Chevy Volt a Failure - GM to Layoff 1,300

Moody's downgraded its debt yesterday, sending the stock reeling. In the past, all of those capital raises were somehow perversely thrown around as a positive -- oh, look, they are able to raise money! Things are starting to change.

The cash burn I have posted about for a long time is starting to matter, because for the first time in more than a decade financial conditions are tightening in real terms -- ever so slightly so far, but the mess central banks have created is an environment in which we are facing outright collapse without interest rates being price administered at ridiculously artificial low levels to keep anything from failing.

The LIBOR interbank lending rate has been spiking over the last 3 months. Which is the real reason the broader stock market has started to roll over again. We're not at credit crisis time yet globally (it is coming at some point -- this is the house of cards they built), but Tesla has burned through a tremendous amount of cash and has lived off of handouts, bullshit and endless promises that it never meets. It doesn't matter when a bunch of monetary mandarins around the world are blowing bubbles and creating zombie companies via their cluelnessness. It does matter when the bottom falls out on that scheme and all of that debt they have pushed on the world via artificial means becomes a problem. And as I said many times on this thread, people would look back at some point and Tesla would be the poster child for what I am talking about.

I have no idea if Tesla will pull a rabbit out of a hat this time (or if the Federal Reserve or ECB, etc. will reverse course and announce QE4 next month out of sheer panic, and blow the bubble just a little bigger as they did the last time their stock market bubble started to roll over. Even if they do, I have no idea if it will even bring Tesla along for a while longer, before a credit crisis comes.

But plain factually, the company has an insane debt load, and it burns through an incredible amount of cash. Its last debt offering was trading down at something like 86 cents on the dollar last I looked earlier today, which is actually charitable given that it is outright crap. The cash burn is going to need to accelerate more just to keep the company alive. So it is going to need to raise at least another $2 billion very soon to keep the nonsense going. Guess we'll see if Goldman Sachs can somehow prime that pump -- against all reason for anyone with money to lend -- and line up some muppets in order to earn some fees.

 

I'm sure the Tesla bondholders who lent his company money, and are sitting on bonds that are trading 13 cents below par, thought this was a hysterical April Fools joke.