According to David Buik, the traffic signal is Amber.
What do you think?
NEW YORK - General Motors announced Wednesday that investors who had lent the company money over the years, through purchases of bonds, overwhelmingly rejected the company's offer to swap out that debt for stock.
It now seems certain the company is headed toward a bankruptcy filing.
Whatever the outcome, this event will surely be a critical turning point for the U.S. economy.
Analysts say if the bankruptcy is quick and surgical it could help give another boost to fragile confidence.
But, if the long list of creditors engage in a drawn out legal battle it raises the risk that GM may not survive at all.
It reminds me of a scene from a racing movie where there is a horrendous crash on the track and all the drivers in the back are racing for this big cloud of smoke. Most hit the brakes. But the leading man grips the wheel and hits the gas.
The driver is either going to crash into another vehicle in that smoke or avoid the crowd and come out in the lead. In Hollywood the hero comes out in the lead, having conquered both the competition and his fear.
But this is real life and things tend to be messier in real life.
The automotive industry is not as central as it once was, but its economic footprint extends to suppliers, dealers, restaurants and entire towns. Industry experts say GM only has about 3 or 4 weeks to prove it can emerge from bankruptcy quickly.
Many believe GM is too big and too complicated to achieve that.
But Chrysler’s journey through bankruptcy has defied the skeptics. The troubled company looks set to emerge from Chapter 11 next week. With the government’s heavy hand in the game, GM could also surprise.
What do you think? Will GM be able to come out stronger or is this the end of the road? Any optimists buying a GM car right now?
We introduced the QI – Quest Indicator last night. Our very own set of traffic lights built in the QMB studio. Is this a gimmick or a real tool to help us understand what is going on?
When important economic numbers are released we will ask economists and analysts that we have come to know and trust which light best describes the situation.
A Red light clearly shows we are stuck in recession. Economies are still contracting. The Amber light means that we are bumping along the bottom. Things are no longer getting worse – but they are not really getting better yet. The Green light obviously shows we are moving forward and growing again.
So for instance, why did we give a RED light when yesterday’s U.S. consumer confidence number rose sharply? Because this leading economic indicator is fragile, anecdotal and often reverses itself in subsequent months. It was also tempered by housing numbers which showed the true existing position. Our analysts – not me or my producer – felt it was a RED.
On any single day we might not get it quite right. A red instead of an amber. An amber when a green is called for. But if you are a regular viewer then the QI – Quest Indicator – is now part of our show.
Traffic Lights – Not a gimmick but an important way we can show you what’s happening on the road to recovery.
Tonight on the show we launched JobQuest – in the months ahead we are following several people who are out of work and seeking jobs Through their eyes we will gain an understanding about what its like to be looking for work in the worst recession for a century.
There is Jason in Atlanta and Jenny in Hong Kong. Jenny moved there from Ireland. Both are very quickly finding out how hard it is to get work. We will be following them in the weeks ahead.
Why are we doing this? Because with unemployment in developed economies likely to hit more than ten per cent it is crucial the rest of us understand the strains this puts on the people and on society.
And for those of us lucky enough to keep our jobs find we are grateful to be working longer hours for less money.
In all cases, It creates a fear that corrodes and eats into all of us.
It is true – most of us spend all we earn. We are usually a paycheck or two away from financial trouble. And if we stop earnings it isn’t long before financial trouble comes knocking.
The experts tell us we should have upto six months worth of salary as savings for the "rainy day." Nice if you can – but I know of no-one who has that much spare cash laying around "just in case."
We all have a family member, a friend, a neighbour who has lost a job – sometimes we have all three. Which is why we are taking this so jobless crises so seriously..because they are soon facing financial problems.
What do you think is the right level of financial cushion ? One month ? Two ? Six months – or are you going to tell me: Quest – get real. We live hand to mouth.
A lot has been made about the so called green shoots of recovery. And I'll be the first to admit it's a lot better than being in freefall.
But let's not get too excited here. There's a huge space between being out of freefall and getting to a sustained recovery.
When I think about recovery, I'm not talking about the end of negative growth. To me real recovery is one which growth rates are closer to longer term trends.
Don't get me wrong, the huge improvements we've seen in credit markets since the collapse of Lehman Brothers last September, and the sharp rally in stock markets off their March lows is certainly welcomed.
But my extensive travels over the last few months tell me, that there's still plenty of caution to go around.
I've been at several conferences, and when I ask people whether they feel the the sharp rally in equities is sustainable, many are skeptical and believe the markets at some point could retest their lows.
When I asked a group of chief financial officers and comptrollers when they expect a sustained economic recovery, a third of those who raised their hands believe it won't be until 2012 and beyond. And remember, these are the guys holding the purse strings.
As to the other two-thirds of that group, it was divided between next year and 2011.
I've been taking these informal polls since last November, and I'd say the majority of those I ask, believe any sustained recovery won't happen before 2011.
So what's standing in the way? Plenty. Unemployment in the United States and elsewhere continues to rise, consumers are focused on saving instead of spending, housing and commercial property in the U.S. and elsewhere remain under pressure, and banks continue to deleverage.
Confidence of course, is key to any recovery. Even once we get out of negative growth I fear we could bump along the bottom for a quite a while. I am not alone in this fear. I hope I am wrong, but I suspect I will turn out to be right.
What do you think?
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.