The Next Minefield: GM, Ford and Chrysler

The economy in 2009 is going to be BAD, BAD, BAD! The liquidity crisis has ignited an already precarious situation with North American auto companies.

Everyone knows that GM and Ford are bleeding cash with outdated models and gas guzzling vehicles. Both have been burning through more than $1 billion in cash per month and are already looking towards government bailouts amid job and production cuts. Most analysts believe that, without raising funds, the two car companies will run out of cash some point in 2009.

The liquidity crisis is making it much more expensive to finance, or lease a car, putting a damper on both GM and Ford’s recovery plans.

A GM-Chrysler merger is being mooted… a merger that will destroy Michigan’s economy and probably shatter U.S. consumer confidence. Afterall, GM is after Chrysler for its cash position, and will almost certainly slash tens of thousands of jobs.

But what does it mean for people outside the auto industry??? It means a large jump in the unemployment rate, as the ripple effect cascades through the economy. Some analysts estimate that for each job loss at the automaker, 3 more jobs in related support industries may be lost as well!