Double tragedy

These stories are always unsettling, and my heartfelt condolences go out to the passengers, crew and their families. Air France flight 447 disappeared on the way from Rio de Janeiro to Paris. It’s been confirmed the plane has gone down into the Atlantic Ocean; it’s unlikely there will be any survivors. AP reports the Air France jet encountered a tower of thunderstorms, and a chief Air France spokesman told reporters “it is possible” the aircraft was hit by lightning although aviation experts are skeptical a lightning strike would have brought the commercial jetliner down. The 4-year old Airbus A330 left Brazil on Sunday with 228 passengers and crew on board. About 4 hours later the plane sent an automatic message indicating an electrical failure and loss of cabin pressure was occurring before it disappeared off the radar screen. What a sobering remainder of how quickly life can be lost.

I also woke up this morning to the news of the GM bankruptcy, and couldn’t help thinking about all the financial implications. The poor vision and missteps of the GM management will come at a tremendous cost to many. Of course this development pales in comparison to the Air France disaster, but it’s a tragedy unto itself. The GM bankruptcy is the 4th largest in history, the largest being that of Lehman Bothers in the fall of last year. As the company reorganizes the financial lifeline it will need will be staggering, about $40 billion. The U.S. government and Canada will control about 60% and 12.5% respectively, while the United Auto Workers get about 12.5% ownership. Investors who hedged their bets and brought GM shares will see their investment wiped out. The last I checked the stock was going for about 61 cents today. The 21,000 employees GM will cut and some 2600 car dealerships, which will be closed, will also feel the economic pain. The aftermath will be a disaster as terminated workers loose health benefits, and possibly their retirement nest eggs if they failed to diversify their retirement portfolios. For consumers there could be bargains galore. The Wall Street journal had an article about what the GM bankruptcy means for Main Street. New car deals, which includes price cuts, rebates and other discounts should be plentiful in the months to come as the company restructures itself into a leaner, more efficient business. However, be warned consumers should tread carefully. Warranties and services might be difficult to obtain if the car model they purchase is one that's been taken out of production, or if GM eventually goes completely belly up.

http://www.msnbc.msn.com/id/31030038?GT1=43001