Investors are starting to see some advantages in President Obama’s plan to allow General Motors bankrupt. Initially it was hoped that more money would be made available for the ailing automaker. Now it appears that GM will need to reorganize and Chrysler will have to work out a deal with Fiat.
Reorganization will give GM time to hash out a new deal with the United Auto Workers Union. The debts will also be restructured.
Yesterday the Obama Administration asked that CEO Rick Wagner resign before the process can begin. The new CEO, Fritz Henderson said GM could close five plants and receive money from the treasury to keep them afloat for two months while they work out their problems.
Money started flowing to Japanese markets when investors realized GM may fail. The Yen benefited increased in value as the dollar fell. The Euro slid on Monday. In after hours trading the dollar made some gains against the yen.
May gold futures on the NYMEX / COMEX were higher Tuesday. This is likely related to the General Motors crisis.
Oil was over $50 a barrel last week. Monday, along with stocks and everything else, oil prices fell sharply. On Tuesday the price of oil started to increase again to $49.66 a barrel.
By Dan Wilson