S&P Puts GM On Credit Watch. Next Step: Default
The S&P ratings agency has put both GM and its GMAC financing arm on its lowest possible rating: “creditwatch,” with negative implications. CNBC reports that “The ratings agency said the move reflected the rapid weakening of most of the world’s auto markets. It added that capital conditions in the sector would remain challenging for the ‘foreseeable future.'” The move follows hard on the heels of tumbling GM’s share price, pushed downwards by a weak overall market and the removal of a federal ban on “short selling” the automakers stock. The fact that Citigroup cut GM (and Ford) to “sell” ratings yesterday didn’t exactly help investor confidence, either. The next step– as predicted by TTAC’s Ken Elias— GM will be removed from the Dow Jones Industrial Average. From there it’s a relatively short trip to bankruptcy court. You know things are bad when CNNMoney/Fortune’s Alex Taylor III uses TTAC terminology. “The stock selloff effectively puts GM and Ford on death watch, and it’s easy to see why.” As it has been for many, many years.
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They said that all they need't was time. Well GM. Ford, & chrysler got years to clean up the act. but time for everyone finally passes us by. What is the difference between, toyota, mercedes, nissan, and honda and the Detroit three? Money....These other builders have cash reserves and limited debt to weather most financial storms. Toyota is talking about less profits for 2009, and if that doesn't work they can take break even or losses for a long time. When you have eaten all your seed corn, you have become a riverboat gambler with all your chips in on the next hand. No one wins all hands not even toyota. They did open a new billion dollar truck plant in Texas last year didn't they? But, they can retool it if necessary for motorized tricycles if that's what it will take to weather this storm. They got the cash to go into semi hibernation and come out the strongest of the few World car builders that will be left. So no more about well even toyota makes mistakes. This is not a game of perfection but rather balance. The team that leaves the field when the whistle blows with the most points wins. Did I just hear a whistle in the distance?
GMs best hope is not C11...its a private sale. wasnt it said yesterday they are worth about $3.5B. that seems do-able for alot of companies. Just imagine if Porsche started buying up GM stock instead of VW
Ronin: well, we were talking about unions that can't put you in jail if you don't pay them.