European Turmoil: General Motors (GM) shuts down production
Today's Financial News - Posted October 7, 2008
Europe is in serious economic trouble. General Motors (NYSE:GM) has stopped production and is forecasting horrid sales. Harley Davidson (NYSE:HOG) is in similar trouble. Avoid European exposure.
By Andrew Snyder
Baltimore – (TFN): If you think the economy is slowing here in the United States, do not even think about looking to Europe. Thanks to already-high unemployment rates, an extremely expensive (and lazy) workforce, and a conglomeration of central banks too small to act independently, yet too large to get anything done, the continent is in some real trouble.
Need proof? Ask General Motors (NYSE:GM) this morning. It just announced it would be halting a huge portion of its European production. It is a sign of a major economic slowdown.
General Motor’s largest European brand, Opel, reports it will close one if manufacturing plants next week for a period of at least three weeks. Another one of its plants closed last week and will not reopen for another week. With nothing to sell, there is nothing to make.
The plant closures come as GM anticipates selling 40,000 less cars through the Opel division this year. With news like that, it is no wonder the company is reeling in pain and share price is in single-digit territory. Fortunately, the night is darkest just before the dawn.
Of course, American automakers are not the only companies hurting thanks to a major European downturn. Last week, I had the opportunity to chat with some of Harley Davidson’s (NYSE:HOG) operations managers.
As we toured the company’s assembly lines, the proportion of bikes headed overseas was staggering. With a slowdown in America already slowing bike sales, Harley is hoping foreign sales continue to rise.
With the news we are seeing out of Europe this week and the strengthening of the American dollar, it is apparent those hopes will be squelched. It is not good news for the nation’s premier motorcycle manufacturer or for any other exporters.
The American economy is slowing, but the problems are much worse in less financially stable countries. Take the time to lower your portfolio’s European exposure. There are foreign markets worth investing in, but Europe is not one of them.
Next Article: Real estate bottom: Are we there or is a major drop on the way?
7 Responses to “European Turmoil: General Motors (GM) shuts down production”
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down
October 7th, 2008 at 9:38 am
Mr Snyder
Are Europeans lazy because they dont want to work twelve hours a day? Or are they lazy because they dont want to align there holiday schedule with America where most working people arent even eligible for paid holidays. Perhaps they are lazy because they want to take time off to watch American working people being fleeced within their ” free market wonder” while the talking heads like you who produce nothing but free market hot air applaud the pilfering. Free markerers are so boring. Enless cliches and intellectual pablum. You can feed it to docile uneducated Americans but I think Europeans dont buy in.
The American model is dead. See it ,believe it.
Regards
October 7th, 2008 at 10:01 am
If the American model is dead, the European one sure ain't smelling all that fresh, either! Hope you in the Old Country now have a chance to show the world how a global economy is run — without the Americans bailing you out and creating your prosperity for you.
Cordially yours,
J. Christoph Amberger
October 7th, 2008 at 11:15 am
Hello Mr. Amberger
What do you mean by bailing the world out? I do not think that exporting your bankrupt and poisonous financial assets can be construed as a bail out. Your financial system is a house of cards built on debt which is now coming home to roost. The trillions of dollars that have gone up in smoke or been pilfered by your ruling classes will mean hard times for the ordinary worker, but then again they are use to paying. Trickle down or is it really trickle up.
Your dollar is on its way down and nothing will stop it. The world is awash in devalued greenbacks and when the world decides enough is enough a no new loans come your way then the jig is up. Foriegners including Europeans will however be able to buy cheapened U.S. assets.
Your fondess for looking to the past when the U.S. held much of the worlds economy for its benefit
does not change the outcome for America. Relative decline and certainly the rest of the world following the European model of free market but with less predatory inclinations.
Regards
I am not from Europe. I am to your north,another socialist hell hole from what CNN portrays.
Regards
October 7th, 2008 at 11:47 am
Correct me if I'm wrong… but isn't the U.S. dollar actually is on the way UP? Considerably so?
Against pretty much everything, including the Canadian dollar?
