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World Financial Crisis: General Motors

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Can you help me compare and contrast at least two different, two-year forecasts from two separate sources, for the Stock Market and Interest Rates of General Motors? I also need to explain the differences between each indicator in the forecast and a rationalization for which forecasts I believe are most accurate. Lastly, how does the chosen forecast affect the operational and planning issues in General Motors?

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World Financial Crisis: General Motors

Financial crisis in U.S. have led to serious problems all over the word. Sales are very low in the U.S. auto industry and it will lead to the collapse of a number of dealers and suppliers. Stressed General Motors (GM) is expecting low sales in the coming months. According to the reports, company is losing $ 2 bln every month and if not supported by U.S. Government, automaker may go bankrupt (Usborne, 2008). Another major problem for the GM is related to huge liabilities which reduces its competitiveness. Company has incurred huge losses in the third quarter of this year and the liquidity position is also weak which has lead to drastic fall in the share prices of automaker. The fall in the shares prices is approximately 5% and company is incurring a loss $ 4.5 on every share (Sector Snap: GM, Ford fall on dismal results, 2008).

The article published by Los Angeles Times clearly forecasts the future of General Motors in coming two years. It is forecasted that the value of General Motors shares would become worthless. The shares prices would come to zero in the coming year. It is expected that in the first two quarters of the year 2009, company will become highly illiquid and may run out of cash in the year 2010. Deutsche bank has predicted target price of GM's stock to be zero and they are confident of General ...

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Are there certain economic crisis that require government intervention?

One of the greatest debates in economics is between Keynesian Economists who believe that government intervention is necessary to restore the economy to its potential GDP while Classical Economists believe the market will correct itself. There are many resources on this topic from the internet including:

Federal Reserve Bank of San Francisco. Major Schools of Economic Theory: Keynesian School. Retreived November 15, 2010 from: www.frbsf.org/publications/education/greateconomists/grtschls.html#A8

Yergin, Daniel and J. Stanislaw. (1998) "The Chicago School" Excerpt from Commanding Heights pp. 145-149. Retreived November 14, 2010 from: www.pbs.org/wgbh/commandingheights/shared/pdf/ess_chicagoschool.pdf

Do you think there are certain economic crises that require government intervention (i.e Great Depression, Auto Industry failure, etc.)? Why or why not?

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