GMAC Also Dropped To Junk Status
The S&P clarified it's position on GMAC and GM. "Standard & Poor's Ratings Services said today that it lowered its long- and short-term corporate credit ratings on General Motors Corp., General Motors Acceptance Corp., and all related entities."
"GMAC will likely be more reliant on ABS funding, its future borrowing capacity in the unsecured term debt market is unclear. If GMAC remains heavily dependent on ABS funding, this would be detrimental to the asset protection for unsecured debt holders. Although we have decided not to notch down GMAC's senior unsecured issue ratings from its corporate credit rating at this juncture, we could still do so in the future."
"In the absence of sufficient steps to restructure the relationship between them, GMAC's rating will remain equalized with GM's." GMAC is one of the largest mortgage firms in the US.
8 Comments:
we're doomed.
just get it over with, already.
When I saw this news, I figured the homebuilders would be wrecked. As it turns out, they had a very good day. Anyone know why this is perceived as good news to the homebuilding industry?
People think that the GM/Ford mess will cause the Fed to stop raising rates and possibly cut them allowing the housing boom to continue indefinitely.
Yup to 3:06 anon. I heard those sentiments out of the mouth of Bob Brinker - "market timer" - radio show last week. He said that Ford and GM prove inflation isn't happening. Stuff like that.
The government received a surprise amount of tax revenue - I heard on the news today. I wonder if that's from capital gains from houses.
"People think that the GM/Ford mess will cause the Fed to stop raising rates and possibly cut them allowing the housing boom to continue indefinitely."
I believe you are right anon, and it shows how idiotic some people are. These people are actually HAPPY about a continuation of this terrible bubble and don't see any harm in lowering rates some more.
I wonder if these will be the same folks that will demand blood from the coporations and/or government when this bubble crushes the economy.
Realty Agents Add Elastic to Their Ethics
These guys better make their money now and put it in the bank, because a lot of them are going to be unemployed when the crash happens. In some markets there are more brokers than homes for sale!
The home builder stocks have strong long positions. They go up all the time when they should be down. That's why it is so dangerous to short them. The longs are getting worn down, though.
"A side comment: It is a very sad statement on the economy when the a couple of very significant MANUFACTURERs in the US that are a rare breed which actually produce something of significant economic consequence are reduced to junk status. This is absolutely HUGE."
Unfortunately you and I are the only ones that think the loss of manufacturing is a bad thing. Everyone else if making money in financials, RE and services. Apparantly manufacturing doesn't mean anything anymore.
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