GM and Ford in trouble

Bloomberg is reporting that booth GM and Ford could be on the verge of going bankrupt. Here is the information:

General Motors Corp. and Ford Motor Co., the two biggest U.S. automakers, have about a 46 percent chance of default within five years, according to Edward Altman, a finance professor at New York University’s Stern School of Business.

The Z-scores for GM and Ford give both a bond rating equivalent to a CCC ranking, though GM is in slightly worse condition than Ford, Altman said. GM reported a $38.7 billion loss in 2007, the biggest in its 100-year history, and hasn’t posted a profit since 2004. The scores are based on the companies’ finances at the end of the first quarter.”

Is this really because of mismanagement of GM and Ford? or is it because they have been protected for years by tariffs and now can no longer be protected?

~PCCapitalist

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Published in: on July 28, 2008 at 12:29 pm  Leave a Comment  
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