Capital structure
 

Common stock will be zeroed out soon - burn rate is just to high for GM. they cannot gear down fast enough. Ford is a better choice - and take the bonds over the common stock. You get paid while you wait for the turnaround.

I woldn't touch Ford either (except to short it). Doesn't matter if Ford is running a brilliant company while Chrysler and GM are cratering. Half of stock's value is the sector it occupies. Ford will get pounded thru mere guilt by association.

That being said, I think we can't allow them to fail. This country's population is growing and they need cars. Emerging markets are also growing, maybe not as fast as last year, but in the long term they are exploding. Millions of people need a $15K econo box to get from point a to point b. We need a player in that game we can't rely simply on one US car company. Chrysler barely counts because they're purely domestic. Big ticket items like wide body jets and Caterpillar machines are all we have going for us. All small consumer items have been lost to China for good. We really cannot afford to lose GM if we plan on staying in the manufacturing game. Service jobs at Wal-Mart and Costco are not going to meet the goals of American families: college and a House for their kids.

I think a Chapter 11 workout for Gm and maybe Ford would work. No one is going ot invest in either unless they make a nice clean break from the past.

Chrysler is a goner I am afraid. Sell or die.

It ain't looking good...may be time to dump it, take your losses and move on...

http://news.yahoo.com/s/ap/20090305/ap_on_bi_ge/gm_annual_report

I was out a awhile ago, currently seeking a bottom on Citigroup, my guess is C will bottom out within the next couple of weeks. There was an interesting report posted yesterday on Reuters regarding upcoming talks surrounding the mark-to-market accounting rule. I'm watching financial stocks closely now, IMO they are way oversold and at nearly bargain basement prices.

I don't think any of the three auto makers will close shop. Ford will make it, Chrysler (I have an inside track on that one) will be acquired and no President will ever allow GM to fail under his watch, certainly not a pro-Labor Dem. But the chapter 11 route is almost 99.9% certain, they're pretty far into their plans for that. They're just trying to figure out how to ****************-can the least amount of people but the layoffs will be huge.

To make matters worse, credit is not budging and oil is absolutely into its quiet recovery.

p.s.
STAY AWAY from those financials if you are an investor. Going long troubled companies in a protracted bear market is EXACTLY what the short sellers want you to do. I see another 30% decline for the big banks. We've still got 80% of the 09 bank failures to come. Which will of course heavily favor the survivors who are now getting murdered. Like cockaroaches in a nuclear winter.

GM is going to file chapter 11, so stay away. As for the financials? Citi, BoA and Chase are all insolvent if you strip away the government money and factor in the off balance sheet (level 2 and 3) investment losses. Citi's market cap at .98 a share is nil. BoA and Chase aren't far behind. Chase will have to suck up $41 B in Bear Stearns losses and the WaMu fallout rendering them nil, unless Obama keeps handing out bailout money. BoA and Citi are effectively nationalized already, so why don't we call a spade a spade?

^well there's trillions of dollars that are sitting pretty in money market accounts and short term bonds from domestic and foreign investors (where Prince Al-Waleed when you need him) that will come back into financials at some point. Its been nearly 7 months of pent up cash worldwide at this point.
Everything goes through energy and the banks. You'll never escape that in a consumer economy the size of ours. I tend to think it costs a lot more to build a bank from scratch than to keep one on life support until the chemo is done.

It's these times that make me think of the investor during the great depression that picked up paper one day and bought every stock of every good company that was trading for less than a dollar. I think he made a lot of money.

The fallout is going to be the real problem. When GM and/or Chrysler files the auto suppliers that are hanging on by a thread as it is are told that they aren't going to get paid what they are owed currently, it will be lights out. Not to mention that typically they would have to send back the last 60 or 90 days worth of receivables collected (may be waived or not possible). Regardless, many aren't going to make it.

