GM: This is Actually Bottom Making Material

The broader markets rallied hard all month. The mouth breathing pump monkeys on CNBC even started postulating, between giggles and squeals of retarded delight, that this Bear Market rally was actually a new Bull Market rally.

Over the weekend Rick Wagoner, CEO of the colossal failure that is General Motors (GM) was ousted by President Barak Obama. The President’s car task force has finally concluded that turnaround plans of GM and Chrysler could not work and that they therefore would not be getting anymore bailout money without further deeper cuts. The futures did an instant face plant in overnight electronic trading.

However, this is one of the first steps in the right direction. This is actually bottom making material.

For the broader markets to bottom and for the economy to bottom, certain cataclysmic events must occur. While the timing or form of these cathartic events are difficult to predict, you WILL know them when they occur. If GM and Chrysler are forced into bankruptcy, that will be the one of the bottom forming events.

Many more, such as the final nationalization of Citigroup (C) and Bank of America (BAC) and the complete unwinding of AIG are still required. Losses must be taken by all stakeholders, not just tax payers. Balance sheets must be purged and legacy liabilities written off. These companies need to be recapitalized and relaunched with pristine balance sheets. Only then can they contribute constructively to the economy and help engineer an economic revival.

GM’s Wagoner Steps Aside After Failing Obama Scrutiny (Update3): “General Motors Corp. Chief Executive Officer Rick Wagoner was forced out after President Barack Obama’s task force decided he was unable to craft a plan to save the automaker he ran for more than eight years.

Wagoner, 56, said he agreed to an administration request to leave. Chief Operating Officer Fritz Henderson will become CEO and director Kent Kresa will succeed Wagoner as chairman. GM had been seeking as much as $16.6 billion in new U.S. loans after an initial installment of $13.4 billion.

“It’s very hard for the government to write a big check without giving some evidence of change,” said John Casesa, managing partner at New York-based consulting firm Casesa Shapiro Group. “This will also give the government moral authority with the other stakeholders to make them sacrifice.”

Wagoner became a symbol of the failing U.S. auto industry in recent months after flying to Washington via corporate jet to ask for aid. Since taking over in 2000, he presided over $82 billion in losses during the past four years and yielded GM’s title as the world’s top-selling carmaker to Toyota Motor Corp.

His exit caps an unsuccessful five-month push to win U.S. aid without losing his job. Forced to work for $1 a year and cede most of his corporate perks, he had said he wouldn’t resign unless compelled. On March 27, 129 days after Congress’s first hearing on the future of GM, he got that call.

“On Friday I was in Washington for a meeting with administration officials,” Wagoner said today in a statement. “In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have.”