Credit Default Swaps Holders Likely to Force GM into Bankruptcy

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It only takes opposition by 10% of the bondholders to stymie an out-of-court restructuring of GM. The FT believes that there are enough bondholders who, via being net short GM bonds via credit default swaps, have good reason to block a negotiated outcome and force the automaker into bankruptcy. And that poses risk to the economy, since there are meaningful odds that the fast track solution of a 363 sale will be opposed successfully, producing uncertainty as to when GM will exit bankruptcy and putting further strain on the supply chain. GM is a big actor in its ecosystem, and too much damage to its supply chain will hurt all US based car-makers, including the transplants.

Here we have financial technology trumping what is in the collective best interest. Creditors when possible prefer to avoid bankruptcy court if a settlement can be reached out of court (it saves costs, reduces uncertainty, and minimizes the risk of loss of customers and key employees during the BK process).

From the Financial Times:

Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM declares bankruptcy, a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the automaker, analysts say.

Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares, a United Auto Workers union healthcare fund 39 per cent and existing shareholders 1 per cent.

However, analysts say the chances the proposal will be accepted have been diminished by the large number of credit default swap (CDS) contracts written on GM’s debt.

Holders of such swaps would be paid in the event of a default – but would lose money if they agreed to restructure GM’s debt. For investors who own bonds and CDS, this could create an incentive to favour a bankruptcy filing.

According to the Depository Trust & Clearing Corporation, investors hold $34bn in CDS on GM. Once off-setting positions are considered, the DTCC estimates CDS holders would make a net profit of $2.4bn if GM were to default.

The opposition of 10 per cent of bondholders is enough to derail the proposal, which has already triggered protests from investors who argue it unfairly rewards the UAW at the expense of bondholders.

“You have every incentive not to agree,” said one bondholder, a large credit hedge fund. “You would be locking in a loss if you did. It isn’t only the ‘shark’ capital; it will be the mom and pop mutual funds who will oppose this deal. ”

Moreover, as we have written at length elsewhere, the idea that GM can have a quick and easy bankruptcy looks like a fantasy. The article continues:

“Chrysler looks like a simple two-car funeral compared to the traffic jam of assets and liabilities and contracts at GM,” said the credit research boutique CreditSights. “Chrysler provides limited parallel.”

John Dizard, in a separate story, explains why a 363 sale is likely to be blocked:

The “363” plan (a provision under the Bankruptcy Act that allows the company to sell assets) is the means for a “good GM” funded by the government to buy assets from the existing company, or “bad GM”. The plan, based on a review of some fairly clear precedents from past cases, is a legally flawed way to disregard the rights of certain creditors – in GM’s case, their public bondholders….

The 363 loophole, (really 363(b)), was intended to give a judge the authority to allow for the quick disposal of wasting assets, or assets that are not part of the core business, without waiting for creditors to vote their permission. It was not intended as a way to impose what is called a “sub rosa plan of reorganisation”. That is a plan of reorganisation of the entire company on which creditors do not get a vote.

In GM’s case, the “sub rosa plan” is to sell the valuable assets, with accompanying union contracts, to a new, “good” GM, and leave the money-losing assets in the original company, which is left in the street to bleed cash and die.

GM’s law firm, Weil Gotschal, has attempted to use this section of the bankruptcy code in the past, and had only mixed success in doing so. For example, a bankruptcy judge in New York ruled against a similar Weil Gotschal tactic in the Westpoint Stevens case, saying: “The fact that a transaction including a 363(b) sale of assets may ultimately be in the best economic interests of a debtor’s various constituencies does not authorise the court to ignore the creditors’ rights and procedural requirements of Chapter 11.”

Here’s how I believe the GM bankruptcy case will play out. The government, the UAW and GM are in a good position to “forum shop”, or find a bankruptcy judge who will be sympathetic to the government-UAW plan. That judge may be in New York (convenient for Weil Gotschal, headquartered in New York’s GM building), or Michigan (hometown advantage for GM). That judge will almost certainly grant the request of GM, the union and the government for the 363(b) sale.

Then the bondholders do some forum shopping of their own. They could well find a judge in a Federal district court (one level up from bankruptcy court) willing to grant a temporary restraining order blocking the 363(b) sale.

Given the facts of the case, and the precedent on the side of the bondholders, I think it’s quite possible that the judge will issue a TRO, and set a hearing on a motion by the bondholders to enjoin the sale.

That will be the end of the good news for the bondholders. The judge will read through the law, and the facts, and then ask an unpleasant question of the bondholders: what’s your alternative?…

Their problem is that the US government will be offering not just working capital for GM during its bankruptcy, but “exit financing” for GM’s emergence from Chapter 11. That is hard to get now on commercial terms, even on a smaller scale than would be needed for GM.

There are other problems with the government/union plan. The suppliers to the remaining “good” brands will need to spread their fixed costs over fewer parts, and transferring and revising all the contracts is logistically very difficult. Getting effective, decisive management, when the major shareholders have made unconvincing pledges to be hands off and avoid conflicts… very uncertain.

