GM Deathwatch enters a new phase-

[jmshepard]

Deutsche Bank Rates GM Shares at Zero

“Shares of GM fell 23% to $3.34 in late-morning trading,” The Wall Street Journal reports. “After earlier hitting a 62-year low of $3.02, as analysts at both Barclays Capital and Deutsche Bank cut their target prices and investment ratings on the stock. Barclays now targets GM shares at $1, while Deutsche Bank slashed its target price to zero… Deutsche Bank analysts, who cut their rating on the stock to ’sell’ from ‘hold,’ gave GM a shorter liquidity timeline, saying the company might not be able to fund its operations beyond December. Even with government intervention, the analysts said GM’s future is ‘bankruptcy-like,’ and shareholders are unlikely to get anything.”

http://online.wsj.com/article/SB122633261247513857.html?mod=yahoo_hs&ru=yahoo

[alf]

I would not be surprised if some Chinese or Indian company comes in to buy some of its brands.

[TerryH]

I think DHL is almost done too. They just all but halted service in the US.

[turbo6bar]

Originally Posted by alf

I would not be surprised if some Chinese or Indian company comes in to buy some of its brands.

GM's upcoming hybrid vehicle will match internal combustion engine with a team of oxen.

[imcarthur]

Originally Posted by alf

I would not be surprised if some Chinese or Indian company comes in to buy some of its brands.

"GM sold 1.03 million vehicles in China last year, about 11 percent of its global total. The company is the biggest overseas automaker in the country in terms of overall sales, as it also makes vans."

from Gasgoo

In a related article . . .

"China has become Porsche's third largest market after the United States and Germany, with more than 7,600 units of the luxury German auto brand sold in the financial year 2008 (Aug. 2007-Sept. 2008) . . ."

from Gasgoo

Ian

[dd74]

Porsche better enjoy the moment. China just sunk $600B into its own faltering economy.

GM? Well, where does one begin? Toyota is probably laughing its ass off.

[rfuerst911sc]

Originally Posted by TerryH

I think DHL is almost done too. They just all but halted service in the US.

I work for the nations largest defense contractor and we received notification today that DHL is suspending U.S. operations by the end of this year to focus on its global business. Are we no longer part of the global picture?

[BGCarrera32]

Surprisingly enough, it would appear that GM may beat both Ford and Chrysler to the end.

[Bill Douglas]

Union members have shot themselves in the foot. All those high wages (plus relatively poor product compaired with a Toyota) have killed it.

[jmshepard]

One article indicated that Toyota is going for the kill at this juncture.

They are using all of the accumulated wealth from the past few decades to push the "saved by zero" add campaign. Offering buyers 0% interest while the big 3 can't provide any financing options.

[jyl]

Circuit City (CC), which filed bankruptcy today, is trading at either 10 cents or 2 cents per share, depending on which quotes to believe. For all practical purposes, the equity is worthless.

Anyone in GM stock is presumably nervously watching the CC chart.

I've railed against bailing out GM. But regardless of what I think, it seems GM is very likely to get emergency govt loans. Both candidates said they would deliver aid to Detroit, Obama is clearly going to carry out those campaign statements, and Bush looks like he may do it even before the new Administration take over. Why? Besides the obvious political stakes, the economy has already lost 1.2MM jobs in 2008 year to date (600K of that in the last 3 months), and is likely to lose another 1.0MM+ in 2009. The Big Three employ something like 200K directly (250K in 2005 and I am guessing 50K shed since then) and the Big Three's suppliers employ something like 700K (850K in 2005 and I'm guessing 150K shed since then). So that's nearly 1.0MM additional job losses at stake. Today's headlines claim that a total collapse of Detroit automaking could theoretically cost another 2.9MM jobs in the US - that sounds like a worst-case estimate that includes follow-on effects. Either way, no President is going to risk ballooning the 2009 job losses to 2.0MM+, and sending the unemployment rate to over 8%. And presumably someone is looking at the math on unemployment benefits (assuming $300/week unemployment benefit, 1MM out of work means $1.3BN/mo of unemployment benefit payments) and lost tax revenues if Detroit goes away. So, I'd guess GM is going to get its loans.

However, what will be the pound of flesh extracted? That might be an interesting question to ask here.

Assume the govt gives GM $25BN in emergency loans. What would you like to see the govt demand in return? Financial conditions and/or govt stake, management changes and/or compensation, business actions, other?

[tabs]

nationalization of the auto companies

[Bill Douglas]

Originally Posted by tabs

nationalization of the auto companies

How to really bankrupt America.

[djmcmath]

I just want a high quality product at a competitive price. I would have thought that capitalism could do that efficiently in this country, and I doubt that a gov't takeover of the brand will yield any better efficiency from the organization -- especially if they keep the union.