And if the recession takes and Americans not just stop buying houses (and Canadian lumber, copper etc.) but Chinese- and European-made imports — whose production requires Canadian, Australian, African minerals, metals, oil etc.), I'd be curious just what would sustain even current levels in the A$, the C$, the NZ$ etc.
Probably not the propensity for shorter work days and longer vacations…
Correct me if I'm wrong, but hasn't the Canadian economy registered negative growth ALREADY, as the US is still eked out nominal, reduced POSITIVE growth?
A negative outcome for America will translate into a catastrophic outcome for the Canadian, European, AND Asian economies. Who comes out ahead? Five bucks says it's neither Europe nor Canada….
October 7th, 2008 at 12:23 pm
Hello Mr. Amberger
I am thinking that what America is really good at is hiding from reality. Yes the U.S. dollar is on a short term rise but why would it not be. When you are bailing out the thieves who sold you down the river to the tune of 850 billion U.S. (just the start point),
this requires creating debt (borrowing the money) which creates temporary demand for dollars, Once all the trillions are eventually borrowed the demand will be gone and the dollar will drop like a rock. This will take a little time, after all Rome didnt fall on one day.
( I wiil bet 5 on this)
U.S. percent of world economy was 50% after wwII and it is down to about 24% and declining. The European Union has a combined GDP of about 14.5 trillion vs the U.S. 13 trillion. So the U.S. is not the largest economic zone. China will be impacted by the American economic decline but they will still be growing quite rapidly. Asia will still grow as will India. Yes the weight of America is declining and at an excelerated pace.
I do believe the catasrophe will be felt the greatest by the American population.
I find you r vacation and work hour comments very interesting. In an economy based on the reverse logic that people were born to serve the economy rather than the economy serving the people I guess that Americans should be confined to the job site with no outlook for a family vacation.
The world economy exists in the form it does not because it is part of nature, or it was handed to us by Moses afer he came down from the mount, it is a human construct that can be better designed to serve human needs.
All your hard long hours at work and vacation avoidance certainly allows the owners of the country to have good vacations. Think Swizerland, the Pacific Islands or any numbers of other exotic locales. Do they ever thank you for sending them there?
Regards
October 7th, 2008 at 3:46 pm
We will certainly see who did manage to “decouple”… and how far $2000 p.a. in disposable income of the average urban Chinese go to spread wealth around the globe when Joe Sixpack has stopped buying…
The phrase “idle rich” was coined to describe the leisure class… those who could live off their capital's yield without having to engage in actual labor.
Being idle or rich is not the natural state of humanity. It is neither a human right nor an entitlement but the result of hard work or good fortune. Ask the Chinese or post-Soviet Russians…
That has become a difficult concept to understand for some Western cultures who have been living off the efforts of their elders (German Wirtschaftswunder generation) or the few.
Or those who are about to vote someone into office who promises the many the fruits of labor of the few.
Overall, I believe that the still dominant American attitude toward work will make the country and economy far more competitive than those countries who consider 6 weeks paid vacation their birthright.
October 7th, 2008 at 6:29 pm
Mr Amberger
Those countries that have six weeks vacation are already as competative as the U.S.. Do you really believe the garbage put out by CNN and the rest of your servile corporate press. The French who Americans love to sneer at have long vacations and 35 hour work weeks and there economic efficiency is higher than in America. They dont work harder they work smarter. (Look it up) I call it progress.
As well the disribution of income in France and most of Europe is not as outrageously distorted as it is in America. When you look at the distribution of wealth in America it mirrors some third world country. How can one justify paying millions, hundred of millions , and even billions to CEO”s, hedge fund managers, and all the rest of the financial wizards who capture most of the countries wealth. Then after buying a Congressman or even better a Senator, they can lower there tax rate so that their minimum wage secretary pays a higher tax rate. These people dont earn millions or billions they steal it. . As well once the theft has been completed the thieves and their descendents will tell you how they worked their fingers and minds to the bone , and thus are deserving every penny. You dont live in a Democracy you live in a Kleptocracy.
You certainly dont live within a free market system. Socialism for the rich and free market competition for the “many”. The amazing part of this is that the system has lasted this long. But then again the propaganda machine in the U.S. is the best in the world.
Regards