Let’s start with GM, the WSJ says: "GM’s loss widened to $39 billion from $147 million a year earlier on a $38.6 billion noncash charge." Those guys at GM are VERY clever. You read this and go – "Oh, it’s a $38.6Bn accounting charge, that’s not so bad." But if we do some complex math we can see that $39,000,000,000 in losses offset by a $38,600,000,000 accounting charge STILL LEAVES $400,000,000 in very real losses, more than double (closer to 3 times) last year’s pace.
GM earned a total of "just" $34Bn between 1996 and 2004, the last year they had a profit. In 2005 they lost $10.5Bn and last year they lost $2Bn and prior to this quarter they had made $900M for the year but this will likely be considered a bit of a setback. This is kind of like when the SS Poseidon was already upside down THEN the water started pouring in, THEN it caught fire and THEN things started exploding. I think in that move about 6 people survived – GM may not be so lucky!
Equally unlucky were people betting on a dollar bounce as Cheng Siwei, the Vice Chairman of the National People’s Congress who said: "“We will favor stronger currencies over weaker ones, and will readjust accordingly.” POW! That had to hurt, especially coming on the exact day the dollar was at the technical resistance mark of 76. Little did the poor dollar know it was a tag-team match and no sooner did Mr. Siwei finish than Xu Jain, a Vice Director of the Central Bank, took the podium and said: "The dollar is losing its status as the world currency." OUCH! That sent the dollar tumbling down to new lows, boldly going where no currency (except the Deutschmark after WWI) has gone before.
“The interest-rate outlook is dragging down the dollar against major currencies such as the Euro and the Australian dollar,” said Seiichiro Muta, director of foreign exchange in Tokyo at UBS AG, the world’s second-largest currency trader. “I cannot see the bottom of the dollar depreciation yet.” That statement was topped off by Australia’s Central Bank RAISING rates by .25 and saying more tightening may be required to curb inflation. This sent investors flying into the Aussi dollar as a 6.75% base…