General Motors: The Unthinkable
It is a terrible thing to see GM (or Ford for that matter) face issues so severe that going forward may not be possible. Friday's rather blinding "earnings" report was so bad the stock of GM went to levels not seen since the year 1954 (corrected for splits, etc). This is telling us something, but what is it?
Could GM close up shop? I would say that will never, ever happen. But the current operation of the company also cannot continue much longer. A complete overhaul is on the way, and of course it is going to require government sponsorship and tax dollars. Wonderful. Perhaps a "Hope Now" program for the American auto makers will get passed by the super smart congress.
I have no position in GM (or any carmaker) and I would very much like to see them get to a better place, but things look pretty bad. What is good for America is good for GM, or so the saying goes. If there is a correlation we are in worse shape than we think.
Insolvency on Steroids
Nouriel Roubini gave an interview to Barrons (you can see video at The Big Picture site, and Barry has a TON of great material up this evening so check it out) and he gives some dollar amounts for banking losses that shocked even me. Mr. Roubini estimates losses on various credit instruments to reach 2 TRILLION dollars over the next 18 months or so. 2 Trillion, wow.
The US banking system right now is effectively insolvent, so what does another 2 trillion down the hole mean? There is going to be bank failures. The FDIC is going to be very busy. How the dollar makes it out of this stretch will be interesting to see. Deflation certainly is in the cards, as deflation is a contraction in credit. Banks cannot loan money they cannot even pretend to have anymore.
So what does this mean? Quite a bit I would think. As a homework assignment I want you the loyal readers to sketch out what 2 trillion in losses will mean for this country going forward. I want to get some feedback and ideas that I will then collate and put into a longer post on this topic as I think it is very important. One will need to position themselves in a way to stay safe and maybe even get ahead. You can only make money by correctly identifying a macro environment ahead of time and positioning for it before it happens. Lets try to get some ideas going. A blog is a great tool to put my own ideas out there, but I would also like it to function as a sounding board for solid thinking from around the world. Do not be shy! Use the comments section to get started.
Saturday Night Entertainment
Comic relief as it relates to the presidential election:
more cat pictures
Try out Iron Maiden and the great song "22 Acacia Avenue":
From the obscure, here is Armored Saint with "Can U Deliver" complete with terrible video:
I remember how visually wild this video was when I first saw it, and the song itself is pretty heavy duty. Here is Tool with "Sober":
Final song for the night. I was thinking about this song I had heard a LONG time ago, and I was able to find it on YouTube. Listen to this oldie by Commander Cody and the song "Hot Rod Lincoln". "Son you're gonna drive me to drinkin if you don't stop driving that hot rod lincoln" too cool:
Have a good night.
