Car crash on Wall Street: many injuries and heavy losses
Not since the financial industry did a header off the high board into a mortgage pool filled with bad paper. It's been literally weeks since an American-based business sector looked this sick. I've been trying to keep up with the bloody saga of the Detroit auto makers and their clever planning for this eventuality. I even talked with one of their spokespeople who found the automakers doing their best under trying circumstances. Clearly that message is not assuaging the money folk on Wall Street who are in an overall blue funk these days anyway.
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Today GM's stock price hit its lowest point in 33 years, that was back at the end of the 1970s oil crisis. Adjusted for inflation GM's stock is worth less now than Enron's or Studebaker's. Those, at least, are interesting to historical collectors of ephemera.
June car sales numbers for the US are coming out, and investors are dumping auto stocks in preparation. Here's what one business site reported, "Carmakers will report June sales figures Tuesday and everyone, including industry spinmeisters, are bracing for truly awful numbers. Even Toyota the company that seemingly could do no wrong, looks like it's in for a shellacking."
The big boys in Detroit are all cutting back on big cars and trucks. Chrysler's closing a minivan plant near Saint Louis. The public will not know how bad the Chrysler positon is, they're privately held since being spit out by Daimler. But 70% of Chrysler sales last year were big trucks and minivans. Oops.
GM today announced temporary closing of several plants. Earlier they'd closed other plants permanently. Good news for some: smaller vehicle plants are working longer hours. GM's sales overall were down more than 35% in May. June looks like an even worse month. We recently bought a used car at a major dealership, the whole place was waiting on us because we were actually going to make a purchase. And Ford's stock is in the tank as well as its erstwhile competitor.
WHERE'S IT END?
Eventually most Americans need to own a car. We have precious little public transit except in a few major cities. Clearly overall consumer spending is contracting as more Americans spend more on gasoline, less on other things. We gotta have our oil, as the President says, we're addicted. There is no quick fix for needing a car. Telecommuting is up and being encouraged on many fronts, from workers to front office bean counters. Doesn't help nurses or roofers. Gas prices hit everything that has to be delivered, creating a vicious cycle of inflation that the official figures try to paper over. But most consumers know the number-crunchers are cooking the books. Food is not up just a few percentage points, nor is your cost of living.
This long-lasting bad feeling on Wall Street is just going to fuel more investment by smart money (guess that leaves out all those MBAs who brought us the mortgage miasma) in fuel and energy-related cleantech. You know a lot of folks are working on the plug-in car that feeds off solar-generated electricity at home and in the mall parking lot. And those folks making the solar parking lots, wow!