Post by psychecc on Oct 9, 2008 14:57:33 GMT -6
Today's 678 point drop on the Dow was heavily influenced by what amounts to a run on GM which intensified late in the day. With GM below 1950 levels, CNBC talking heads are speculating that their chances of survival just got much worse.
Speculation is that the failure of GM would have a huge ripple effect on jobs in the rest of the economy. At least if GM is "too big to fail," they will be making a product instead of just shuffling paper. Many say that their current problems stem from too much paper shuffling in their lending arm and not enough planning ahead to build fuel efficient cars we would want to drive in an energy crunch. They are unveiling the promising Volt, but it might be too late. Others blame their health care costs, but I'm not in the camp that advocates pitting American workers against uninsured foreign workers to survive. I like tariffs. Link to full article follows.
GM Hit By Ratings Warning, European Sales Drop
CNBC staff and wire reports | 09 Oct 2008 | 03:58 PM ET
General Motors' shares hit their lowest level in almost 60 years as the U.S. automaker said its year-to-date sales in Europe slid almost 2 percent and a ratings agency said it may cut the auto maker's long term credit rating.
GM stock traded at an intraday low Thursday of $5.04, marking a decline of 27 percent from yesterday's close. GM hadn't traded below $5.50 since December 1950.
The shares slid as much as 30 percent.
S&P said Thursday afternoon that it was putting GM on its "creditwatch," with negative implications. The ratings agency said the move reflected the rapid weakening of most of the world's auto markets. It added that capital conditions in the sector would remain challenging for the "foreseeable future."
The agency also put the 49 percent GM-owned finance affiliate, GMAC, on creditwatch as well.
GM said earlier Thursday that car sales in Europe fell 1.9 percent to 1.6 million vehicles in the first nine months of the year, dropping its market share by 0.2 percentage point to 9.3 percent in that market.
....
"We are facing an unprecedented set of economic challenges due to the global economic crisis," GM Europe President Carl-Peter Forster said in a statement.
GM, a component of the Dow Jones Industrial Average, said Tuesday it was cutting production in Europe, as fears of an economic downturn hurt sales on the Continent as a whole, despite ongoing gains by the company in Eastern Europe.
GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and announced plans in July to cut costs by about $10 billion.
The company has been restructuring in North America to meet increasing demand for more fuel-efficient vehicles.
One investment banker who declined to be identified attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values.
"It all has to rebalance now," the banker told Reuters.
The stock decline comes as influential industry forecasters J.D. Power and Associates and Global Insight lower auto sector expectations for 2008 and predict a slow recovery.
Citigroup also cut GM and Ford Motor to "sell" ratings on Wednesday.
....
www.cnbc.com/id/27100742/
Speculation is that the failure of GM would have a huge ripple effect on jobs in the rest of the economy. At least if GM is "too big to fail," they will be making a product instead of just shuffling paper. Many say that their current problems stem from too much paper shuffling in their lending arm and not enough planning ahead to build fuel efficient cars we would want to drive in an energy crunch. They are unveiling the promising Volt, but it might be too late. Others blame their health care costs, but I'm not in the camp that advocates pitting American workers against uninsured foreign workers to survive. I like tariffs. Link to full article follows.
GM Hit By Ratings Warning, European Sales Drop
CNBC staff and wire reports | 09 Oct 2008 | 03:58 PM ET
General Motors' shares hit their lowest level in almost 60 years as the U.S. automaker said its year-to-date sales in Europe slid almost 2 percent and a ratings agency said it may cut the auto maker's long term credit rating.
GM stock traded at an intraday low Thursday of $5.04, marking a decline of 27 percent from yesterday's close. GM hadn't traded below $5.50 since December 1950.
The shares slid as much as 30 percent.
S&P said Thursday afternoon that it was putting GM on its "creditwatch," with negative implications. The ratings agency said the move reflected the rapid weakening of most of the world's auto markets. It added that capital conditions in the sector would remain challenging for the "foreseeable future."
The agency also put the 49 percent GM-owned finance affiliate, GMAC, on creditwatch as well.
GM said earlier Thursday that car sales in Europe fell 1.9 percent to 1.6 million vehicles in the first nine months of the year, dropping its market share by 0.2 percentage point to 9.3 percent in that market.
....
"We are facing an unprecedented set of economic challenges due to the global economic crisis," GM Europe President Carl-Peter Forster said in a statement.
GM, a component of the Dow Jones Industrial Average, said Tuesday it was cutting production in Europe, as fears of an economic downturn hurt sales on the Continent as a whole, despite ongoing gains by the company in Eastern Europe.
GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and announced plans in July to cut costs by about $10 billion.
The company has been restructuring in North America to meet increasing demand for more fuel-efficient vehicles.
One investment banker who declined to be identified attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values.
"It all has to rebalance now," the banker told Reuters.
The stock decline comes as influential industry forecasters J.D. Power and Associates and Global Insight lower auto sector expectations for 2008 and predict a slow recovery.
Citigroup also cut GM and Ford Motor to "sell" ratings on Wednesday.
....
www.cnbc.com/id/27100742/