The bondholders still fight a hard, continuing, rearguard action, since they have little or nothing to lose, and want to preserve their rights and legal precedents for future reorganisations.

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  1. Bob Goodwin

    beautiful article Yves. Very thorough. It sounds like the government will be able to duplicate the Chrystler bond holder bullying. And probably for the best.

  2. Steve

    The distortion of bankruptcy incentives through CDS was predicted in economic and legal studies. Now we have the prospect of broad suffering to enrich a few deep pockets that have paid enough Congressmen to prevent regulation of CDS. These are very pretty times we’re living in.

  3. depresso

    GM needs to go bankrupt! Keeping the bad banks and bad corporations alive is like getting rid of Death – the World will be full of zombies!

    And please, don’t blame the hedge funds and investors. GM was very sick for many years with bad management, bad union contracts (ooops, that’s not PC on this blog), bad strategy, etc. Stop with the socialist nonsense and let the company die!

  4. Yves Smith


    Did you actually read the post or the links? It appears not.

    It is just about without exception preferable to restructure companies outside of bankruptcy. Here we appear to have a deal but a teeny minority that bought CDS in excess of the value of their debt can stymie it, imposing costs on everyone, including the taxpayer, since a bankrupcty will require government provided DIP financing (normally private DIP might be available, but none is on offer). So you are advocating a more costly process to everyone, including you.

    As for “GM must die” that’s a pathological point of view. The point of bankruptcy is for a viable company to emerge. So you are opposed to any process.

    I suggest you get familiar with the basics rather than present uninformed opinions.

  5. bob

    Yes depresso, betting that GM is going to fail, and having the us govenment on the hook for the loss on the bonds of these brillant “hedge funds and investors” is very socialist.

    We are very lucky indeed to have people who have enough money to be able to use it as a weapon to destroy others wealth. Who do you send your the christmas card to?

    The stated position of the US government is not to let another bank fail, so who pays for the CDS’s that citi and JPM and AIG are counterparty to when GM fails?

    Do you have any idea how this money actually flows through the black box they call modern banking?

    I’ll give you a clue, the unions don’t get it. The union members get a cut in benefits. Benefits that, according to your precious contract law, should have been paid for already. Calling them benefits is also a nomenclature isse that the creditors use. They are really earnings, by any reasonable definition.

    Then the tax payers get the bill for the cost of taking care of these people for at least the next 30 years.

    This then allows the bondholder, who lent the money to GM, to get out of an investment which any sane person whould not have made in the first place.

    Your not nearly depressing enough.

  6. Charles


    Sometimes the point of bankruptcy is to eliminate excess capacity, usually the marginally less efficient. Maintaining zombies company with public infusion of cash puts pressure on pricing, which affects the profitability or even the viability of every other actors in the industry. Zombie is an appropriate term here, as usually in horror movies Zombie victims become Zombies themselves !

    The only rationale for keeping most of GM capacity intact is national security and/or soon-to-come protectionist measures that will drastically limit car import. If this is really the end game, this is going to be really nasty !

  7. carol765

    at Charles:
    ¨The only rationale for keeping most of GM capacity intact is national security..¨

    rationale ?
    what would be the line of reasoning?

    Please note: in the name of ´national security´ the security of the US has been very much reduced over the last 8 years.

  8. Jim T

    Dear Yves,

    I normally agree with your posts and you normally have a great sense of fairness, but this time I have to disagree with your position.

    Yves Smith said…

    It is just about without exception preferable to restructure companies outside of bankruptcy. Here we appear to have a deal but a teeny minority that bought CDS in excess of the value of their debt can stymie it, imposing costs on everyone, including the taxpayer, since a bankrupcty will require government provided DIP financing (normally private DIP might be available, but none is on offer). So you are advocating a more costly process to everyone, including you.

    Jim T here again:

    Sure it’s great to restructure outside of Bankruptcy and everyone would do that if everyone was being treated fairly. But that is NOT THE CASE HERE OR WITH CHRYSLER.

    President Obama and his Car Czar are HELL BENT on REPAYING President Obama’s political debt to the UAW using the Bond Holders Money! What in the Hell is Fair about that?

    Let’s See This deal!

    Gov Trades $27B for 50% Stake
    BH Trades $27B for 10% Stake
    UAW Trades $20B for $10B Cash and 39% Stake



    The Bond Holders “DO NOT OWE” the UAW anything, President OBAMA does so President Obama needs to pay them if that is so damn important to him!


    BH Trades $27B for 50% Stake
    Gov Trades $27B for 10% Stake
    UAW Trades $20B for $10B Cash and a 39% Stake

    I’m sure the bond holders will take that deal all day long!

    And that way President Obama is paying his debt to the UAw with TAX PAYER MONEY and if the tax Payers don’t like it they can VOTE HIM OUT OF OFFICE!


  9. Brick

    It is not really a sale in GM’s case because there is no Fiat to take over except maybe for Holden and Opel/Vauxhall parts. Whether this is a legally viable 363 , I fully expect it to be pushed through as we see the full force the administration is prepared to apply. Nor do I expect delaying tactics to work either as this gets rushed through. The long term implications for costs of debt to large firms does not bare thinking about, and the jury will be out for a long period before the verdict of whether it was worth it is decided.

