Can Wall Street Withstand The Impact Of GM's Bankruptcy??

Posted by Kris | Wednesday, May 27, 2009 | | 0 comments »

Kris is now very blur on the direction of the market and also his life.

From the DJIA movement this few days, I think that DJIA can withstand the impact of GM going bankrupt, job losses, and its collateral damages etc. DJIA rose up to 200++ points last nite due to positive feedback from analysts on APPLE Inc and rosy consumer sentiments. But deep down in my dark heart, I think there is a possible that DJIA will tank when the dust settles down. Sure , logically it is better for the bond-holder to cash out now instead of averaging down their investments in GM. (Somehow this does not apply to Malaysian investors , which sunks tons of dough into loss making biz for the sake of pride). I guess Americans are proud that they have their own national cars. Notice that the cars in transformers are all American cars. :P 

Everything will be self-reinforcing : Jobs loss, no money, foreclosure increases, consumer sentiment down, DJIA down. Rinse and repeat. A rally is where the big boys will suck the retailers in. But i don't think the financials will be impacted that strongly again unless they are the major creditors of GM. Hopefully, they are wise enough to buy credit swaps as protection against possible GM default.

The real problem as in any recession is the normal people like me and you. We are the most to suffer not the big bond holders. Thus, the average Americans will surely feel the pain especially towns that depend on the automotive industries.

Chrysler has already filed Chapter 11 protection and the last of the threesome, FORD is still in a deep and dark pit.

Anime Pic: School Rumble (The cute and adorable Tenma Chan)