Monday, June 30, 2008

General Motors, Adam Smith and Losing Your Short-Term Memory

I have to admit I've always had an uneasy relationship with capitalism. But since that's the economic horse we've been riding on for a couple of hundred years, I just sit back and try to enjoy the bumpy ride.

Right now that ride is motion-sickness Hell, especially for some folks in the Detroit area.

General Motors stock, as of this posting, sits at $11.20 a share. As pointed out in a CNBC story from last Friday:
That means the world's largest auto maker has a stock market value of only about $7 billion. That compares with a market cap of about $56 billion in 2000, when the stock was at its all-time high of $94.62 a share.
To put that in even more perspective, GM's market value is now roughly equivalent to that of tax-preparation provider H&R Block or toy maker Mattel.
I know many of you might be rolling your eyes about "stock" and "market cap", but c'mon even to those amongst us who wouldn't know a "market cap" from a shower cap this is big news. The big, evil, impersonal GM of "Roger & Me" has been replaced with a piddly, increasingly irrelevant, befuddled Alzheimer patient GM. The "invisible hand" has done gone and smacked Detroit upside the head like Mike Tyson circa-1987.

Meanwhile, a Bloomberg story points out the type of amazing forward-thinking that helped GM get where it is:
Inventories of compact cars and hybrids are "going down at a rate we've never really seen before, and automakers are caught a bit unprepared,'' Jesse Toprak, an analyst in Santa Monica, California, said in an interview. "It might take several years to fully meet the consumers' demands.''
The same Bloomberg story notes that GM sales are estimated to have dropped 21 percent in June, while Honda's look to be up 16%.

Was this a great country or what? Now where did we put our dentures? And who is this person sitting across the dinner table from us? Ah, 1954...the memories...the memories....

P.S.: Speaking of "mature" companies showing signs of age-related corporate dementia, Microsoft's new overall boss, Steve Ballmer, has "chronic Google envy", most probably like the smarter folks at IBM envied Microsoft back in 1985. Gettin' old sucks, don't it Mr. Gates?

1 comment:

James said...

Caught "unprepared"? Where the **** have these idiot been the last 30 years?