Worries about Ford and J P MOrgan Chase -
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Elephants in the Room: J.P. Morgan and Ford
By James J. Cramer
10/10/2002 09:59 AM EDT
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What if J.P. Morgan Chase (JPM:NYSE - news - commentary - research - analysis) has a funding problem? Are we even allowed to think that? Are we allowed to whisper that? Or shout it? Does anyone in government even know about it? Do we have a contingency plan?
What if Ford Motor (F:NYSE - news - commentary - research - analysis) has a funding problem? Are we even allowed to think that? Are we allowed to whisper that? Or shout it? Does anyone in government even know about it? Do we have a contingency plan?
No, you did not read that wrong. Both are in trouble. We can deny it, but both companies have elephants in the room -- their bond and stock prices. And those elephants are trumpeting to us that we should begin accepting the fact that these companies may not make it in their current form.
Fortunately, J.P. Morgan is not so huge that if push comes to shove, someone can buy it, probably for the price that Chase paid for just J.P. Morgan alone. Ford, however, is too big to be bought. It will have to be bailed out if its financing woes get much worse. Despite the protestations, Ford's too big to be allowed to fail.
We all know these things. We just don't want to talk about them. They are too frightening. But I want them on the agenda so the policymakers can be ready. Because both will require the help of the government if they go down.
And this government, in the form of its Treasury Department, should be versed in these things, But it has no idea what these companies do, let alone the trouble they are in. Memo to the Treasury: The symbols are JPM and F. Get a Bloomberg. Look at the structures. Learn them.
Yeah, maybe they don't have funding problems. Maybe they have hidden assets that aren't being valued correctly. Maybe they have things on the books that are worth more than we think.
But if the prelude is any judge, they have hidden liabilities that aren't valued correctly. And their books are worth a lot less than we think they are.
Sobering times. |
