The odds of a bigger bailout for the automakers are as certain as betting on a snowfall at least one day in December in Michigan.
But should you throw all your retirement money at stock in GM or Ford?
Again and again, I'd say no.
The risk level is sky high for investors who are tempted to buy when General Motors Corp. stock is trading around $5 and Ford Motor Co. stock is trading at $2 or so.
Try telling that to oh-so-many investors who know they're looking at easy money.
Lucille Morton tried to convince her investment club, which owns 100 Ford shares, that at it's a good time to load up on Ford.
The club bought 25 shares in April 2006 at $7.65 a share and 75 shares in March 2008 at $5.75 a share. Average: $6.22 a share. So Ford at $2 is cheap. The club didn't budge.
"It's a better deal than going to the casino as far as I'm concerned," said Morton, who turns 81 this month and lives in Pleasant Ridge.
OK. If this is fool-around money that could be thrown away at blackjack, she has a point. But remember, even Las Vegas mogul Kirk Kerkorian dumped lots of Ford shares at a loss lately.
Automakers aren't just battling a traditional recession - now with 10 months of job losses nationwide.
We're looking at the worst financial crisis many of us have ever seen. Jittery consumers won't buy a simple sweater, let alone an SUV.
Automakers could get more help down the road. If government bailouts could save many, not all, white-collar jobs on Wall Street, bailouts must save many, not all, blue-collar jobs on Main Street, too.
Barack Obama got his next job knowing that reality.
Jim Cramer, host of "Mad Money" on CNBC, told me via e-mail last month that Ford and GM bonds were trading at such low levels that the bond market was predicting "almost a 100% chance of bankruptcy."
Today, Cramer told me he'd put the odds of a bailout for autos at 100%.
Cramer said on his show that Obama must fix the auto industry on his second day in office.
"We have to bail out GM and Chrysler, not to mention Ford, with the same template we used for the AIG bailout," he said.
The government should take a huge stake in GM's common stock, as well as buying billions in GM preferred stock and do the same thing with Ford, he said.
Even if that happens, a bailout isn't a rescue plan for shareholders.
American International Group Inc. stock was trading at $4.76 a share the day before the federal government announced an $85-billion loan. The government received a 79.9% stake in AIG and the ability to remove senior management. AIG stock closed at $1.87 a share on Thursday.
In March, the Federal Reserve agreed to guarantee $29 billion of Bear Stearns' assets and Bear Stearns was sold to JPMorgan Chase & Co. for $10 a share, down from its 52-week high of $159.36. Bear Stearns stock had closed at $30 a share before the bailout was announced.
Locally, many people only remember the 1979 bailout of the old Chrysler Corp.
"We have seen a lot of people come in because of the success with Chrysler," said Jim Badge, president of DFCU Financial Partners, the investment services arm of the credit union in Dearborn.
Now, he said many customers want to buy Ford. The investment arm does not advise on individual stocks. Most experts warn bargain hunters who live in the shadow of Dearborn-based Ford that it's a speculative bet.
"This could be a totally different situation this time," Badge said.
Ditto for GM.
If we see more bailouts for the Detroit Three, and I'd bet we will, I wouldn't risk my 401(k) money a hunch about easy money for auto stocks.
Contact SUSAN TOMPOR at 313-222-8876 or stompor@freepress.com.
By SUSAN TOMPOR - FREE PRESS PERSONAL FINANCEIn your voice
Play 
