Back when it wasn’t totally clear that GM would suck away every dollar unfortunate enough to even cross the expanding event horizon of fail that surrounded the company, you would have looked at us skeptically and slowly backed away (or jabbed us in the eye with a sharp stick). Still, that’s exactly what happened with the auto giant. But, as it happens, Obama doesn’t listen much to us, so, we were a little taken aback when he finally admitted the inevitable.
President Barack Obama believes a quick, negotiated bankruptcy is the most likely way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.
GM’s $500 million of 7.7 percent notes due in 2016 tumbled 8.8 cents to 10.4 cents on the dollar as of 9:45 a.m. in New York, a record low, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 79.7 percent, or 77 percentage points more than similar- maturity Treasuries, Trace data show.
Obama Said to Find Bankruptcy Likely for GM, Chrysler [Bloomberg]
A quick bankruptcy is a fallacy here. The PBGC issues alone are enormous.
How will the Gubament reinflate the GM bond prices?
Next you are going to tell me Chrysler is in trouble.
And all those bondholder holdouts hedged with CDSs are loving it
Holy crap, you need to proofread.
I TOTALLY called this in 1881. We should have stopped Samuel Gompers when we had the chance.
Prepackaged bankruptcy means “do anything to protect the unions who vote for us”.
Scary that in America, we have to fear undereducated blue collar workers and make stupid decisions to appease them.
Go the normal Ch 11 way – heck let them all fail.
I normally let grammatical issues through but what exact language is this written in?
“unfortunate enough to cross even horizon an expanding event horizon of fail”
I am sure the bonds are falling but TRACE doesnt work and I wouldnt rely on its quotes
What does this even mean?
“Obama doesn’t listen much tus”
I actually think the administration knew this as well as the rest of us, months ago. It’s just that if you’re going to tell the country that General Motors needs to file for bankruptcy, you’d better looked like you’ve tried every other option first.
I think the argument for bank nationalization might be the same.
Just saying.
Bob Lutz leaving GM was the best and earliest indicator.
@ 11 FTW!
Fool@#4…
“And all those bondholder holdouts hedged with CDSs are loving it”
And what makes you so positively sure that those CDSs are actually going to pay out? Hmmm?
The Guy from Delaware
@14.. The gubament will make sure CDSs are paid out at 100%. The only people that lose while “team no one fais” is in office are the common share holders.
Well, I’m glad we didn’t throw a ton of money into it before it went the BK route.
guest@#15…
If the “gubament” makes sure, that means us. Does it not?
And if that’s true, you should go buy some CDS contracts on those 2016 notes this afternoon. Sounds like you can’t lose.
The Guy from Delaware
Big O shaded this one months ago. Not to mention he openly laughed at the thought of an auto bailout citing 70% of Americans didn’t want it.
And yet GM stock is still trading > $0 because…
Every just f’ing relax – it’s another April Fools joke. Retards.
@20
So GM’s already on the Pinksheets and my data providers are just f*cking with me?
Well, I guess that’s about as good of an explanation as any I’ve heard…
@14 because if they weren’t going to pay out, then bondholders would have accepted a deal at a price higher than they;re are trading at now, or could chance get in bankruptcy
Airlines all went bankrupt. They got rid of all their obligations (pensions, extravangant labor contracts). Now we fly on cheap flights.
That was years ago and they are barely making it. Only one that did not file bankruptsy was Southwest and they make a profit.
So what does this say about the Big 3?
GM will downsize until they disappear like other manufacturing here? Or will it just be a way to get rid of obligations and be able to compete?