That's right, the big one, 1929. We have a financial crisis thread in the Debate Forum but this one isn't so much a debatable issue (if it gets there, mods, please move and combine it) so I thought I would put it here.

The market had a "challenging" day and the General, that's right, the stalwart of American industry closed at something like $4.90 a share which gives it a market capitalizaition (or worth) of about $2.73B. Now I think at the high around 2000, GM was worth something on the order of $100B but in 1929 right before the Great Depression, GM had a market cap of just over $4B.

Now you can adjust the 1929 figure and in today's dollars that is more like $45B which means the current value is about one tenth of what it was back then, but if your grandparents bought GM stock and left it to your parents and they left it to you, you are probably now under water from what grandma and grandpa paid for it 80 years ago.

I know CL is a bit of a refuge but it would be worth everyone's while to pay some attention to what is going on. If for nothing else then to get some historical perspective.

 

I declared that GM would be bankrupt in 5 years about 2 years ago. Many market-watcher types predicted the same 1 year ago.

This isn't exactly how I planned on it happening; but when you're a massive company in massive debt and in a massive credit-recession; this is what happens.

Peace out Ford and GM, don't let the door hit you or your overpaid UAW on the way out!

 

Obviously they've been as good as anyone lying to investors, customers, etc. But it is pretty obvious they are in survival mode now. They have a whole lot of steps they can take so I don't see them going bye bye very soon.

Bankruptcy? I sure would if it were my call. Just like the airlines it will be the easiest, neatest, simplest, and quickest way to "renegotiate" the UAW contracts. That most definitely will not solve their problem. But it is something they are going to have to do. One way or the other, those UAW jobs are gone along with the retirement benefits, the people holding them just don't know it yet.

I don't take any glee in this, it is a shame, and I mean that, a shame on America. But the current economic crisis only accelerated what GM set in motion decades ago.

 

well from what i read it's the rumors of them at the edge of bankruptcy that pulled them down so much today. i am not surprised though, they are doing really bad, and especially with the auto industry hit lately, they are hurting bad

would they do under soon like that? i doubt, especially it seems like the US government wants to hold it up one way or the other. but i don't think that's a good move neither, the government is getting their hands in too many muddy business now and they are not that strong to begin with

nice comparisons though on GM comparing to before the last crash

 

I hadn't exactly seen the rumors but one of the brokerage houses, OK, I know they aren't exactly in favor, I believe reduced GM stock to a "sell" before the open. Then S&P came out and said they are reviewing, or going to review, GMs credit rating for a possible downgrade. The downgrade obviously doesn't preclude GM from getting financing but it raises the rate they will pay for it.

I can't claim to be very knowledgeable about business on this level but bankruptcy is a strategy before it is the wake. As I mentioned, the airlines used it to cut labor and leasing costs quite effectively. GM has significant issues still with their labor and retiree costs even though they have restructured them. The unfortunate side is for anyone familiar with GM is that if the "customer first" UAW members feel they were screwed, their prime candidate to punish is the GM consumer by producing even worse quality vehicles. GM simply can't afford that.

GM still has a lot of resources but you have to question if Waggoner and Lutz are the guys at this point. Maybe no one could have done better but they make Lehman and AIG top management look like genius holymen.

 

At this point if they go bankrupt it will give them a chance to break the unions.

Many said this before that this is what they want once it reaches a point.

 

I guess the fundamental question is that if they can drop costs, like break the union and jettison the retirement liability, do we think it will make a difference? I really don't know what I think about that. I think Caddy is making some interesting cars and Buick knows its niche. We enthusiasts will applaud the vette and the Camaro but they aren't going to save the company. So, can GM go forward built around the Volt? Probably an over simplification but you get where I am going.

Some of the talking heads were making a deal of this on the morning shows but I still have to admit, I was staggered when I put the numbers together, especially after the close. The drop in the Dow, which is 30 of the USs biggest international companies, really doesn't reflect the carnage in the markets. A GM investment being a wash (or a huge loser if you count inflation) after 80 years is still something that I am having difficulty wrapping my tiny mind around.

 

What about the $25 billion bailout they just got?

 

What about it?

 

to negative by Standard and Poors.

Quote, originally posted by CNBC »
GM Hit By Ratings Warning, European Sales Drop
Topics:Stock Market | Eastern Europe | Western Europe | Credit | Consumers | Transportation | Automobile Industry
Sectors:Automobiles and Parts
Companies:General Motors Corp | Ford Motor Company
By CNBC.com with Wires | 09 Oct 2008 | 03:28 PM ET
Text Size

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 .

RELATED LINKS

Current DateTime: 12:07:16 09 Oct 2008
LinksList Documentid: 27100671

* Toyota: 2009 US Auto Market to Be Flat
* Auto Sales Slammed by Credit Market
* GM's Wagoner Takes Case to YouTube

GM stock traded at an intraday low Thursday of $5.41, marking a decline of 21.7 percent from yesterday's close. GM hasn't traded below $5.50 since December 1950.

The shares were down [GM 5.36 -1.55 (-22.43%) ] roughly 20 percent.

general motors shares fall

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.

It blamed the credit crisis and inflation for seriously hurting consumer confidence.

"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.

Shares of GM's Detroit rival Ford, which plans European production cuts as well, also slid Thursday. The stock [F 2.25 -0.41 (-15.41%) ] was down more than 12 percent.

- Reuters contributed to this report.
© 2008 CNBC

 

I guess I'm one of the few that have been buying up stock in Ford, GM, and a few other none auto related companies as if the market will turn around tomorrow. But give it a few months or years. Now is a good time to buy.

 

I smell Ford/GM Group buy!

 

Really? But the fundamentals aren't there. I think there are better bargains in the market right now aside from the U.S. auto industry perpetual loss machine.

But then again, the U.S. govt. sure likes bailing them out.

 

LMAO!!!

I actually was thinkning of buying a few GM stocks today. I think they are starting to see the light and move better product much better than Ford.

 

Give it a couple of more days and we can probably find someone with a CC limit high enough to charge the GM buy on.