The Sun is Setting for GM

GM seemed closer then ever to bankruptcy today as bondholders gave GM the middle finger when ordered by the federal government to swap their debt for soon to be worthless GM stock. If GM files for bankruptcy the United States and Canada will own as much as 70 percent of a post fire sale GM with the biggest share owned by the US. This will just add to an already over burdened US Treasury.

As for the far flung “the sky is falling” predictions of AIG’s failure and subsequent destructive impact on the economy predicted by analysts, the failure of Chrysler and now possibly GM could very well place our economy back into the tailspin it has attempted to break out of. Additionally, what type of message does the government send to taxpayers when it offers little help to blue collar icons Chrysler and GM but allows AIG and banks to come back to the money tree time and again?

Its true that narrow minded, short sighted bafoons such as Jim Wagoner guided the direction of GM to its ultimate demise but who really pays the price for this one man? Everyone does. An already gun shy stock market will dump stocks and jump to hording cash as the market wobbles and bounces around. A new flood of jobless claims will fill every nightly news headlines.

This is a familiar tune we have already heard. The biggest difference is what the automakers represent to the people of the US. They have long been viewed as the backbone of success (and sometimes excess) and losing them will ultimately change the landscape of our American economy. Its true American automakers should have been embracing new technologies sooner and possibly reduced or eliminated brands that detracted from the core business but should’ves and could’ves are a thing of the past.

I told friends that GM stock early this year was a good buy for the very short term. VERY SHORT. It looked like they might pull out of this with limited help from the government. That proved to be a false positive and the stock has nose dived ever since.

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