FNM, FRE, AIG were the first round of gov't help, and those equities have not performed since the gov't "saved" them. Can't see much reason for this to change. Futhermore, helping GM and Chrysler is the exact wrong policy for the US, since it helps a poorly run company steal business from a well run company. Ford isn't asking for government help, so there's reason to believe the US will still have an auto maker after GM and Chrysler fend for their own survival (Maybe Mr. Buffett wants to save GM for a sweetheart deal of 12% and a free option like he's doing in Swiss Re?). Why would we want to penalize the one halfway decent US car maker by making them compete with 2 obviously horribly run zombie automakers? We already have proof that saving automakers by financing them with taxpayer money is exactly the wrong policy. The proof is GM itself. Had the US gov't not saved Chrysler decades ago, perhaps GM would've survied today, ON ITS OWN. Then we'd have 2 much stronger companies in Ford and GM competing with increasingly competitive german and Japanese car companies-- and eventually Chinese ones too. Refinancing GM is sealing the fate of Ford, and instead of saving US automakers and jobs, it's sending them overseas. Financing GM and Chrysler (again!) sends Ford to the eventual death heap. Nice going US policy makers! If the gov't decides to let GM fail, I'll be the first to buy shares in Ford. note: The gov't is doing this exact wrong policy in insurance as well, saving AIG so that it can undercut good insurers on price, thus penalizing the strong companies our economy needs, and supporting bad CEOs to continue to run cruddy organizations while losing US taxpayer money. But even with gov't support, this recommendation is based on the long term fact that gov't help won't work. The credit depression is far too quick than gov't actions. GM, like AIG FRE and FNM before it, will suffer stock gyrations which once again test US policy makers incorrect strategy. Cover when GM's bad leadership is back in DC begging for more money. Until then, prepare for this stock to rocket upwards in the face of short sellers who are the only ones that recognize long term that GM failing is good for America. Expect short sellers to get crushed by short-covering panics induced by horrendous ideas such as going back to erroneous uptick rules.
$2.72 (03/13/09)
