From plants to parks. From dealerships to driveways. From gas stations to grocery stores. What happens in the automotive industry affects each and every one of us. In fact, the collapse of the U.S.-based auto industry wouldn't just impact the more than 239,000 Americans directly employed by the Big Three. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants. The effect would be devastating in ways of which you never have thought:

* Nearly 3 million jobs would be lost in the first year alone – with another 2.5 million to follow over the next two years
* Personal income in the United States would drop by more than $150.7 billion in the first year
* The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance
* Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies

The credit crisis that is affecting us all is wounding the U.S. auto industry in many different ways. Carmakers can’t get loans to restructure and to produce new advanced technology vehicles. Suppliers and dealers can’t get loans for routine business, and customers can’t get loans for new cars.

[via Facts and Fiction]

Let's be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.

No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.

GM's 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.

But that's not all. Here comes the call to action:

The taxpayer needs protection and an upside. GM's top management may need to go. Government-as-shareholder deserves a big voice. Those details can be worked out.

The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are prepared to make.

But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing — now.

What? Buying a t-shirt won't help? [Automotive News, CNBC]

For the first time in the history of the company, the crisis isn't product. It's clear GM's figured out the need to design and build high quality, fuel efficient and attractively-designed vehicles. Not only have they realized the need to do it, they're actually doing it. Even the most jaded auto enthusiasts, journalists and industry analysts with even the slightest clue have to admit they've stepped up their game in the past few years. But, that won't stop bankruptcy at GM — just like it isn't stopping bankruptcy at their dealerships, as the recent failure of Bill Heard Chevrolet showed us last month.

Although the automaker has the cash to go about doing business right now, we've been told in the past the company needs $11 billion in working capital on hand at all times to remain in business. Right now, they've apparently got somewhere around $20 billion. With a "burn rate" (god, we SO didn't miss that term from the dot-com bubble) averaging over $1 billion a month (and a greater spend in recent months thanks to increasingly lower auto sales) and an inability to raise more cash (other than whatever minor deals they can come up with like refinancing buildings like their Renaissance Center HQ in downtown Detroit), the automaker will hit that $11 billion mark pretty darn quick. When that happens, there's no more crazy deals they'll be able to come up with to avoid declaring bankruptcy.

What's that you ask — what about the $25 billion in Federal loan guarantees? GM's cut of that pie will give them a few billion, yes, but nobody's expecting that money to hit the General's accounts until sometime next year and anyway, they may not even make it that far.

What about the open markets? Well, S&P just made it much more difficult yesterday, claiming it was reviewing GM for further long-term credit downgrades — ratings that already indicate their bonds are below investment grade. So don't expect help to come from the capitalist-loving marketplace.

So what happens when they hit that wall and actually have to throw down the B-word? Nobody knows for sure, and anyone who claims they do is full of more bull than Bank of America after swallowing up Merrill. But, one thing's clear — any form of court-mandated reorganization allows GM to reevaluate all sorts of deals — like the one recently signed with the UAW, with suppliers and most importantly, with creditors seeking repayment on the $43 billion in debt and $80 billion in other liabilities on the books at the General — potentially allowing the automaker to wipe some of that out. More importantly, just like the airlines, it'll give them the time to continue selling their ever-better vehicle lineup. True, many folks may be scared of buying vehicles from a company that's declared bankruptcy but of course, that didn't stop people from piling into Northwest planes after the airline did the same. And that's where they and we, have got some hope.