall order, Bruce. I'm sure we all wish GM well.

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There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. - Ludwig von Mises

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