General Motors Corp. (NYSE:GM) is trading down sharply after disclosing huge charges last night.  The auto giant posted $43.1 Billion in quarterly revenues  GM does note that ongoing challenges in the U.S. mortgage market is impacting GM income from GMAC.  The company is recording a $39 billion allowance on deferred tax assets, although the company is also claiming that its liquidity position improved to $30 billion.

Unfortunately GM’s core operations were still at a loss. Excluding special items, GM had a 2007 third-quarter adjusted net loss of $1.6 billion, or $2.80 per diluted share, compared to net income of $497 million, or $.88 per diluted share, in the year-ago quarter.

In North American, the car company had an adjusted net loss from continuing operations of $247 million. So, it still have a long way to go to fix the broken core of the company–its home market.

No matter how well GM does in China and South America, a talking point for almost all GM execs, the labor cost cuts that the company has just won in its UAW negotiations are now faced with multiple threats.

The first of these is $100 oil. This could translate into $3.50 gas prices, which would certainly hurt US car sales, especially of profitable SUV and pick-up models.

And, the housing crisis makes the consumer feel more broke each day.

The truth is, the consumer is broke in many cases, and that would kill GM’s hopes here for a long, long time.

Douglas A. McIntyre

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