As GM goes so goes the nation (and market), your thoughts and predictions

[shotgunner]

I am watching Cramer this evening and he said the following. The Lehaman Bros. failure was a mistake by the government, the biggest they made thus far in the crisis. If Lehman had not failed the DOW would be at 10,000 now.

He went on to say that another possible Lehman disaster is in the wings, that is if the Gov't allows GM to fail. He believes the a GM failure (I am sure most of have heard the projections they will be kaput between Christmas and Feb) would send the DOW down to 6000. The resulting unemployment and loss of business by GM suppliers would be devastating.

He is putting the Great Depression II possibility back on the table.

So here are some questions, How likely do you think a GM failure is? If likely do you see it sending the DOW down another 2000 points. If so, are going to take any action relative to your investments?

I will add I think GM's failure is likely without governement aid. I am unsure if they will get said aid or enough of it to survive. I am beginning to believe all aid is a band-aid delaying the inevitable. I am starting to think that the Doom and Gloom pitch has some good points and I don't like thinking that way.

Is much worse coming, because if Cramer is right and GM fails we are not near the bottom right now?

[Notmuchlonger]

Why do you believe Jim Cramer?

[shotgunner]

Because nobody is wrong 100% of the time

However he presented a believable scenario so I would appreciate thoughts on the questions I posed.

[FIREd]

"in Cramer we trust"...

[Notmuchlonger]

Quote:

Originally Posted by shotgunner Because nobody is wrong 100% of the time However he presented a believable scenario so I would appreciate thoughts on the questions I posed.

No, I wont be taking any actions with my investments. In fact I will ride my investments down to 0.

[Goonie]

Quote:

Originally Posted by Notmuchlonger Why do you believe Jim Cramer?

Really. I'd much rather watch Cosmo Kramer than Jim Cramer......he's much more level headed and not nearly as annoying.

[boont]

I agree Cramer is annoying and frequently wrong but he is the only one talking on a regular basis that was a hedge fund manager and daily Wall Street insider.

To do what he used to do, trade by the minute, you had to think by the minute. Buy, buy, buy. Sell, sell, sell. Right now. No pondering. He made a ton of money doing that.

I take him for what he is worth. I used to email him back and forth when he first started TheStreet.com. He doesn't answer emails like that anymore as far as I know but he did when the site was brand new.He taught me stuff I had never heard before.

I notice that Bill Gross mentioned, in his column last month that he also watches Cramer. Why would he do that? Because, he said, he learns stuff from him.

Me too.

b.

[Notmuchlonger]

Its great you learn things from him Boont. He certainly is an interesting character.

[kjrn]

I'm not a Cramer fan either, but I did catch what he had to say about letting GM go. The numbers of those affected were interesting.

14,000 GM dealerships across the country
Suppliers of everything from office supplies to outsourced electronics
479,000 pensioners and dependents

Quite a scenario...

[unclemick]

Meanwhile BUD slips away while Congress fiddles.



heh heh heh -

[kumquat]

Quote:

Originally Posted by shotgunner Because nobody is wrong 100% of the time

Yet. There's always a first time.

[clifp]

Quote:

Originally Posted by kjrn 14,000 GM dealerships across the country Suppliers of everything from office supplies to outsourced electronics 479,000 pensioners and dependents Quite a scenario...

No doubt a GM Bankruptcy will cause huge disruptions. Still we have seen literally scores of airlines enter bankruptcy over the last 20 years ago. For the most part they continued to fly airplanes, sell tickets and people continued to earn frequent flyer points while in bankruptcy. Most emerged smaller and more competitive a few such as Aloha and ATA stopped operations. Tens of thousands of employees were laid off, pension were screwed up, suppliers were hurt, travelers inconvenienced, many smaller cities saw dramatic reductions in commerical airlines. Yet through all of this chaos the country survived. Other airlines expanded and took market share, new airlines were started.

If GM declare bankruptcy it is very very likely they will continue to manufacturer and sell cars, and certainly GM dealers will continue to service GM vehicles for a decades to come.

Honda employs 25,000 (and many respect is as much an American company as GM) Toyota employs 38,000, indirectly they employee several hundred thousand through suppliers, dealers etc. If all of GM car capacity is shutdown, you'll see the competitors increase market share, and I bet you'll see hiring on the part of Toyota and Honda.

As a lady who grew up in Cleveland told me, GM going bankrupt is God's way of telling people to get out of Detroit before winter...

[Midpack]

I'm convinced GM needs to make or break on their own, a further bailout only prolongs the inevitable (whatever that may be). And if Cramer thinks we need to bail out GM, I'm sure a bailout would be a mistake. I wrote Pres Bush, my Senators and Congressman today to tell them not to waste any more of our money on a bailout of GM, Ford or Chrysler...

[treypar]

Cramer may be right. He is some of the time but sometimes not. The problem with bailing GM out and, I am sure that this will happen, is that there are problems with their product and union contracts that will cause continuous need for more billions every month with no end in sight. If it was just a one time bailout, I might approve but to set up monthly bailouts for GM forever is not reasonable. What about everyone else that is going to ask for bailouts such as state and city governments and other industries that will claim similar distress. I ,for one, would like a bailout for me.

[Midpack]

This says it all. How much debt should the rest of us take on to help big three auto workers with wages & benefits few of us enjoy plus pensions and retiree health care - while offering a product very few people want? And do you think the industry you're in will get a bailout? It's not impossible to be successful building automobiles, Toyota, Honda & Nissan aren't asking for a bailout...

[boont]

"If all of GM car capacity is shutdown, you'll see the competitors increase..."
CLIP

That is not what I'm hearing. Toyota and Honda use the same suppliers and they are very worried that if GM goes their same suppliers will not survive. It will happen very quickly and will be very hard to put Humpty Dumpty back together again.

I'd listen to Toyota.

b.

[NW-Bound]

I have also read that GM has 2.5 retirees drawing benefits for every current worker. Is that benefit included in the $73/hr above, I wonder.

If yes, then it is going to be tough to reduce the $73/hr without jettisoning the benefits already promised to their retirees.

If no, then it means that the burden on GM is beyond what the above chart shows, and it is truly hopeless.

Now, think about the US population at large. For years, I have asked myself why what is happening to Detroit will not happen to the US, 20-30 years from now. Are we a bunch of ostriches trying to ignore the elephants in the room, i.e. SS and Medicare? Demographics is catching up with us, and none of our honorable politicians ever wants to confront this.

Will the younger generation declare "open season" on us baby boomers?

http://www.nytimes.com/2005/06/30/business/30auto.html

[clifp]

I'm surprised that Toyota and GM would share suppliers, it is not like a headlight, radio, etc for GM truck would work in a Corolla. If the headlight supplier makes a 1,000,000 headlights a month 300K for GM, 300K for Toyota , 200K for Ford, 200K for Honda and they lose 300K from a GM shut down, the others should pick some of the slack. Now this is in theory perhaps in practice it is different.

There is immense pressure for a bailout, so I expect that PR machines of GM, and the UAW are working on overtime trying to scare everybody. Do you have a link to what you are hearing? Color me dubious.

Here is Forbes link supporting what I said.

[Bestwifeever]

Quote:

Originally Posted by Goonie Really. I'd much rather watch Cosmo Kramer than Jim Cramer......he's much more level headed and not nearly as annoying.

Not to mention much more interesting hair

[Steve O]

I think this is a good read...

Im a car guy and this article pretty much agree's with me.

Rants - Autoextremist.com ~ the bare-knuckled, unvarnished, high octane truth...

Im a die hard Oldsmobile fan and as far as Im concerned GM screwed the pooch in 2004 when they killed Olds