Burning assets to buy another day of life

It’s amazing what people will do when they are truly, deeply desperate.

They’ll make small sacrifices to prepare for potential future hardships and bigger ones if the threat is closer or more certain. To stave off certain death, folks will do nearly anything.

Last year, we all watched the Detroit 3 hold a deep-discount garage sale to prepare for hard times. Then this year a fuel-price spike and the credit meltdown made Detroit’s worst-case scenarios look like so much wishful thinking.

Those once-huge tens of billions in cash reserves start to look puny when your burn rate accelerates to billions per month.

Since the $700 billion Wall Street bailout shows no sign yet of convincing U.S. banks to make a car loan or two, the Detroit 3 is stuck. Congress is their only chance to avoid going bust.

And Congress may not decide in this week’s special session. It could hang fire until February with a new Congress.

So General Motors, Ford and Chrysler must plan to hang on an extra 90 days. If your cash burn is over $2 billion a month like it was for GM and Ford in the third quarter, every day consumes about $70 million.

How desperate is Detroit this week? Do the math and decide for yourself.

Ford gave up control of Mazda for $540 million, reducing its stake from 33.4 percent to 13 percent. That bought Ford an extra week.

GM sold its remaining 3 percent stake in Suzuki for $230 million. That’s about three days. Call it a long weekend.

What does that say about them?

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