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The Gm Meltdown

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by Felix Salmon
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Mar 05 2009 12:36pm EDT

The GM Meltdown

Amid all the debate about the cost to the government of a GM bankruptcy, no one seems to have stopped to ponder the mark-to-market cost to shareholders of unrelated companes. But today, with a GM bankruptcy looming, stocks in general, and financials in particular, are having another one of those days: the S&P 500 is now solidly in sub-700 territory, Citigroup is less than $1, and Wells Fargo is down 18% at less than $8.

Meanwhile, the message from Treasury and the Fed is essentially unchanged from when Hank Paulson was making decisions six months ago -- something which certainly makes it seem as though the government has finally run out of ammunition and is essentially powerless in the face of the sheer magnitude of this financial crisis. With the "Bernanke put" a distant memory, investors are now waking up to the fact that no one can save them. This isn't the bottom. But I think it might, finally, be the point at which a clear-eyed realism is replacing hopes for some kind of quick and impressive rebound.

(Image via Scheiber)

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