General Motors just can? catch a break - Automotive - MSNBC.com

General Motors Market Cap < $12 Billion

GM shares plunged low enough today to bring the market cap of the company (the total value of all its shares) to $11.9 Billion. The market considers General Motors to be less than 1/10th as valuable as Google Inc. (at $112.5 Billion), and even less than Ford Motor Co. (13.6 Billion).

(thanks to Marc S. for the link.)

General Motors just can?t catch a break - Automotive - MSNBC.com

GM shareholders should be in open revolt at this time. The recent $400 million earnings restatement is just a hint that the GM's financial statements probably aren't that reliable, and the reality is probably worse than what's on paper. There SHOULD be intense pressure on the board to break up the company at this point. GMAC, the crown jewel of the company, is at risk when the company can't borrow money cheaply enough to keep lending rates competitive. Once GMAC is gone, what true financial incentive is there on a pure financial standpoint to not sell off valuable assets and shutter the worthless ones? Given the contractual provisions in the current UAW contract, plant closings are limited through 2007, but that's just 13 months away. (I don't know what month the collective bargaining agreement ends.)

What's it going to take to save GM as we know it today? Read the next post.






My take on the GM Mess and How to Get Out of It Version 1.0.
Nobody Asked Me, but So What?

GM's only realistic hope of turning around the automotive operations involve immediate substantial help from both the United Auto Workers AND the United States government. Whoever wants to lead this country should take the bull by the horns, get GM management, the UAW, and the congressional leaders in the same room and hammer out a deal where everybody gives something up. It would take an immediate 20% concession by the UAW plus additional promised concessions to forestall Delphi-like impoverishment. Moreover, friendly congressional representatives should propose $50 billion or so in government contracts to improve capacity utilization. When they are accused of doling out a handout, don't hide it. Admit it. GM saved the economy after 9/11, it's time for a payback. Screw the World Trade Organization.

Here's my specific proposal, If George W. Bush really wants a legacy, earn one. Declare war on foreign oil dependence and mean it. Let GM lead our industrial base just like it did in World War II. The government could sponsor a program to replace the inefficient, polluting engines in 2 million old cars with modern Ecotech engines, it will go as far as any project the Bush Administration has sponsored in reducing air pollution. Such a program can be funded by money from polluting power plants who get the benefit of the net reductions. Let GM plants shift to the production of solar heaters, solar shingles, and led lighting fixtures. Give every family on welfare $1000 worth of energy-saving home improvements, have the products built in the USA in idled auto plants, and have the improvements installed by people who are now un-employed. Let's convert all city buses to dual-fuel hybrids within 5 years. Let's divert 1/2 of all NASA work hours to energy-efficiency projects. Let's put GM supercomputers to work doing the math on planning the grid for massively parallel electrical grids featuring residential fuel-cell co-generators such as the model that Honda just introduced.

While we're at it, we have to come face-to-face with the healthcare mess. It's time to sever the bond between employment and healthcare. It is a farce and it is now being exposed as a farce. GM can't compete in a capitalist economy with a socialist entitlement structure. We need a single-payer healthcare system not just for General Motors but for every employer. It's not socialized medicine, it is central funding of a social good in a market where there is there isn't anything close to the "zero information costs" necessary for free markets to function.

To be continued, updated, deleted or ?