General Motors (GM) said on Friday that it will draw down $3.5 billion on the $4.5 billion line of credit it put in place with JPMorgan Chase (JPM) and Citigroup (C) back in 2006.

GM is pursuing the "get it while the gettin’s good" approach to capital management. With the credit markets tight and GM’s fiscal health in rapid deterioration, the company wanted to take out the money now rather than wait a few months and find out it’s no longer available.

The Wall Street Journal reports that "GM’s cash position has been dwindling in recent quarters. The auto maker says it needs between $11 billion and $14 billion on hand to fund day-to-day operations. As of the end of June, GM had $21 billion available, excluding $5 billion in untapped credit lines. Given the about $1.2 billion-a-month rate at which GM has been burning through cash this year, Wall Street has begun to worry about its liquidity."

That brings us to GM’s latest plan for raising capital: tap the taxpayer. General Motors, Ford (F) and Chrysler have been in Washington lobbying for $50 billion in low-interest loans to help the sinking auto industry stave off its demise — of course they say the money is needed to make Detroit a leader in fuel-efficient cars, but I’ll believe that when I see it.

It goes without saying that shares of General Motors are a risky long-term bet — any company that is diving into its credit lines while it burns $1.2 billion a month is in trouble. But will GM get its bailout? Probably, because lawmakers would look woefully hypocritical if they hand out billions to save struggling investment banks and then claim to be free market-proponents when it comes to the auto industry.

But if GM needs a government handout to survive, the shares probably aren’t worth buying: kind of like lending money to people in line at the welfare office.

Zac Bissonnette

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