GM's Day of Reckoning

It's crunch time for General Motors. The automaker prepares to file the "largest restructuring plan of its 100-year history," as it seeks to justify its use of the $13.4 billion federal loan package it received back in December, the New York Times reports. The 900-page road map to profitability that has been crafted by GM will lead to more job cuts; the closure of more factories in North America; and the halving of its brands, with just Chevrolet, Cadillac, Buick, and GMC left standing. But these radical measures will be for naught, notes the NYT, if GM fails to persuade the United Automobile Workers union to agree to large cuts in retiree health care coverage. Both GM and Chrysler (which also must submit restructuring plans today) are hinting at "Chapter 11 filings to frighten creditors and workers into discounting debt," writes BusinessWeek, and that sets up a "face off between the union and bondholders with GM in the middle," says David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. With negotiations between the carmakers and the government expected to run far beyond the Tuesday deadline, the Obama administration has appointed former Lazard Freres & Co. investment banker Ron Bloom—a man with "a record for demanding harsh concessions from manufacturers, unions and investors alike"—to spearhead the auto-industry task force charged with driving through a deal, writes the Wall Street Journal. Bloom previously made his name "advising U.S. steelworkers to accept major concessions in several bankruptcy cases," writes the WSJ.

“Get John Malone on the line,” was just one of Mel Karmazin's frantic cries to his assistant last week as the CEO of Sirius XM raced to fend off bankruptcy and the ignominy of losing the company to Charles Ergen, "his longtime nemesis [who] had cleverly bought up $175 million of Sirius XM’s debt, knowing full well that Mr. Karmazin couldn’t afford the payments," writes a breathless NYT. The call seems to have paid off. Last night CNBC was reporting that Malone's Liberty Media is close to "finalizing a deal to buy a major stake in Sirius XM Radio that would spare the satellite radio from bankruptcy." How Sirius XM found itself in such a mess can be attributed to one major miscalculation by Karmazin, writes the WSJ. Last summer Karmazin needed to refinance more than $1 billion in debt that the newly combined company needed to pay off in 2009. But he demurred, explaining that the refinancing terms available were "ugly." Just a month later, the credit markets dried up. Karmazin isn't the only corporate titan staring at the brink. Sources tell the WSJ that Trump Entertainment Resorts Inc., Donald Trump's casino group, is set to file for Chapter 11 bankruptcy protection today.

Let's stay with the WSJ as it chronicles the (relative) decline of Silicon Valley, which "posted a drop in employment and recorded a decline in per capita income in 2008 for the first time in several years." Along with job losses, the valley experienced a 7.7 percent drop in venture capital investments—its primary driver of economic innovation—during 2008. "There was a feeling that Silicon Valley had special assets to help weather the crisis, but we now know we're in for the same pain," said Russell Hancock, chief executive of Joint Venture Silicon Valley. At least one valley company sees opportunity in the downturn. Oracle Corp. is on a spending spree, having completed 10 acquisitions in the past year, the WSJ writes. The software giant is one of a "small club of cash-rich companies bargain-hunting amid the worst economy in a generation," it writes.

Japan's current woes—its economy shrank at an annual rate of 12.7 percent in the final three months of last year—are enough to make anyone hit the bottle, but it's still not a good idea to appear drunk in public, as the country's finance minister has found out. Shoichi Nakagawa announced he will resign later this year "over what appeared to be drunken behaviour at last weekend’s G7 summit in Rome," the Times of London reports. While Nakagawa insisted "a combination of jetlag and cough mixture got the better of him" (other politicians had spotted him bumping into doorframes), one leading opposition MP told the Times there was "'nobody in the Diet [parliament] who did not know' about Mr Nakagawa's fondness for a tipple."

Finally, add live TV to the list of things you can get on your iPhone. Now all AT&T has to work out is a way to make consumers pay for it. As Silicon Alley Insider writes (via CNN Money), while "mobile TV is popular in some countries ... just 2.1% of U.S. mobile subscribers watch programmed TV on their cellphones."