Now comes word from S&P, the benchmark ratings service that it just might cut debt ratings on all three of Detroit's automakers. The impact would be significantly worse than a bad review and could up to millions upon millions more in terms of borrowing costs. S&P says it's particularly concerned by the impact of all prices, which is eroding demand for the trucks Detroit has long depended on.
While no one is saying quite what this might mean, it's interesting to note that back in 1992, GM came a hair's breadth away from going broke and actually had an executive posted at the executive suite's fax machine, waiting for word from the ratings agencies about a threatened discounting of debt. Had S&P downgraded the company, I was told, the automaker would have been forced to declare bankruptcy, as it couldn't have shouldered the added costs.
A debt downgrade alone probably wouldn't trigger this sort of catastrophe - at least not by itself, this time. But with the continuing cascade of bad news, who knows how much more the Big Three will be able to tolerate?
Do you, our readers, anticipate a bankruptcy by one or more of Detroit's makers?