I haven’t posted business bits in the last few days, trying to take care of a few other things made my time limited, but there are a number of things in the financial world to pass along.

GM to sell Swedish unit Saab to Koenigsegg

Frankly, I’m surprised GM managed to pull off the deal. From a U.S. sales and distribution point of view, Saab’s footprint is insignificant compared to other luxury auto makers. When you look at the company that purchased Saab, however, one can see that any footprint is a good footprint:

Saab Automobile, General Motors Corp.’s struggling Swedish unit known for its family cars, was rescued Tuesday by a consortium led by Koenigsegg Automotive AB, a tiny company which produces only a dozen custom-made super cars a year.

GM said in a memorandum of understanding that the sale would include an expected $600 million funding commitment from the European Investment Bank, guaranteed by the Swedish government. Additional funding for Saab’s operations and investments would be provided by GM and Koenigsegg Group AB, it said.

On a dozen custom-made cars a year? Does a company that only employs 45 people and produces 12 cars each year have the ability to take over a company of 4500 with a global presence? Hmm… Why am I skeptical of this purchase? Oh, and take a look here for some facts on both companies.

Saab only sold 93,295 cars last year.  Ouch.

Two notable bankruptcies

To recreational (for lack of better words) companies filed bankruptcy in the last few days. Six Flags Theme Parks went belly up due to $2 Billion in debt. Also, the Extended Stay hotel chain fell to the crushing $7.6 Billion it had on the books.

Further signs the consumer is hurting

Credit Card default rates hit another record high.

Bank of America—the largest U.S. bank—said its default rate, those loans the company does not expect to be paid back, soared to 12.50 percent in May from 10.47 percent in April.

In addition, American Express, which accounts for nearly a quarter of credit and charge card sales volume in the United States, said its default rate rose to 10.4 percent from 9.90, according to a regulatory filing based on the performance of credit card loans that were securitized.

As unemployment continues to rise, so will the default rate.

Being out of it for the last 24 hours (or there about) means that I’ve missed a few things in the world of business.  Well, in the world in general as well.  

Anyway, there are a number of things that caught my eye as I went over the headlines for the last day.

Chrysler Dealers: ‘They Turned Their Back On Us’ 

You knew it was just a matter of time before the dealers/dealerships that fell victim to the Chrysler cuts started to speak up.  It didn’t take long, actually.  Something along the lines of 12 hours…

“I had to notify just around 50 people today that our business has been terminated, that they no longer have a job,” said Kevin Ormes, owner of the dealership. 

Ormes got a courtesy call on Thursday morning delivering the news, and he’s angry. 

“Over the past months, they’ve begged us to buy vehicles, they’ve begged us to do everything for them and when it came time to do something for the dealers that basically invested everything that they have, they’ve turned their back on us,” he told CBS 2. 

I actually feel quite sorry for Ormes.  The dealers who stuck with Chrysler, who ended up buying stock when Chrysler needed – but their dealership may not have – are not left in the dark.

Too bad for the dealerships that Chrysler went into bankruptcy. That move allows the company to void contracts (with the approval of a judge), leaving the dealer network virtually hostage to whatever decisions Chrysler made in the name of rightsizing.

G.M. Notifying 1,100 Dealers That They Will Be Dropped

And just as expected, General Motors did the same – the notified and additional 1,100 dealerships they were no longer needed in the GM family.

What I find interesting about the latest news is the input provided by the National Automobile Dealers Association.

The National Automobile Dealers Association estimated that the G.M dealerships being dropped employ 63,000 people, and that 40,000 work at the Chrysler stores being closed. Thousands more jobs are at stake in the later phases of G.M.’s dealer cutbacks.

There are another 100K jobs that will be looking for employment.

Empire State Manufacturing Survey: Conditions worsened modestly in May

The much watched Empire State Manufacturing Survey data was released on Friday, and wouldn’t you know it, conditions continued to decline.  

The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened only modestly in May. Although negative, the general business conditions index rose 10 points to -4.6, its highest level since August of last year. The new orders index fell several points and remained below zero, while the shipments index inched into positive territory. The inventories index remained negative, but rose from last month’s record low. Price indexes also continued to be negative, with the prices received index falling 10 points to a record low. Employment indexes indicated further contraction in employment levels and in the average workweek. Future indexes improved substantially for a second consecutive month; the future general business conditions index rose 11 points to its highest level since September.

Business news is now reaching what I would call the “good bad news” cycle. People are now taking bad news and are trying to make it look good by saying “it wasn’t as bad as the last report”.  

Contraction is contraction.  Wake me up when growth actually starts.

Signs that the consumer is hurting, Credit Card Defaults Reach Record Highs in April

For most of this recession cycle, the news has focused on the business community.  How banks are not making a profit, how retailers are overstocked with inventory, how homebuilders are unable to sell.  

Well, the signs that the consumer is actually hurting can now be seen.

Take a look:

Default rates (per credit card issuing bank)

• Citibank – 10.21
• Wells Fargo – 10.03
• JP Morgan – 8.07
• Discover – 8.26

As unemployment continues to rise, it would be safe to expect the above numbers to continue climbing.