A question on a related note: as unemployment goes screaming towards 8%, does anything think it's likely that the UAW guys who are now out of work will take up employment doing previously unthought-of work? Will American labor take up working in the fields, standing out in front of Home Depot, etc.? How high does unemployment have to get before Americans are willing to do the jobs that they have claimed to be too good for?

Dan

[tabs]

Hey Billy..you know where I stand...it is just what is coming.

The govt will take an equity stake...pfd shares or some such thing.

Can you see a Democratic party led govt negioating with the UAW...and trying to break the Union...or at least telling them they have to take pay cuts.

What a joke that would be on the UAW

[Bill Douglas]

Yes I do actually.

I was thinking Tabs would like this yesterday when I stumbled across this site. It's a been and gone auction but another like it will come in this country http://www.gunauction.co.nz/catalogues/36.pdf

[dd74]

Originally Posted by djmcmath

A question on a related note: as unemployment goes screaming towards 8%, does anything think it's likely that the UAW guys who are now out of work will take up employment doing previously unthought-of work? Will American labor take up working in the fields, standing out in front of Home Depot, etc.? How high does unemployment have to get before Americans are willing to do the jobs that they have claimed to be too good for?

When it comes to feeding your family and yourself and keeping a roof over their heads, what possibly could be beneath you as far as work goes?

[dd74]

Originally Posted by tabs

nationalization of the auto companies

It won't happen. But first, we're going to pour a butt load of cash into them, with conditions that they build innovative "green" product.

I'm neither here nor there about the idea...

[Oh Haha]

Guys, here in Michigan this is big news. Many families depend on the auto companies for jobs, not just the UAW people.

We are experiencing the worse time swe have ever had at my company and we are a supplier to many of the plants that are slowing/shutting down.

Having dealt directly with them, I have my own opinion on some of the UAW workers.

That said, I don't know if a bailout is the right thing but I do know that if any one of the 3 US makers goes under, Michigan will be devastated by the jobs lost. Sure, some have the option to move to another state for work but not all.

Delphi is doing much better since going bankrupt and have flushed out a TON of the old school workers. I don't wish bad times on anyone but some of those were arrogant, selfish, bastards who bled the company dry. When the hammer came down, they said,"you can't do that!"

Oh, really? Watch us. buh-bye.


I think alot of blame MUST be laid at the feet of management, too. The leaders were the ones making the decisions the took the company down this path.

What's even funnier is that you see more "foreign" cars now in the Delphi parking lots and around the sites. You see, they are a global company now and deal with almost all of the car makers. I saw today at one of my plants:

Porsche Cayenne, BMW 3,5,7 series. Ford F-something(camouflaged), some tiny little Renault I think, etc.

Some clod wrote in to the local Flint paper recently to say" What's wrong with you people around here? Driving foreign cars when GM built this town. For shame. No wonder they are going under."


The dealerships are even picking on each other in ads touting that "we only sell American-made cars" not like those other dealerships that sell "the other makes".


Pfft.

People don't give a crap anymore. They buy what is a quality product.


Why do you think I have a BMW and a Porsche in the garage? duh.

[MotoSook]

Without a major management shake up and/or take over by a firm or executives from outside the automotive industry, any bailout of the auto industry is just throwing money into the toilet. They will continue to be wasteful and very little will change. A complete failure of the US auto industry may result in a better more efficient rebirth. Unfortunately, I don't think the policy makers see how terrible Detroit is operated (probably as inefficient as Washington)...and will probably bail them out to prevent the large loss of jobs and the fallout that would follow. BUT! Can a temporary collapse lead to a better future? Can the US make it through a couple years without Detroit?


Good example of a poor bailout plan is the banking bailout. It has had little impact and is likely a borderline failure as it hasn't done anything to change the habits of banks to act in a responsible and productive manner deserving of our tax dollars. It appears banks are just using this as an opportunity to go after weaker banks and hording cash to secure there position. They have done very little to improve the economic mess they created. When you give money to a bunch of greedy men and women who got themselves into the mess because of their greedy reckless nature....did we expect anything different?

Same would likely be the case with Detroit. Throw money at them....but the way that money is spent will not change. The auto execs will use the money to operate the same as before while hoping the economy turns around and people start spending money again. They'll trim the fat...but the core of their operation is still wasteful and ineffiecient. They will make feeble attempts at new products, but people will not buy in the numbers that we saw in the last 10 yrs. The profit margin of their new product will be smaller than what they saw in large trucks and SUV's. America and the world has been spending in excess for years, and the current economy will linger for a few years in the minds of smart consumers. Unless the auto companies come up with a realistic plan to stay in business for the next 5 years, the goverment might as well let them fail. A realistic plan does not rule out the loss of jobs and reduction or loss of pensions and healthcare to retirees.