Scary but possibly getting closer to reality. General Motors today hit $11.43 and had an intra-day low that was their lowest stock price in 53 years. The company's worth (or market capitalization, stock price multiplied by number of shares) is less than Toyota's 2007 yearly profits. It's right now burning through $1 billion per month in operating money. Chrysler today had to disclaim rumors that it was close to filing bankruptcy after it took out a $2 billion credit line from Cerberus and Daimler. Thoughts? Would the government let them reorganize or try to make a political show of it in an election year and offer them bailout money?
What was behind today’s nightmare on Wall Street? It's getting ugly up here. I don't know about bailout money. The airlines get it. The oil companies get their tax brakes. But Washington hasn't given two shits about the auto industry in a while. And really, where's the money gonig to come from? Sometimes I think that the auto industry would be best served by figuring their way out of this. At the same time, most of my family, friends, and neighbors are tied to the industry in some way. And there's a real possibility that they'll lose their jobs. I'd hate to see that. But I'm also tired of government handouts to major corps that took advantage in the good times, but failed to plan for the bad.
It's been said before, but GM is a pension plan and health benefits company that builds cars on the side. There's really no pretty way out of this.
I really hope they don't go bankrupt - and later out of business. They're the reason japanese auto makers haven't sky rocketed the cost of their vehicles in our market
Thing is though, they wouldn't be able to anyway because there'll always be a low-end and a high-end product for the likes of Toyota and Honda to be sandwiched between. Whether thats GM products or Hyundai and BMW products, there'll still be something that stops them from asking more, even if its thats not a rival but just that if they charged $60,000 for a basic spec car nobody would be able to afford it.
http://jalopnik.com/5064934/gm+chry...ory-two-month-furlough-for-chrysler-engineers And read Peter deLorenzo's rant on the GM-Cerberus talks. http://www.autoextremist.com/
I'm not quite sure how to feel about this. I'm kind of half awake right now. But any way you slice it, it's more jobs lost in Michigan. We just can't win up here.
Pretty much. But it's a lot of jobs lost everywhere. Suppliers (I work for one major Chrysler supplier although my job is not tied to what we sell to Chrysler), car dealers (which is the main job loss that will be felt nationally I think), truck drivers doing deliveries and other transportation (both suppliers and the carmakers), the ports that ship the cars. I read a thing that said the car industry directly and indirectly employs 1 out of 12 people in this country FWIW.
Yeah, sorry for sound callous about what Michigan would lose. I know this sends a ripple effect throughout the country. We're just getting real tired of bad news. It seems to never end up here.
As far as "jobs everywhere", from the New York Times today: http://dealbook.blogs.nytimes.com/2...failures-at-big-three/?scp=1&sq=vlasic&st=cse So 1.2 million people in the U.S. directly, and then there all the indirect jobs tied to the carmakers. Looks like GM might have backed off from buying Chrysler. Looks like Cerberus are back to talking to Renault. Ford's "loud" shareholder, Kirk Kerkorian is to sell his stake in the company that was once worth $1 billion and is now only worth $300 million. The Ford family should just take the company private IMO. They can stop the stock price decline, this is as cheap as they'll ever get it, they can keep operating expenses closed to the public, and when things get better, they can do an IPO and make a ton of money. GM is also going to sell AC Delco for hopefully $15 billion.
Anyway, what do people think of this article? I'm posting it in full because the link will go to a different article next week. http://www.autoextremist.com/current/
Interesting article. It makes you wonder sometimes that since the auto industry was the well that sprung such a strong middle class if the elites weren't scheming from the get go to crumble it from within. The elites love cheap labor. They don't give a damn if we can afford to send our kids to college or not.
Those were the days...today, GM hit $3.02...a 62 year low... By now, this number has more than doubled...over the last 9 months, GM burned through $2.3 billion per month. And, today, the Deutsche Bank cut their target price to $0...that's right, ZERO. According to this WSJ article, even with government intervention, the analysts believe GM's future is "bankruptcy-like," and shareholders are unlikely to get anything.
This guy obviously loves cars and he loves America. But he has no clue how the economy works. Starting a trade war really won't help anyone. While the US are probably the worlds largest importer of goods, they are also among the top exporters...I don't have exact numbers, but I've heard some analyst on TV saying that the US will be #1 exporter in 2008. Also, only because you buy a Chevrolet doesn't mean that the car was made in the US. When it's cheaper to produce elsewhere, everybody will do so, even the American makes...that's economy 101 and it's not even as bad as it may seem, because it means that the US is more productive. The time it takes to build a car can better be spent by doing another job that generates more money than a car is worth. Also, don't forget that with the weak Dollar, more and more production is actually coming back. Every major automotive brand is either already operating many production plants in the US or are at least planning to built some. So only because the US car manufacturers were incompetent doesn't mean that there's no production. A free market works via supply and demand and neither of that changes when one or two firms go out of business. Either there was no demand in the first place, then there was simply not enough room, or there's enough demand, then somebody else will take over. Look at Britain. They were in a very similar situation a couple of decades back. Their solution: British Leyland, a government owned company that combined all those once proud British automakers. It failed miserably and cost the British taxpayers billions. Today there's no British auto industry left, yet there are more cars produced in Britain than when British Leyland ran the show. Others have taken the spot once occupied by BL, and because they're better at managing their money, they're actually contributing to the country instead of just sucking on it's monetary vein.