GM stock trade halted, close to bankruptcy

[tsetsefly]

Its just a ticker but Ill update as the news story develops.

GM - world's largest carmaker - reports $4.2 billion loss and warns that its cash is near the 'minimum amount necessary to operate.'

edit (news story): GM Almost out of cash

[metalman]

Re: GM stock trade halted, close to bankruptcy

Its just a ticker but Ill update as the news story develops.

GM - world's largest carmaker - reports $4.2 billion loss and warns that its cash is near the 'minimum amount necessary to operate.'

good riddance. badly run companies should go out of business.

but not to worry, gm won't.

the fannie and freddie and aig and all the other bailouts were all preceded by announcements of imminent death to give political cover for the next taxpayer ripoff bailout...

this will go on and on and on and on... wake me up with public debt to gdp hits 200%.

[grizam303]

Re: GM stock trade halted, close to bankruptcy

I think maybe the people who want to save GM have never driven a GM car. My first new car was a Saturn Ion. After my second new car, a Honda (I'm in love), I now refer to it as "GM's Fisher Price My First Car."

[we_are_toast]

Re: GM stock trade halted, close to bankruptcy

GM is about to become a wholly owned subsidiary of U.S. Inc.

Ok, time to spark a little controversy.

This could fit nicely into Obama's plan. GM will become a jobs program, and a contractor for the ALT-E bubble. It will be given conditional money to produce high mileage, hybrid, and electric cars. The market forces that have Ford increasing F100 pickup production can now be ignored as the economy is redirected.

CAFE standards are most certainly going to rise, and while GM will have government cash, and will be forced to retool to smaller more efficient vehicles, Ford will be behind the curve, still producing gas hogs during this brief downturn in gas prices.

[Mega]

Re: GM stock trade halted, close to bankruptcy

Agreed
NO MORE SUV's!
Pinto's only....without the "Over heating" problem.
Mike

[touchring]

Re: GM stock trade halted, close to bankruptcy

Is $10 trillion enough to bailout all the GMs, AIG, Citibank, Ford, etc?

[grizam303]

Re: GM stock trade halted, close to bankruptcy

Agreed
NO MORE SUV's!
Pinto's only....without the "Over heating" problem.
Mike

But... they make hybrid SUV's now!

Which... still get worse mileage than my lowest-gas-mileage-model Civic.

[Andreuccio]

Re: GM stock trade halted, close to bankruptcy

But... they make hybrid SUV's now!

Which... still get worse mileage than my lowest-gas-mileage-model Civic.

Maybe worse mileage than a civic, but not bad for a car that can comfortably handle my family of 4, plus grandma on occasion, for a trip to stock up at Costco, or any other excursion.

I have an Escape Hybrid. I typically get about 30mpg. If I drive deliberately (which can be a bit annoying to drivers behind me), I can get mid to high 30's. On a two hour round trip that was almost all flat highway, at a constant 55, I managed to average 43.

[Chris Coles]

Re: GM stock trade halted, close to bankruptcy

The most efficient aspect of good old capital based business is bankrupcy. If you fail, someone will pick up the useful pieces to use again and at a lot lower overhead. Yes, sad. yes, in the short term causing great difficulties. But the future must be in the hands of the new entrepreneurs, not the old broken backed horses loaded with unsustainable overheads and debt.

The only way forward is through new investment of capital into completely new industries. Many not even thought practical, but which will surprise everyone by their capacity to succeed and their intrinsic vibrancy.

The future is in the imaginations and efforts of tomorrows original thinkers and like everyone with new ideas, the "old school" will demean them and tell all around that they are fools. But they are not and never have been.

Take the savings of the nation away from failed banks and institutions and place it into new equity capital investment in every bright idea you can find. Yes, many will fail, but that capital, instead of lining the pockets of the failed, will instead be disperced throughout the nation as new orders for everything you need to build a new business. Those that will succeed, will again light up the smiles of their employees and the nation will stand tall once again.

Pay the bankers and failed executives and it will all end up offshore while the recipiants will simply enjoy an early retirement on some sunny shore.

Look up from your fears and invest and never fear the shame that some investments will fail so that the few will succeed beyond your wildest dreams. Because while those funds are always in the hands of new ventures, the money will be spent at the grass roots where you need the jobs the most.

All it needs is courage. The rest will follow.

[GRG55]

Re: GM stock trade halted, close to bankruptcy

GM is about to become a wholly owned subsidiary of U.S. Inc.

Ok, time to spark a little controversy.

