GM just announced earning, which were horribly low (go figure). But, what is interesting it their burn rate of cash. They have approximately $20B in cash and need to stay above $12B just to maintain operations. Now, at the rate they are going through cash, they will have to file for bankruptcy unless then get major financial help from the Government (that means more money out of taxpayer's pockets). I have two views on this. 1) GM can't fail because of the job losses that it would case; not to mention the effect on the stock market. 2) We should let GM fail because the wasted cash we would use to try and hold them up (just to see them fail later on) would be better spent helping workers find new jobs or pay pensions. Here is a chart of GM which looks like a falling knife.
Just so everyone is clear, I don't suggest either going long or short these types of stocks. The simple reason is that each day could shoot it higher or send it lower. Someone said that they wanted to buy it at $4 because "it can't go lower than that." What I'm saying is that IF it goes go to $2 (which is very close and easy to get to) then you would have lost 50% instantly. Don't speculate with these stocks right now...things are way to uncertain and the risk/reward is not clear.
