  Digitalvision Member Username: Digitalvision Post Number: 1366 Registered: 11-2003 |
So CNBC is reporting that investors are thinking that GM has a liquidity crisis beyond the end of this year, and "most investors are betting it's going to fail." What if the unthinkable happens? It's market cap makes it the automaker that's the 20th largest in the world right now. Ripe for purchase by an ambitious foreign, frankly. This could have major implications for Detroit. I do think there is some serious "chicken little" behaviour going on, and it's sorta scary. | ||
Gravitymachine Member Username: Gravitymachine Post Number: 2350 Registered: 05-2005 |
if it fails, who wants to give me a job? | ||
Digitalvision Member Username: Digitalvision Post Number: 1367 Registered: 11-2003 |
http://money.cnn.com/2008/10/0 9/news/companies/taylor_death_ watch.fortune/index.htm?postve rsion=2008100916 (Message edited by digitalvision on October 09, 2008) (Message edited by digitalvision on October 09, 2008) | ||
Detroitrise Member Username: Detroitrise Post Number: 3711 Registered: 09-2007 |
^If that matters, Detroit is also on Forbes "Death Watch". The collapse of Ford & GM (Chrysler) would just speed up the process. | ||
Bobl Member Username: Bobl Post Number: 128 Registered: 07-2008 |
G: Many of us are already out of a job. Welcome to the club. Just got a job offer for less than 60% of what I made last year. Phil Gramm's deregulation of investment banks in 1999 has come home to roost. And, now they want to deregulate (and tax) employer paid health care!!! | ||
Sstashmoo Member Username: Sstashmoo Post Number: 2665 Registered: 02-2007 |
Bob, Take it. I think we'll all be hearing the causes as soon as all the finger pointing begins. | ||
Iheartthed Member Username: Iheartthed Post Number: 3536 Registered: 04-2006 |
The most ironic thing... This morning I was looking at GM and Ford's market cap and comparing it to Honda and Toyota (Ford is larger that GM market cap wise, if anyone cared). GM won't outright "fail" like an investment bank. These investment banks were living almost solely on credit, whereas the auto companies generally keep large cash reserves. I think a company like GM would go into bankruptcy reorganization if it became insolvent. I also have to believe that the feds would cook something up to keep it out of foreign hands, and even out of the hands of an on-shore venture capital firm. GM would be the manufacturing equivalent to an AIG... | ||
Iheartthed Member Username: Iheartthed Post Number: 3537 Registered: 04-2006 |
The collapse of Ford & GM (Chrysler) would just speed up the process. If GM goes under, consider Detroit dead. Michigan too, for that matter. It's the largest private employer in the state. | ||
_sj_ Member Username: _sj_ Post Number: 2655 Registered: 12-2003 |
Yet, Health Care employees more people in Michigan than the entire auto industry and look how quickly people wanted to put them on the street. | ||
Lilpup Member Username: Lilpup Post Number: 5328 Registered: 06-2004 |
I wish I had money to invest right now. | ||
Novine Member Username: Novine Post Number: 794 Registered: 07-2007 |
Do you really think we've hit bottom yet? I thought we had at the beginning of the week but the market looks like it has more to shed. Still, several years from now, I'm sure we'll hear the stories of the people who jumped in at the bottom and rode the next wave up. | ||
Publicmsu Member Username: Publicmsu Post Number: 771 Registered: 11-2003 |
We're not done yet... still need the retail market to begin failing. Let's wait for the holiday shopping season and figure out what confidence consumers have in this market; my guess.. not a whole lot! | ||
Lilpup Member Username: Lilpup Post Number: 5329 Registered: 06-2004 |
It depends how many more lose jobs. Many (most?) average income people don't have a lot in the market and so aren't hurting unless they're carrying credit card debt (raised interest rates), are upside down in their mortgage, or have lot their job. It's important to recognize that most neighborhood banks and credit unions aren't failing because they don't play the games with market risk the nationals did. This is true also of the conservatively run (generally smaller) businesses. | ||
Sean_of_detroit Member Username: Sean_of_detroit Post Number: 1964 Registered: 03-2008 |