This could fit nicely into Obama's plan. GM will become a jobs program, and a contractor for the ALT-E bubble. It will be given conditional money to produce high mileage, hybrid, and electric cars. The market forces that have Ford increasing F100 pickup production can now be ignored as the economy is redirected.

CAFE standards are most certainly going to rise, and while GM will have government cash, and will be forced to retool to smaller more efficient vehicles, Ford will be behind the curve, still producing gas hogs during this brief downturn in gas prices.

It wasn't their build quality that killed them. It wasn't even their product mix, bad as it is in a higher energy price environment. And, in the case of GM, it wasn't even their pathetically bland passenger car design [that dates back to the last energy crisis era...remember the J-car?]. If it really was any of these they wouldn't have much hope of a bailout from the government.

What killed these companies is their high unit costs [including legacy costs] and the fact they can no longer offset these on the income statement by playing financial games in the derivatives and MBS markets. Curing the cost issue means pain for union workers, current and retired. Lots of pain. And it's the need to be seen to be "doing something" in the way of pain relief that is the sole motivation for the bailout. Maybe GM becomes the next JP Morgan, Chrysler the next Bear Stearns, and poor ol' Ford the next Lehman?

Last time these guys had to make "efficient" cars they gave us the Vega, the J-car, the K-car, the AMC Pacer, and the Ford Fiesta [why Ford is now resurrecting that name given its dismal history is a complete mystery]. Thank gawd they know how to make pick-ups or they'd never have made it this far. Going to be interesting to see what the Asians come up with to compete with the Volt. ;)

[Tulpen]

Re: GM stock trade halted, close to bankruptcy

Going to be interesting to see what the Asians come up with to compete with the Volt. ;)

I think that under Obama and a democrat congress we are surely going to see trade barriers for the car industry.

[Shakespear]

Re: GM stock trade halted, close to bankruptcy

make pick-ups

What a waste !!!!

I remember over the years coming to Texas and with each passing year seeing the pick-ups getting bigger and bigger.

About 2 years ago I was at a stop light in a mid-size rental in Dallas when a pick-up drove up next to me at a stop light. I could not see the driver (he was on the passenger side of my car). I had to duck to see him. In the vehicle was the driver and a child. :confused: My thought was "Nuts!!!! What are they thinking?"

[sutro]

Re: GM stock trade halted, close to bankruptcy

Isn't GM's highest cost health care? Aren't they competing in a world market against others based in countries with universal health care?

But on the flip side, can you have free trade with countries that don't have free labor?

[BiscayneSunrise]

Re: GM stock trade halted, close to bankruptcy

The SUV craze was an unintended consequence of higher CAFE standards. Detroit stopped making large rear wheel drive sedans and station wagons. At that point there were only two alternatives to driving econonboxes; highly expensive mercedes and BMW sedans or trucks.

Around 1984 some first movers began driving Broncos' and Suburbans, first generation SUV's that really that really were trucks. Detroit then came to the realization that SUV's were a loophole in the CAFE standards so they starting adding car like luxuries to their fleet of trucks with eye popping margins. Those margins gave Detroit the ability to pay unsustainable labor contracts. The whole thing based on cheap energy.

Now, thirty some years after the introduction of CAFE standards we have a domestic auto industry still stuck in the 1960's.

Good point about GM becoming an arm of government tinkering. Obama owes the unions for his election and the last thing he is going to do watch a million UAW and related jobs disappear. (Not good if one wants a second term) Keeping GM around as a social experiment accomplishes several goals.

By the way, I happen to be in east Asia right now (Japan & Singapore). Despite news reports regarding euphoria around the world on the Obama win, there is an awful lot of nervousness at the leadership level in the region regarding rising American protectionist sentiment and continuing military/security guarantees.

[BiscayneSunrise]

Re: GM stock trade halted, close to bankruptcy

Isn't GM's highest cost health care? Aren't they competing in a world market against others based in countries with universal health care?

Each industrial economy pays for health care in it's own way. Some provided by the employer, some by the government. Either way, the cost is somehow baked into their respective costs of doing business. I suppose the disadvantage American exporters have is that they are completely responsible for whatever expenses may occur in the future, an open ended commitment. If it is government provided, the employer pays the appropriate tax and is off the hook after that. Sort of like the difference between defined benefit and defined contribution pension plans

But on the flip side, can you have free trade with countries that don't have free labor?

Law of comparative advantage supposedly kicks in. The idea being if the Chinese can make useless trinkets cheaper, let them. We'll concentrate on higher value added items. There are then two problems with that scenario: your competitors eventually figure out how to make high value added items also and not every person in that kind of economy has the interest or ability to be a high value added worker, i.e computer designer or a hedge fund guy.