We’ve survived,been saddened,seen,heard and talked about Tragic Automobile Accidents…but when the Automaker itself, and that too one of the world’s largest, is heading for the worst Accident in it’s history,what will happen !?
Yes,the US Giant ,General Motors is on it’s knees already…..on the brink of bankruptcy !…and in a Catch 22 Situation as Bankruptcy is not an Option,as it will creates more complications than it solves !.It has started screaming out Mayday SOS calls exposing that it is in grave and imminent danger and requires immediate assistance
There is intense global rivalry between Automkers in Japan,US and Germany…so it was rather amusing to observe that Deutsche Bank Securities,the broking arm of the German Bank has issued a strong “Sell” report for General Motors with a price target of Zero Dollar !…yes you read it right ! …’Zero Dollar’
GM’s Share Price dived 13% to close at US $ 2.92 yesterday dropping it’s Market Cap to just US $ 1.69 Billion…A Month ago GM quoted at US $ 7…a Year ago it was strong at US $ 42
GM CEO,Rick Wagoner has hitched his Wagon to pleading for a Federal Bailout….Waiting for Obama to be sworn in as President in January 2009 may be too late a wait !
GM needs US $ 11 Billion for it’s monthly expenses.It had US $ 16.2 billion as on hand at September 30,2008,down from US $ 21 Billion as of June 30,2008.It has suffered accumulated loss of US $ 74 billion since 2004 and has been cutting jobs and shutting plants to control costs…Car Sales dropped 21% last quarter and 45% in October
The Three US Auto Giants,GM,Ford and Chrysler are already demanding a further US $ 50 Billion Bail-out Package on top of the US $ 25 Billion approved in September to re-tool plants to make more fuel efficient cars…this is to weather the worst auto storm in 17 years
The US Government too is in a Catch 22 situation and is in a moral and financial bind here…Doomed if you did and doomed if you don’t……it had bailed out, in September, mortgage financier, Fannie Mae which has just announced a crippling loss of US $ 29 billion for the last quarter…It has provided a bail-out package of US $ 150 Billion so far to AIG…It has announced a US $ 700 Billion Bail -out Package for the Finance Industry on the Whole….Where is Obama and USA going to get the Monies for such huge Bail-outs ! ?
Recession is one Issue….USA has faced it before and survived….but over-leveraging in the Financial System has been a Demon and nothing short of Satan playing havoc…It’s Citizens and Corporate Entities are defaulting and going bankrupt….it would be a Global Tragedy if USA,as a country followed suit…and this is why serious prudence in bail-out packages needs to be exercised