Several analysts are forecasting that GM shares have a mind go down below a dollar on weak sales, money burn, and looming fault

By David Kiley

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General Motors’ (GM) shareholders probably have a gloomier view than the company itself.

Shares of the struggling automaker sank 23% on Monday, Nov. 10 after the company admitted on Friday, Nov. 7 that it may hit the danger point in its cash reserves (BusinessWeek.com, 11/7/08) by the New Year. Some Wall Street analysts say that GM shares may not recover for years fair if the U.S. body politic comes to its extrication. That’s because GM bequeath owe so abundant additional debt that the burden will hang outer its share price for a generation.

GM closed at 3.36, a 62-year-low for the automaker. Ford (F), widely considered to be in a little better shape to weather a recession nearest year, but far from core out of the woods, closed down 4.5%, to 1.93.

Democratic leaders of Congress—House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid—wrote to President George W. Bush and Treasury Secretary Henry Paulson on Nov. 7 asking that they revisit their decision to not include the automakers as beneficiaries of the $700 billion bailout of financial firms last month.

But on Nov. 10, Capitol Hill sources said the White House seemed "dug in" on the idea that the bill can’t be rightfully explain to include auto companies. "The push a little while ago is going to be to pass some amendment to the bill that specifically benefits the automakers," said one congressional staffer with knowledge of the negotiations. Congress meets next week in a lame-duck session during which such an amendment could subsist voted in succession. The other possibility is attaching help to the automakers to an economic stimulus bill-hook that the Democratic domination is drafting in favor of the session.

President-elect Barack Obama has made it clear that he wants the automakers helped one way or another. That may move enough reluctant Republicans to vote in opposition to it next week. "There are some Republicans who adverse helping the automakers a couple of months ago, but a little while ago seem else willing to go in Obama’s direction," said the legislative staffer.

Wall Street is painting a dim picture of GM’s future with or without government help. Barclays (BCS) at this time targets GM shares at 1, under which circumstances Deutsche Bank (DB) slashed its target price to zero. "While further government support would decrease the likelihood of a GM bankruptcy, we believe any government assistance would likely significantly dilute GM’s impartiality," analysts at Barclays Capital said. Deutsche Bank’s Rod Lache wrote in a short letter to investors: "Without government assistance, we believe that GM’s extreme depression would be inevitable, and that it would precipitate systemic risk that would be difficult to overcome as being automakers, suppliers, retailers, and sectors of the U.S. economy." Lache has a target of zero on GM.

Automakers are looking for a minimum of $25 billion in immediate loans. Part of the deliberations going steady between GM and the Michigan congressional caucus has to accomplish with what terms the automaker may subsist willing to agree to in exchange for lend aid—from executory compensation limits, shareholder dividends, and job protections.

GM said on Nov. 10 it would divide 1,900 factory jobs onward top of the 3,600 cuts announced on Nov. 7.

GM forward Nov. 7 posted a clear loss of $2.5 billion in the third quarter, and said it ran through $6.9 billion in cash, leaving it with only a thin cushion between its current reserves and the minimum amount of cash needed to stock day-to-day operations.