Thursday, June 18, 2009

General Motors Will Be Juiced

General Motors (GMGMQ) Chief Fritz Henderson is making noises about coming out of chapter 11 sooner than the 60-90 day time frame. Ford Chief Alan Mulally (NYSE:F) says people want to deal with a company that is stable. GM says they anticipate oil to hit $130 @ barrel and are designing cars to reflect that. When the Chapter 11 thing is over it will be interesting to watch competition. Ford will be very quick to shout foul and unfair advantage. Ford probably has a dedicated strategic legal team warming up right now. The new GM has to work so watch them juice it. Can the federal government be culpable in economic manipulation? Of course that’s what they do best.

It may be a long time before you are able to invest in this sector without the whiff of government involvement. Remember the good old days when you could just assess an investment’s prospects and go from there. Most investors will not be able to follow the story as it unfolds so watch for irrational activity.