Off the Scrap Heap


Alan Abelson has a few kind words in this week’s Up & Down Wall Street column.

“Barry Ritholtz of FusionIQ, who’s sparing in his praise of just about anything connected with Wall Street even though (or maybe because) he earns his daily bread analyzing markets and the economy, calls the rescue of GM and its IPO “the most successful bailout of the 2007-2010 era.”

Grumps like us might not view that as all that much praise, but, he explains, the new pared-down GM has clean books, is well capitalized, has been relieved of its crushing debt and enjoys less onerous payroll (employment is down to 209,000, from 324,000 six years ago), pension and health-care obligations (the union now picks up the tab for retirees’ health care).

Fair enough, but obviously the acid test for both the company and its new stockholders will be where GM goes from here. Don’t misunderstand our restrained response to the rapidity and extent of its revival. Back in the dark days of the Great Recession, we voiced our conviction that allowing the company to go up in smoke would cause unimaginable woe to an economy teetering on the edge of the abyss. So we’re only too happy to second Barry’s positive view of GM in its new incarnation.

Our wariness springs from the fact that this lame recovery is still notably fragile, the consumer still wary and pinched. And the things that make him so—the lack of jobs and the sorry condition of housing—stubbornly refuse to fade away. All of which stacks up as a rather formidable speed bump for GM and its fellow auto makers in the road ahead.

Keep in mind, the purpose of the GM complement was to point out how absurd the bank bailouts have been.

I have no real opinion on where GM’s stock goes, but I can firmly state that had the banks gone through the same process, they would be much healthier today than they are. So too would the entire US economy.

A quote in Abelson’s column, for some reason, never ceases to thrill me . . .


Off the Scrap Heap
Barron’s NOVEMBER 20, 2010

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