Besides this morning's July Employment report, the other main headline of the day is the $15.5 billion loss from General Motors (GM). To put this in perspective, with a market cap of $6.3 billion, this loss represents about 2.5 times the net worth of the company! Not only is this number bad for GM, but it will also cause Q2 earnings for the S&P 500 to take a big hit as well.
The truly shocking thing here is that GM is still trading. Its 10Q seem to indicate that the company is insolvent with Equity of -$44 bn. The surprising thing here is that its market cap is still $6 bn.
I guess the only reason they're around is that pension liability, benefits and deferred taxes are excluded. If I were a director of GM I would be worried... if I were a supplier I would be very worried.
Regards
Posted by: NLF | August 01, 2008 at 10:54 AM
The troubles for GM have just begun.
In the next three years, the U.S. market will see a flood of Chinese manufactured automotive products, and the cut price production in China will drive the big three to insolvency.
Posted by: Mike, New York | August 01, 2008 at 01:24 PM