My guess is not until next year. I'm hoping I have to eat crow on that one... | ||
Bobl Member Username: Bobl Post Number: 129 Registered: 07-2008 |
Yep. Retail sales will fall. But nobody can predict the bottom. If you have decades to go before retirement, this might be a good time to jump into a stock market IRA, though. Less than ten years, probably not. Five years or less, no way! Think I'll buy my first lottery ticket tonight! | ||
Lilpup Member Username: Lilpup Post Number: 5330 Registered: 06-2004 |
This would be a great opportunity for the Ford family to gobble up stock if they can. | ||
Wilus1mj Member Username: Wilus1mj Post Number: 280 Registered: 05-2005 |
Should I buy Ford or Gm Stock or let it ride on Black??? Are my odds better at a Detroit Casino or investing in Detroit autos?? | ||
Belleislerunner Member Username: Belleislerunner Post Number: 425 Registered: 12-2003 |
The ride the wave up only works if the company stays in business. It would make more sense for GM/Ford to file for bankruptcy, which would void the vast majority of it's contracts/obligations (e.g. pension etc) and then have a private equity firm or another buy it from bankruptcy - akin to the Lehman switchover to Barclay's. Sucks if you were a bondholder/stockholder/pension receiver of the old GM/Ford - but good if you were a factory employee and employed under the new company. Bankruptcy could be a good option for getting rid of legacy costs. Holding on to stock "because what goes down must go up" could leave you with a pile of worthless stock. Paging Lehman, WaMu, etc.... | ||
Patrick Member Username: Patrick Post Number: 5668 Registered: 10-2003 |
Seems like a lot of these talking heads on the East Coast want GM to fail. | ||
Lilpup Member Username: Lilpup Post Number: 5333 Registered: 06-2004 |
They've been saying that for a couple of years now. They're desperate to be proven correct about *something* (like unions and Detroit's Democratic 'socialist' tendencies make business unviable). Let the automakers plod on! (Message edited by lilpup on October 09, 2008) | ||
Iheartthed Member Username: Iheartthed Post Number: 3538 Registered: 04-2006 |
quote: Nah, this isn't bottom. Some people don't think we're anywhere near the bottom yet... http://www.alleyinsider.com/20 08/10/vcs-angels-to-startups-l ook-out-for-that-meteor-that-j ust-hit-you- | ||
D_mcc Member Username: D_mcc Post Number: 1341 Registered: 12-2007 |
Forget the tunnel, lets just sell all of Michigan to Canada while we can still get something... | ||
Patrick Member Username: Patrick Post Number: 5669 Registered: 10-2003 |
At this point can GM sell of certain units? Not actual brands, but transmission and engine units? Is that even possible? | ||
Lilpup Member Username: Lilpup Post Number: 5334 Registered: 06-2004 |
GM's major problem this past year or so has been from GMAC and one time charges, not actual automaking operational expenses. The question is how much more exposure to the down credit market does GMAC have? Ford Credit poses a similar problem but nowhere near as large a one as GMAC I'm sure. Since Chrysler isn't the parent company anymore they don't have such issues buried in their numbers so they can show a profit much more easily and Cerberus isn't compelled to publicly announce where they stand overall. | ||
River_rat Member Username: River_rat Post Number: 357 Registered: 02-2006 |
It is an unfortunate fact that all three US automakers are likely to fail without a government 'bail-out'. The pensions will, to a certain extent be assumed by the PBGC; I wonder about the medical benefits. It is very likely that the state and many municipalities dependent on tax revenues will also follow the route of Highland Park. California and Florida will need massive federal help to continue a semblence of function in a few weeks. The suppliers to the auto industry will belly up as well. Brother, can you spare a dime? | ||
Lilpup Member Username: Lilpup Post Number: 5336 Registered: 06-2004 |
Nonsense. All they have to do is make it until 2010. Chrysler even says they're turning a profit, which is entirely possible. | ||
Sean_of_detroit Member Username: Sean_of_detroit Post Number: 1969 Registered: 03-2008 |
