The Five Dumbest Things on Wall Street This Week

3. GM Rubbernecking

General Motors (GM Quote) had an ugly collision with reality this week.

The automaker stunned Wall Street Wednesday by announcing a $39 billion third-quarter loss. The loss, which ranks among the biggest in corporate history, broke a modest string of three straight quarterly profits at GM.

The lion's share of the $39 billion quarterly loss comes from GM's decision to write off the value of billions of dollars worth of deferred tax assets -- credits GM was carrying on its books in hopes of reducing taxes on future profits.

This suggests it may be a while before GM makes enough money to put any tax credits to use. That's no surprise, given car-sales gains by rivals like Toyota (TM Quote). Even worse, GM is also exposed to the crumbling U.S. housing market through its 49%-owned GMAC unit, which posted a $1.6 billion loss in the latest quarter.

But GM's third quarter looked ugly no matter how you slice it. Even excluding special items, GM lost $1.6 billion, or $2.80 a diluted share. That reverses a year-ago profit of $497 million, or 88 cents a share.

None of this, of course, will stop CEO Rick Wagoner from claiming GM is in terrific shape.

"We continue to implement the key elements of our North America turnaround strategy," he said in Wednesday morning's press release, "and these initiatives are driving steady improvement in our financial results."

It's hard to see how a $39 billion loss amounts to "steady improvement in our financial results." But finance chief Fritz Henderson managed to outdo Wagoner in minimizing the impact of the writedown.

The charge, Henderson told reporters Wednesday, is purely an accounting matter. He went on to add, Reuters reported, that "nothing has changed in terms of the economics of the business."

That's the whole problem, Fritz.

Dumb-o-Meter score: 88. Wagoner later said the loss had "no impact whatsoever on our cash position, no impact on our ability to use the tax offsets in the future, and from my perspective, really no change whatsoever in our outlook or optimism about the future of getting the business turned around."