A New Reality for GM, and Its Shareholders

Is my analysis of GM (GM - commentary - Cramer's Take) extreme? Yes. Do I want GM to file bankruptcy? No. Is it the most rational thing for them to do? Yes.

The problems with GM are so myriad that it is difficult for the company to solve things without some sort of wholesale breakage with the past. I was disappointed, severely disappointed, with how the unions held up these guys, which then made the automaker less competitive vs. the Japanese.

I believe that GM has made remarkable strides to bring down costs per car and truck, but the problem now is that it has the wrong cars and trucks because of gasoline's rising costs. Until that happened and the unions held them up, I thought that GM was making the turn.

Now the issue is not the prospects for the common shares, it is the prospects for the company; and the company should not be compromised by the common. It is possible that the common can be diluted down to some single-digit number, but why the heck should it even exist? Why don't the bondholders get the company?

There's not just the cars and trucks. We have no transparency when it comes to GMAC, which I regarded as perhaps among the worst lender when it came to residential mortgages. How do I know that? Did you ever see GMAC's ads? They were more aggressive than even Countrywide (CFC - commentary - Cramer's Take), although less aggressive than New Century (NCBC - commentary - Cramer's Take), Ameriquest, Fremont and Novastar -- the ones that may have been scammed left and right.

GMAC, like Chrysler, is a black box because Cerebrus doesn't have to tell us jack. This is why they can always tell us that they are in great shape.

I look at GM like I look at the American steel industry. No one ever thought, for example, that Bethlehem Steel would ever have to reorganize. That was the richest company in America by the way it paid its executives in the 1960s. In the 1990s it had some big years. It was a gigantic company and the biggest maker of all sorts of steel.

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. Watch Cramer on "Mad Money" weeknights on CNBC. To order Cramer's newest book -- "Jim Cramer's Stay Mad for Life: Get Rich, Stay Rich (Make Your Kids Even Richer)," click here. Click here to order "Mad Money: Watch TV, Get Rich," click here to order "Real Money: Sane Investing in an Insane World," click here to get "You Got Screwed!" and click here for Cramer's autobiography, "Confessions of a Street Addict." While he cannot provide personalized investment advice or recommendations, he appreciates your feedback and invites you to send comments by clicking here.

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