Chicken Little? Okay, you're a little right. However, for some people, the sky really is falling. It's like the 200 foot Cedar Point roller coaster. You have some people who won't go near the thing, and others who think it's nothing (especially compared to the 300 or 400 foot tall coasters across the park). So, I really think majority of the Chicken Littles are attracted to this falling sky, while others see it as an unimportant and boring acorn. | ||
Chuckjav Member Username: Chuckjav Post Number: 932 Registered: 09-2007 |
Lilpup.....Amen! I'll take 20,000 shares of Ford & 20,000 shares of GM; hold the stock for 24 months...cash-out huge. | ||
Crawford Member Username: Crawford Post Number: 384 Registered: 10-2006 |
If you guys are so confident, put your money on both. Where I live, GM and Ford are not considered legit vehicles by most folks. Detroit is the only place I see GM and Ford as the predominant vehicles. Until this perception changes, they will not sell cars, regardless of credit markets. | ||
Lilpup Member Username: Lilpup Post Number: 5337 Registered: 06-2004 |
FYI, they already sell cars. They have been for over 100 years. | ||
Border5150 Member Username: Border5150 Post Number: 269 Registered: 03-2004 |
Maybe this will prompt William Clay Ford to sell the Lions... Wouldn't that be nice? | ||
Flyingj Member Username: Flyingj Post Number: 326 Registered: 08-2006 |
Border5150, if he does they'll be on the West Coast faster than you can say "Baltimore Ravens" | ||
Mwilbert Member Username: Mwilbert Post Number: 412 Registered: 11-2007 |
Investors think the company will fail because it looks like it is going to fail. It is pretty clear from their actions (shopping the RenCen when the property market is ice-cold, slowing payments to suppliers) that they are scraping the bottom of their wallet for cash. This isn't a good time to need cash, and they will probably be in chapter 11 before the end of the year. Perhaps there will be some kind of bailout, because right now people don't need to see another large company fail, and depending upon how that is structured, maybe that keeps them out of bankruptcy. Otherwise I believe they are toast. | ||
Catman_dude Member Username: Catman_dude Post Number: 316 Registered: 03-2006 |
Automotive loans by GMAC and Ford Credit are the subprime mortgages of the auto industry. | ||
Lilpup Member Username: Lilpup Post Number: 5338 Registered: 06-2004 |
Don't confuse actions taken now with actual need now. They have cash for this year at least and are being pro-active for the future. BTW they are looking for a mortgage on the RenCen rather than to sell. | ||
Mwilbert Member Username: Mwilbert Post Number: 413 Registered: 11-2007 |
If by this year, you mean until the end of December, maybe, if car sales don't fall further off the cliff for the rest of the year. If you mean a calendar year, they don't. And what I've read is that they are looking at a mortgage or a sale/leaseback on the RenCen. Either way, it is an attempt to raise cash, and not all that much cash in the context of GM's requirements. Slowing vendor payments isn't a long-term strategy; it is a way to get a little breathing room. I think they are desperate (took them long enough). | ||
Lilpup Member Username: Lilpup Post Number: 5339 Registered: 06-2004 |
If you think slow vendor payments from GM is something new due to a cash crunch I can only assume you've never done business with GM. | ||
Mwilbert Member Username: Mwilbert Post Number: 414 Registered: 11-2007 |
They are explicitly moving from a roughly 35 day payment schedule to 60 days. That is new, and it is because they need to conserve cash. And no, I don't do business with GM. | ||
Pkbroch Member Username: Pkbroch Post Number: 148 Registered: 02-2008 |
Did business with GM Argo 45- 60 days was the norm. Even in the good years. | ||
Sstashmoo Member Username: Sstashmoo Post Number: 2666 Registered: 02-2007 |
"They are explicitly moving from a roughly 35 day payment schedule to 60 days. That is new," That may be their policy, but that hasn't been their practice. They've had some vendors out almost a year in some cases. Nothing new for them. Ford is the same way. They can do whatever they want in that regard and always have, what else are their vendors going to do? If one enters into collections/litigation, they immediately cut you off. Two choices: Like it or lump it. I keep reading, "if they could get a loan", loans and interest aren't going to fix anything in the long term. They are positioned perfectly right now to get their labor costs in line with the economy. Labor costs, legacy costs on ridiculous agreements are what is killing them. The UAW has negotiated them into a corner where if sales drop off, they get into a situation they are in right now. Should've never been agreed to. It was greed, carelessness and ignorance that has put them where they are at. They cannot adjust to the market. That's why I think you'll see both Ford and GM enter into Chapter/restructuring. It's the only way they can survive and it's not going to be pretty. | ||
