GM is just like 1/2 of Americans now, living outside their means.
It's a different problem for corporations vs people. I don't think many of us understand how modern mega-corps finance their operations.
Let's say I'm Ford and I have twenty billion dollars in cash and marketable securities sitting around. I've had a good decade and the company has been earning a tidy profit. What should I do with that money?
Invest it back into manufacturing? Well, if I'm a union shop and I know that my total cost of manufacturing labor is four times what it is for Toyota, I really don't want to manufacture any more things in-house than I need to. So why build plants or expand existing ones if I can just out-source more part manufacturing to small businesses or overseas companies? It is clearly more cost-effective to let non-union shops build a widget than make it myself. So the only kind of manufacturing investment that makes sense is one that reduces union head-count (kills jobs.)
Invest it into research & development? Nothing wrong with this. But when the EPA rules are changing every few years, battery technology is getting more government subsidies in China than in the U.S., and fuel prices make it unclear what consumers are going to want in a few years, it's really hard to know what R&D is useful. Besides that, Wall Street now demands short-term performance from companies, and doubling your R&D budget is not that popular with stockholders (unfortunately.)
Continue to invest it in stocks and bonds? Companies do this all the time. Cash in the bank is just not something that is acceptable to them. Unfortunately, with a volatile stock market, you don't know what will happen or when.
Lend it to consumers at low interest rates to sell them more Ford vehicles? Make that payment number more attractive than the competing Chevy with GM-backed financing? Yes, certainly they did this and still do.
Now, after you look at all the above things, as a big corporation, if you run out of useful things to do with your money, you can't just save it for a rainy day. Investors won't tolerate this. Ford holding onto cash in case the economy stumbles and consumers are afraid to buy new cars? Never!
So what did Ford do? They gave out a $10 BILLION+ special dividend to stockholders because company insiders AND Wall Street just couldn't deal with that money sitting there collecting dust, and Ford management could not figure out a smart way to re-invest it into the business.
Every mega-corp has to make these kinds of decisions. It did not work very well for Ford -- some of the auto-related debt (as opposed to consumer-financing -related debt) they currently have is borrowed at insane interest rates. Yes, the company is doing quite well now, and they have dramatically reduced their debt load, including most of the outrageous interest rate bonds and credit lines; but it cost them a lot.
GM works the same. Chrysler. Airlines. Every big company. If they have cash sitting around, there is only two things that can happen: either it burns a hole in management's pocket so they find a way to spend it, or they pay it out in dividends or stock buy-backs, both of which are good IN THE SHORT TERM for investors. Often they are not good in the long term.
If you want to change this, good luck trying. A company sitting on a pile of cash is treated by Wall Street as a company with a factory sitting idle -- they think that pile of cash should be spent or invested so it produces profit, just like a factory produces goods. If you aren't doing either one, they want that money back.
