Spiralling health care and pension costs (as well as loss of market share) are crippling GM, which may have serious consequences for the housing market and, indeed, the entire U.S. economy.
"While most people think of GM as a car company 80% of its 2004 earnings came from GMAC, its financial division. While the auto divisions posted losses the finance division provided all of the profits. GMAC doesn't just do auto financing; in fact the majority comes from consumer credit, insurance and mortgage financing. This division provided GM with most of its profitability. Just as with GM, the financial industry was responsible for 50% of corporate profitability in the US. With rising interest rates and the prospect of increasing defaults by overleveraged consumers this is likely to change dramatically in the near future...GM's total consolidated debt was $301 billion on December 31, 2004. To put this into perspective this is almost as large as Canada's entire Federal Debt of about $363 billion. It is larger than the value of the US gold reserves of 512 million ounces, worth about $217 billion at $425/ounce gold."
Thanks to Michael Dudley
Read the full story: General Motors, the Stock Market and Gold
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City of Rosemead
Rutgers University, Edward J. Bloustein School of Planning and Public Policy
One Hundred Miles
University of Michigan School for Environment and Sustainability (SEAS)
Hunter College, City University of New York (CUNY)
The Architects Foundation
City of Cambridge
Montrose County
The Pocatello Development Authority