General Motors' Massive Negative Equity
The result of this is that GM now has negative equity-and we're not talking about small sums. As you can see here, on June 30, General Motors had assets to the value of $136 billion and liabilities of $193 billion, implying a negative equity of $57 billion!. And with the loss they reported for the third quarter, equity is presumably even more negative now. And given how dire the outlook is for car sales, can anything but increased losses be expected?
Ford's situation is BTW not quite as bad as General Motors', but they too have negative equity as assets stood at $265.3 billion and liabilities/debts at $267 billion. And as Ford continues to accumulate losses, their negative equity should get bigger and bigger.
GM and to a lesser extent Ford are broke and run operations which are simply economically unviable. They really should therefore go bankrupt and have their assets liquidated. But I doubt that the future President Obama will let that happen considering how many auto workers who would become unemployed in a time when unemployment is already rising fast and considering the support Obama has gotten from unions (Detroit auto workers are heavily unionized).