General Disarray, General Chaos, And General Motors

GM stock dropped off a cliff today as Reuters is reporting that Barclays Financial forsees a stock value target price of...ZERO.

General Motors Corp (NYSE:GM - News) will likely fall below its minimum cash needs of $11 billion to $14 billion in the first quarter of 2009 if the troubled automaker does not receive additional funding, said an analyst at Barclays Capital, and GM shares fell as much as 31 percent in morning trade.

Barclays' analyst Brian Johnson downgraded GM to "underweight" from "equal weight." Deutsche Bank also cut GM to "sell" from "hold," and saw an equity value of $0 for the stock, according to a report on theflyonthewall.com. Reuters could not immediately verify the report.

"While further government assistance would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM's equity," Barclays' Johnson wrote in a note to clients.

Johnson cut his price target on the stock to $1 from $4.

"Of the four broad options for government assistance for GM, we believe that political pressure to protect taxpayers may lead to a solution similar to the 1979 Chrysler bailout, which was accompanied by concessions from debt holders, labor, suppliers and management," Johnson said.

"In any scenario, we see little value for current equity," he added.

In other words, the inevitable bailout of GM will wreck the stock price the way Lehman, Fannie and Freddie, and WaMu went, or the company will go bankrupt anyhow. Either way the stock price is screwed...and we're seeing the market say its last rites as GM about to die.

Here's a sobering thought. It's Deal or No Deal time for GM now. It may not survive the week. This isn't a bank we're talking about here (although GMAC Financing is a big part of the GM issue) this is General Motors. Chrysler is about to fold too, because GM was the company supposed to save it. Now GM is on the brink of folding, and Wall Street is abandoning the company to either a bailout or bankruptcy. Ford may soon follow.

Either way, the pronouncement is grim: the Big Three automakers will be no more shortly.

Bush may have to act on Detroit before Obama is forced to. If the auto industry goes under, millions of jobs could be lost. Even worse, GM seems to be fully expecting a bailout, because it's not even considering filing for Chapter 11 at this point. Officially it's saying it's too big for bankruptcy to handle. Unofficially, it's expecting a massive bailout.