S&P Cuts GM, Ford Credit Ratings to 'Junk'

[screembloodymurder]

Folks this is huge and here's why.

"The rating reductions are significant because some big bondholders such as some pension funds are prohibited from buying bonds that are considered by the major rating houses as speculative, or junk."

I've heard analyst say that the Gov can't allow this rating on GM because the selling pressure on their bonds could bring down the market. Any economists out there care to comment?

[Skidmore]

1. Fords are junk.

Just adopting truth in advertising.

[MsUnderstood]

2. From a conservative columnist comes the explanation

http://jewishworldreview.com/cols/will050205.asp

"GM is a car and truck company — for the 74th consecutive year, the world's largest — and has revenues greater than Arizona's gross state product. But GM's stock price is down 45 percent since a year ago; its market capitalization is smaller than Harley Davidson's. This is partly because GM is a welfare state. "

GM says health expenditures — $1,525 per car produced; there is more health care than steel in a GM vehicle's price tag — are one of the main reasons it lost $1.1 billion in the first quarter of 2005. Ford's profits fell 38 percent, and although Ford had forecast 2005 profits of $1.4 billion to $1.7 billion, it now probably will have a year's loss of $100 million to $200 million.


But wait, why is it that other car companies (mainly Japanese based Toyota doing okay?

GM says its health-care burdens, negotiated with the United Auto Workers, put it at a $5 billion disadvantage against Toyota in the United States because Japan's government, not Japanese employers, provides almost all health care in Japan. This reasoning could produce a push by much of corporate America for the federal government to assume more health-care costs.

[SoCalDem]

5. This is why a national health care program is necessary

It should not be the responsibility of an employer to "play god" and literally decide who gets medical care, and who doesn't. They should make a product, and pay people to build/make that product.. Then sell it.

Providing medical coverage is what "allows" employers to "mess with" their employees...and to trade off wage increases for health benefits that THEY ultimately control..

[MsUnderstood]

12. what I find so frigtening about the article

Is the part I didn't post. After George Will explains that a national health care program made Toyota successful, he explains how the "people" of America would get screwed by a national health care system.

Very strange how the mind twists when you are a conservative!

[DulceDecorum]

16. This all goes back to slavery

In most other places, the local community assumes the responsibility for health-care since an epidemic can wipe everyone out in much the same way that a fire can destroy an entire city regardless of income, race, or factors other than flammability.

In the US, the slave-owners took an interest in the health of the enslaved and that was only because the slaves were property.
In the same way, none of us gives a damn about the health of horses unless we ourselves own one or are thinking of betting on Daisy May in the fifth race.

Slavery gave way to large corporations and they assumed the burden of health-care so as to ensure that the workers were able to continue hauling sixteen tons and then giving the bulk of their wages to the company store.

After the Robber Barons retired from openly oppressing the masses, the insurance industry took over the job of milking money from healthy workers and stomping on the weak and sick.

And now, the large corporations are going offshore and the health services which they have guarded so jealously, are now in a state of collapse.

But the good news is
WE ARE NOW FREE.

[LiberalFighter]

21. It would put all businesses on an even keel regarding health care

Especially 2 income families.

If one employer provides health insurance and the other doesn't?
If one employer provides a better health insurance than the other employer?

Will the employee choose the health insurance over none or choose the better plan versus less coverage?

If employers don't have an incentive to provide insurance because most of the spouses of their employees provide it will they provide it for the few that don't have insurance?

[SoCalDem]

22. It would make employers pay employees for the job they DO

since they would have their "national health coverage" regardless.. The employees would be free to negotiate for the worth of their labor..and the employer for the best employee to do the job, whether he has a sick kid or wife or may be ill, himself.

No one should be withour coverage..employers should be on our side on this one.. It could benefit them the most.

[indepat]

6. Japan lost WWII, yet provides almost all health care: the right wing won't

allow such nonsense in America.

[G2099]

7. The American Conservative Right Would Call That Socialism

From the article, "Japan's government, not Japanese employers, provides almost all health care in Japan"

The American Conservative Right would call that "socialism" like they consider "Social Security" a socialist program and seek to destroy it in America.

[fishwax]

8. oh how beautifully ironic that would be

:D

[phantom power]

10. So let's see.....

According to conservatives, the government shouldn't provide health care. Corporations shouldn't provide health care. I guess it's every man for himself. And a big steaming cup of "tough-shit" for you and your family, if you're ever laid off.

[MisterP]

3. it IS the 80's all over again!

what are we selling to Iran?

[oneighty]

4. Social Security

funds should help them out.

180

[screembloodymurder]

9. Did Kirk Kerkorian know this was coming?

Yesterday's headline: Investor Kirk Kerkorian has bid for another 5 percent of General Motors

Somehow I don't think this (bond rating downgrade) came as a surprise to Kirk Kerkorian. He's a billionaire with all kinds of inside connections. So why did he make the offer? Was he part of a planned prop-up of GM's stock? Who has this guy been meeting lately?

Where's Cheney?

[oneighty]

11. The only thing I know about

the stock market is that my TIAA/CREF annuity dividends took a major hit when Bush* took over. Then a short while later I lost a quick $10,000 or so in the stock market. That is all I know about economics.

This billionaire did not get that way by doing stupid things. Sure he knows something. I bet.

180

[ckramer]

17. "This billionaire did not get that way by doing stupid things."

Well maybe he's getting old, and be confused of GM as MS. You only hope that this is not a case of fool and his money. haha.

[oneighty]

19. Hey ckramer.

I understand this is one of those billionaires that can afford to drop a few here and there. He will likely double his investment before the year is out. Bush* will not let Ford and GM sink.

You think?

180

[ckramer]

23. Stock market is a place insiders suck your bloods

so all joe-sixpacks should stay out of it let these rich people play with their filthy money and kill each other over there.

[oneighty]

24. Yup

If one cannot afford to lose do not play. So it says in the real fine print.

180

[screembloodymurder]

13. I think Kirk's been assured that the Gov won't stand in his way.

Once in control, he will declare bankruptcy. The pensions and health benefits GM owes their workers will be cut. The auto plants and the jobs will be shipped overseas. This is another example of corporate and government collusion to steal from the workers. These fascist bastards must be stopped.

[billyoc]

14. Link? n/t

[screembloodymurder]

15. Wow.

http://biz.yahoo.com/ap/050505/automakers_debt_ratings.html?.v=10

How did I miss that?

[DulceDecorum]

18. In other news

the US will be making substatial and permanent cuts
to the amount of carbon-based emissions it produces.

[screembloodymurder]

20. Unfortunately China has stepped in to fill the void

and prevent the total collapse of the atmosphere.