'Nightly News': Is General Motors Going Out of Business?
General Motors has been in business since 1897, but there are fears now propagated in the media that the longtime American icon faces an uncertain future.
Brian Williams raised the possibility of General Motors (NYSE:GM) going out of business on the June 26 "NBC Nightly News" to Jim Cramer, host of CNBC's "Mad Money."
"[J]im, I know you talk about this, think about this everyday for a living and have a formula regarding this," Williams said. "But first, what's going on out there? I heard one analyst today said, ‘GM will go out of business,' though I know a lot of people disagree with that and it's a scary thought."
The investment bank Goldman Sachs (NYSE:GS) downgraded GM's stock earlier in the day and that forced GM to a 53-year low and put it at a risk of default. Goldman Sachs also downgraded Citigroup's (NYSE:C) to a sell on June 26.
"I think GM is a huge part of the problem, [and] as you said, Citigroup," Cramer replied. "These are companies that need much more cash than they have right now or they can raise - so their stocks keep going lower. Unless we get a break in oil - which keeps going up, food - which keeps going up, or houses - which keep going down - Brian, it's going to get worse, not better."
The drop in GM and Citigroup sent the Dow plunging to "its worst June since the Great Depression," according to Bloomberg on June 26. A June 26 Dow Jones story said some interpreted Goldman Sachs' downgrade to mean the automaker is going out of business.
"We're going to move in the opposite direction of oil, and General Motors is going to go out of business, at least according to Goldman Sachs," Art Hogan, chief market strategist at Jefferies & Co. said to Dow Jones.
Renowned short-seller James Chanos, president of Kynikos Associates Ltd., appeared on Bloomberg Television on June 25 and said that GM should consider bankruptcy."I think both of them [GM and Ford] have issues and as I told an elected official from Michigan, I mean arguably, one of the better things these companies could do is go bankrupt," Chanos said. "I'm not saying liquidate, I'm saying go bankrupt and reorganize. I think that then they would have a fighting chance, but of course the board and the management works for the shareholders and their viewpoint might be a little different.