Europeans believe that Americans have this thing about them that history can be re-written -- if Americans are doing the writing. What can I say?

GM (sub-industry=25102010) reported that auto sales have collapsed in the U.S., but not elsewhere -- mostly gas-guzzling SUV's. The problem happens to be, as I have been saying, that Americans are too heavily in debt. What's left over after leaving the fuel pumps these days?

Europeans, by the way, have smaller cars, and much higher gasolene prices, but aren't screaming about either situation.

But U.S. SUV owners know that nothing has changed with the styling of these cars for the past 5 years. So, buyers don't mind waiting for the commodity price (i.e., oil) bubble to collapse and then they'll buy next year's SUV model because they still have a love affair with big cars, and theirs will be a year older.

I like what GM is doing in Canada (new $3 billion capital commitment), and in China. I like what they recently did in Europe to close off their problems there.

I like what I see with GM sales of the new Cadillac STS, which is a four-door, five-passenger luxury sedan, or luxury sports sedan, available in two trims, the V6 and the V8.

The STS V6 is equipped with a standard 3.6-liter, V6, 255-horsepower engine that gets 17 mpg in the city and 24 on the highway. The V8 has a standard 4.6-liter, V8, 320-horsepower engine that gets 17 mpg (city) / 26 (highway). A five-speed automatic transmission with overdrive is standard on both. MSRP is $40,525 for the V6 and $47,025 for the V8. According to a Cadillac spokesperson, after receiving this new model in November, dealers sold 3,240 units in December, which is outstanding. Days-to-turn for the STS is 29 nationwide, and some dealers are selling them as soon as they hit the lot.

I wrote in my blog yesterday that the market cap of GM, being just $16 billion, or a small fraction of GOOG, is a bit of a joke. There are serious issues of course, or intelligent investors would not have it down here to the $28 level.

The issues GM has with U.S. healthcare costs are faced by Boeing etc, as well, but Wall Street seems to want investors to link the healthcare issue strictly to GM, which is a crock.

Wall Street also says they don't like the GMAC financing unit, but for some reason they love GE Capital as part of GE. More nonsense.

It would not surprise me that if the price of GM goes low enough it might attract a Warren Buffett / Hathaway bid. He has the cash, and there is no other value play as big as GM.

Wall Street, which stands to make millions in M&A fees, could be helping Buffett by pushing down the price of GM stock. Do you think?

Besides, serious investors can see that the current market valuation as a percentage of the replacement cost of GM's assets (future earnings power) is the lowest ever seen.

GM's balance sheet needs to be restructured, and the unfunded pension liability is huge, but I think these are quite minor issues when compared to the value of its wealth-creating assets in a normal economic cycle, with $35 oil, and people in the U.S. working at good jobs.

What GM ought to do now is to somehow line up enough capital to buy back as much equity as possible. They ought to do more of what is being done at other Dow 30 companies (AXP, BA, CAT, DD, GE (announced), IBM, MCD, MO, MRK, PG, WMT and XOM) to pump their share prices: it's called the stock buy-back.

I made a mistake in the 4Q04 on this one, but I still believe in the company. As you know, I did not see crude oil speculators coming back to the table and driving gasoline prices to the moon in the U.S.

But, that story will soon play out.

Now that I think about this, maybe I'll write up GM as a long-term "accumulation" recommendation -- either now, or possibly after I see the fall-out in equities through 2Q05?

BCara@BillCara.com