They will drag Ford down with them. If Ford can't get parts because the suppliers shut down they can't make cars. Being in better financial position today is no guarantee of survival. They are simply the nicest looking rat in the dumpster.

It has been said time and again that the only thing worth anything out of Chrysler is Jeep. Even if they are acquired I wouldn't anticipate that they will be making anywhere near the number of models that they currently have.

Detroit is going to become a ghost town. Then we can ask Gettlefinger if in retrospect he would have done anything differently.

The 2008-09 Minivans and 2009 Ram 1500 are worthy, too. VW seems to agree on the minivan: the Routan is a Chrysler/Dodge minivan with VW styling, built by Chrysler on the same production line. Chrysler has an agreement with Nissan to build a version of the Ram, to be sold as the replacement for the current Titan pickup. The 2009 Ram 1500's coil spring rear suspension has provided a HUGE improvement in ride quality over all its competitors - particularly the Toyota. The Tundra rides HORRIBLY on concrete freeways when unloaded. The Fiat products and powertrains should be a big help to Chrysler when the tighter CAFE standards kick in. Not to mention the benefit when gas prices eventually rise.

It will be interesting to see what the new 2010 Grand Cherokee & Durango (supposedly related to the Mercedes M-class) and the 2010 Charger & 300 look like and how they drive.

Not that I like to toot my own horn, however, looking pretty good today. Shorties look to be close to done on financials....

GM stock is a total steal now!!! Let's buy some more OP! :cheers:

That was Templeton

Yep. All true. I happen to like my chances with these stocks. Not a lot of reason to short them anymore. And if you haven't noticed, the government IS handing them money.

Be Careful out there
 

Last updated: 12:55 am
March 11, 2009
Posted: 12:22 am
March 11, 2009

If the US government assumes greater control over US bank Citigroup or automaker General Motors, that might "trigger" their removal from the Dow index, the Dow Jones Indexes said yesterday.

John Prestbo, editor and executive director of the DJ Indexes, which selects the 30 stocks in the Dow Jones industrial average, said he tracks both companies "every day to see what the status is."

Should either stock be removed, "everything is on the table basically in terms of replacements," Prestbo said

So the question is if GM goes under, what can I pick up a vette for?

Or will they still be overpriced? Just like the Circuit City "sales", mark it up and then discount it to just a little bit more than Wal Mart's price haha....oh well, everything has been overpriced here for awhile, including my Porsce :D

Hopefully some changes will take place, but judging how the oil companies resorted to price fixing and nothing has been or will be done, we may not see the change to get the economy going.

btw...I wouldn't buy GM stock, a cheap vette, hell yes :D

I don't think that there is any credible evidence that the oil companies nor even OPEC has been able to fix oil prices.

If they could, I think they MIGHT be a bit higher right now.

:)

If you're willing to look past the $140 barrel of oil last summer then I guess we have no evidence. Give it time, at one point there wasn't any credible evidence of Enron having it's hand on California's energy crisis but that sure has changed.

And we'll probably disagree, but when one side cuts production, and the other side cuts how much gas they make because they don't like what happened to the price of their product, it's fixing the price. Or some will say, no it's just supply and demand. And as a direct result of their efforts, gas prices are higher than where they need to be right now.

What you describing IS supply and demand. Price fixing is when all of the suppliers act in concert to set the price irrespective of demand. Fact is, demand dropped and prices dropped, just like you would expect. Now, suppliers are providing fewer units at lower prices, just what you would expect in a commodity. If oil producers could fix prices, the prices would have just stayed at $4 a gallon. They didn't. And they won';t stay fixed here either.

Gold miners don't go after all the gold they have when gold prices are expected to be down. Farmers will not plant the whole field if they think prices are depressed.

Sorry, even OPEC has not been able to FIX prices, even though they would like to.

OK, OK, so $2 wasn't the magic number for a share of GM.

Anybody for $1/share?
(Cut to Ferris Bueller history class scene with Ben Stein: "Anybody? Anybody?")