From: Alejandro Valle Baeza (valle@SERVIDOR.UNAM.MX)
Date: Fri May 06 2005 - 11:05:38 EDT
Gerald_A_Levy@MSN.COM wrote: >Hi Alejandro: > >What is the significance of this story? > Hi Jerry, this quote from today Financial Times could be useful: "When the second and third biggest corporate borrower in the world goes to junk, it is not just they that have a problem, we all have a problem,” said Gary Jenkins, credit strategist at Deutsche Bank." I think that it is the main issue: Are we facing a new recession in the US economy? >What is the relation between >fictitious capital and junk bonds? > I think huge government deficit is causing problems in credit market. >What role does S&P (and >similar organizations) play in determining which is what? Which bonds >can be expected to be downgraded to junk next? > > > I do not know, I need more time to answer this. Sorry. >Isn't the change in credit rating to junk for GM and Ford largely >about the trade imbalance? E.g. at the same time that Ford and >GM sales plummeted in the US , Toyota had a huge increase >in sales in the US. Another issue is how the composition of >demand for cars has changed as a result of increasing oil and >gas prices and how this especially has hurt the sales of SUVs -- >which were big money-makes for both Ford and GM. > > > You are right.There are changes in vehicle market against domestic US producers. >Another issue: the reference to "enormous health care and post- >retirement liabilities" suggests to me that the way in which GM and >Ford will seek to recover is by demanding greater 'concessions' from >the UAW. Will the Union, though, finance the recovery of these >corporations or will the ranks (especially retired members on >pension) put enough pressure on the Union and the corps. to prevent >this? > > Cordialmente Alejandro Valle
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