"In addition to the pension and health care liabilities GM's debt is also of concern and is symptomatic of the high consumer, corporate and government debt levels. US corporate debt grew to new highs of over $9 trillion, representing 84 percent of GDP. These high debt levels are significant when you consider that the Federal Reserve has stated it intends to continue to raise interest rates, and that equity markets are overvalued by all traditional measures. The combination of decreasing consumer spending and increased debt service costs will ultimately translate into slower growth, a contraction in earnings and reduced profit margins. This will all translate into declines in stock prices. "
An excellent article relating to fiscal fitness.
2 comments:
Maybe you can now appreciate how much I've come to admire whoever it was that developed that machine for cleaning all the cocaine off of our beloved national currency.
It is unfortunate to see GM go into debt from the rising health care costs and I hope they can overcome this situation.
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