It's increasingly apparent that the central banks and Wall St. have not only gamed the credit system with dodgy derivatives but have also pursued policies aimed especially at the U.S. manufacturing sector.  The existing system of banking and credit creation is on the cusp of collapse brought about by its own internal contradictions and corruption.  For almost two decades, Wall St. has merged and manipulated the U.S. manufacturing industry using manufacturers' asset wealth, good credit, and trained work force for leverage as the predator-opportunists either sell off profitable portions, borrow for cash and then bankrupt, or off-shore the work through labor arbitrage. 

 
General Motors, while demonstrating a relative good faith toward expensive legacy obligations, faces shrinking profit margins and mounting debt.  There is insufficient cash and credit access to pay the rising cost of debt expense or to invest in future operations here or in their profitable overseas ventures.  Checkmate, or so the financial industry analysts thought.  Imagine the fees-rich environment of a GM breakup.

What if, instead, venerable GM is considered too big to fail?  That concept was put forth in a recent article by Greg Watson at www.seekingalpha.com entitled Default Risk of U.S. Automaker Debt: Too Big to Fail.  A well-capitalized automaker could see its way through these difficult economic conditions and take the necessary time and steps to develop, re-tool, and produce a more suitable lineup of vehicles, he said. 

 
For all who have an interest in GM's survival and success, it would be wise to take actions now to increase the company's status as too big to fail, Watson said.

While downsizing reduces default risk it also makes GM a smaller company with fewer employees, fewer suppliers, fewer dependent local economies, and with less importance to the U.S. economy.  Instead, GM needs to begin a campaign aimed at convincing anyone who may be opposed to guaranteed financial obligations that the company will be environmentally aware, efficient and effective in operations, and will re-tool - rather than shut down - certain truck and SUV plants for hybrid mid-size and small-engine gasoline cars like it produces overseas. 

When a new Congress turns to health care-reform, to stimulating a sagging economy, and revitalizing a manufacturing sector sufficient to drive GDP, it's possible the automakers could be huge beneficiaries.  Perhaps there will be a new Reconstruction Finance Corporation (RFC) created, similar to the institution that financed the rapid U.S. industrialization that led to victory in WWII.  A package of loan guarantees, health-care subsidies, and "green" funds for the production of fuel efficient vehicles could be in place in less than a year. 

 
Why open the Treasury to a financial industry that passed so much Ponzi-scheme paper that monetizing its trillion-dollar indiscretions dangerously diminishes the dollar and the economy?  

 
Back our U.S. auto manufacturers and suppliers, instead.  The Detroit 3 is integral to the overall U.S. economy and to the locales directly affected by the auto makers' downturn.  If we are going to guarantee financial obligations, then perhaps GM is too big to fail, too.