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General Motors Corp. symbolized U.S. prosperity in the postwar period. Its weight in the U.S. economy was summed up by the phase “What’s good for General Motors is good for America” — attributed to a 1953 statement by GM’s Chairman and CEO Charles Wilson.

GM enjoyed the position of the world’s top carmaker for 77 years from 1931 in terms of the number of units sold worldwide until Toyota Motor took over. But GM has weakened to the point of needing government intervention and assistance.

The effective nationalization of GM and its Chapter 11 bankruptcy filing would have been something unthinkable in the past. GM’s Chapter 11 filing, which follows Chrysler’s similar move at the end of April, marks the largest failure of an industrial firm in the U.S. history.

The U.S. government will acquire about a 60 percent equity stake, and the Canadian government and the Canadian province of Ontario, about 12 percent, in a new, leaner GM firm to be established within 90 days. The government will provide some $30.1 billion in fresh loans to the new GM. The government loans to GM, Chrysler and their affiliated firms will top $80 billion.

Until a few months ago, it was said that GM was too big to allow to go bankrupt in view of its effect on other industrial and financial firms. But the U.S. government has found that it is no longer possible to continue to financially assist GM.

Behind GM’s difficulties may have been hubris and shortsightedness on the part of management, which failed to implement policies that would let it successfully meet the challenges of a rapidly changing business environment. It continued to rely on sales of gas guzzlers because they brought large profits. It also could not reduce the so-called legacy costs associated with health care and pensions for retired workers.

The challenge for the new GM is whether they can develop and sell fuel-efficient and eco-friendly cars — clearly the types of cars that consumers desire. For seven straight months, the U.S. car market has shown more than a 30 percent decline from the same month the year before. The challenge is big.

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