General Motors Corp. and Chrysler LLC technically are bankrupt and Chrysler is a step away from death, said Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor. "GM and Chrysler are insolvent. Without federal funding they are bankrupt," McAlinden said at a conference today at the joint office of The Detroit News and Detroit Free Press. If the government took half of all of the bailout money away, they would go back to being bankrupt, he said. "GM will not meet the initial conditions of the loan. But the conditions will change so GM can keep them," McAlinden said.
His prognosis for Chrysler is not as rosy. "Chrysler will go away," he said. "Most cats don't have that many lives."
McAlinden described the company as being in hibernation, operating at a "one beat per minute level." Chrysler idled all North American manufacturing plants this month and entire floors in its Auburn Hills headquarters are empty in the wake of recent 5,000 white-collar buyouts.