Russix Member Username: Russix Post Number: 140 Registered: 11-2006 |
Think of all the people who will lose their pensions if these companies collapse. | ||
Reddog289 Member Username: Reddog289 Post Number: 632 Registered: 08-2007 |
If i had not have messed up on my 2004 taxes i,d be buying 200 shares of Ford stock. | ||
Mauser765 Member Username: Mauser765 Post Number: 3305 Registered: 01-2004 |
"consider Detroit dead. Michigan too" i think the rest of the country has already considered us dead for about 15 years or more. | ||
Iheartthed Member Username: Iheartthed Post Number: 3539 Registered: 04-2006 |
About GM's cash reserves: quote: Did GM report it's cash on hand yet for the end of the 4th quarter? The credit freeze has gotten a lot more serious since June 30, so I have to imagine that they burned through cash a faster rate between Jul 1 and Oct 1 than they did between Jan 1 and Jul 1. | ||
Patrick Member Username: Patrick Post Number: 5673 Registered: 10-2003 |
This is a good article. I am just waiting for some smart ass on here to cherry pick things from it in order to make an obscure point Why America needs General Motors, Ford Posted: September 01, 2008 10:13 pm Eastern © 2008 WorldNetDaily I've been asked to do many interviews recently on Fox News when automotive issues top the current events for the day and a guest is needed to defend the American automobile industry. But my most recent interview on August 1 had me defending General Motors against the misguided opinions of an economist who was calling for the outright failure and bankruptcy of the company, while claiming such a national calamity actually would be in the best interest of America. http://www.worldnetdaily.com/i ndex.php?fa=PAGE.view&pageId=7 4048 | ||
Gene Member Username: Gene Post Number: 116 Registered: 10-2006 |
If GM and Ford fail, this country will have no facilities for large scale production for national defense. Such a loss would not be in the best interest of this country. Chapter 11 would be the best solution for both companies. Bought Ford at $2.20. Stock will be at $5.00 in 60 days. | ||
Digitalvision Member Username: Digitalvision Post Number: 1372 Registered: 11-2003 |
No it wouldn't. Chapter 11, and their sales come to a screeching halt, even more so. I've heard multiple times from various car marketing experts that bankruptcy means total curtains. Much more likely, they are going to be bought if anything major happens as they are a ripe target for it. Most the suppliers I know are thinking that's going to happen. Sstashamoo is correct, too. More like 6 months to a year for many for payment, as I mentioned on another thread. | ||
Larryinflorida Member Username: Larryinflorida Post Number: 3073 Registered: 02-2007 |
If you are trying to ignite World War III you will be needing some tanks. Republicans would never let GM fail. | ||
Mwilbert Member Username: Mwilbert Post Number: 415 Registered: 11-2007 |
They aren't going to get bought out before they go bankrupt--no one wants to assume their debt. But no doubt some portions of the company will continue to operate, maybe most of them. Buying the stock of a company whose best hope you think is Chapter 11 is an unusual strategy. I can imagine it working as a trade, but you'd better be nimble. And it is true that car marketing experts say people won't buy cars from a bankrupt automaker, and they may be right. In any case I'm pretty sure we will be running the experiment. | ||
Lefty2 Member Username: Lefty2 Post Number: 2513 Registered: 07-2007 |
If they go BK then the union contract will be gone and they can call new terms on all the vendors. I highly doubt the gov't will let one GM close shop. Over a million jobs overall are at stake. They will let them restructure on a different level. |