    Some of the real questions I think should be if there will be lots of winners with GM CDS who are the losers. Still with current costs of GM CDS not as much money will be made as some think and I guess the taxpayer will foot the bill through AIG for most of the cost. What happens to GMAC in any restructuring, is it set adrift or sold off, or put in to runoff. Since the UAW will most probably have to sell any shares in the new GM what does that imply for the new GM’s equity prices and financial stability. Since GM US/Canada will be separated from its international component, GM will become a rather small fish in the automotive pond, so will struggle to attract the investment and most probably get into trouble again.

    Long term it comes down to whether the consumer thinks they can get spare parts for their car in 10 years time and I am not sure the government can instil the right amount of confidence in a new GM in quite the same way as the take over by Fiat of Chrysler. Leaving the management structure of GM in place worries me and not really examining some of the alternatives due to political reasons must be raising a few questions in investors minds. GM could be sold to one of the Russian car manufacturers for a dollar, but that is not going to happen is it. I just think it would be cheaper if GM was nationalised and the money was given directly rather than by round about routes.

  10. bob

    “Sometimes the point of bankruptcy is to eliminate excess capacity”

    Capacity is a problem, but should we be reducing capacity in the Northeast, and giving subsidies that effectively increase capacity in the south?

    No, we just need management that wants to focus on cars and the production of them, not how they can finance that car sale at 10% and then make money for the banks when they sell off that car loan.

    For the past few years no one has made any money selling cars, they were selling the loans, and the banks, aka the bond holders of GM, were more than happy to take their cut of the “profits”.

    Jim, you are wrong. You have been demonstrated to be wrong. You obviously have no idea what you are talking about, and who exactly your problem is with.

    Again, in the case of chryler, all parties agreed to that settlement. If you feel so strongly that the orignal disententers were screwed you should call them, I am sure they would be happy to talk with you. Stop by, explain to them how you can get them more in the settlement. Call them, now.

    Perella Weinberg Partners 767 Fifth Avenue New York, NY 10153. Telephone: 212.287.3200

  11. bobo bobo

    Good luck to Obama persuading investors to provide financing to distressed companies, if he’s going to violate the law. Distressed investing is more popular in the US than in other countries because there is a clear legal framework and the government sticks to it. Once the government stops playing by the rules, it has no advantage over other countries. And it does look like the government stopped playing by the rules. Like Authers says, 363 sales aren’t supposed to be used as a under the table plan of reorganization. Also, if the rumors of threats of IRS audits are true, then that may be criminal activity. 26 USC 7217 generally makes it a criminal act for the president, vice president, their staffs, and cabinet members to request IRS audits. And threats to commit a criminal act often are themselves also generally criminal extortion.

  12. bob

    “if he’s going to violate the law”

    What law is he violating? This is a pre-civil action negotiation. No one has to agree to anything.

    This distress debt financing, who is exactly goign to provide it? In any case I imagine the government is on the hook ultimately. If its done through the banks, the government is giving them the money. If it is done by the government directly, we still are on the hook.

    We already own the banks remember, we just can’t tell them how to operate, that would be a conflict of interest.

  13. wintermute

    The US Government wants GM in a fast, controlled, 363 bankruptcy – with preference given to UAW voters.

    The ghost at this feast is AIG. If they had not bailed out AIG then many of the GM CDS holders would have found their insurance on GM bankruptcy paying less than 100%. So they would be more amenable to USG terms.

  14. snowman


    You need to change the title of your post:
    “CDS holders likely to force GM into bankruptcy”.

    Nothing could be further from the truth. GM has done this themselves. Chronically burning cash flow, huge pension liabilities, consistently failed “restructuring” plans, and a failed business model. Care of management and the UAW.

    They way you present this falls straight into the lap of Team Obama – blame money men, not the ones who are causing this fiasco.

    Is this your intent?

    btw, as an aside, you may want to look into what the CDS holders are actually paying to “cover” Gm debt.

  15. Matt

    In most standard single name CDS contracts both restructuring and bankruptcy are credit events under the ISDA agreement. In such a case, it wouldn’t matter whether bondholders negotiate for .50 on the dollar or receieve .50 in BK, the loss and corresponding recovery on the CDS would result in the same payment. Meaning that buyers of protection via CDS wouldn’t prefer one over the other. Were most CDS transactions on GM specifically modified to exclude restructuring as a credit event or is this just another attempt to blame credit default swaps for all the woes of the world?

  16. frances snoot

    Comrade Yves:

    Here’s to going forward in Amerika for the good of the “collective best interest.” The interest of the bondholders to keep money they are entitled to is trumped in Obama’s Amerika by the collective.

    We won’t worry about the decision makers in the interest of the public collective good: after all, we trust the government.

  17. Gentlemutt

    Yves, great thread.

    Next stop: examine the role of ISDA in screwing up the economic playing-field. CDS, AIG, GM bankruptcy…

    Change the rules and the game changes. ISDA (i.e., the big banks) systematically lobbied to change the rules and here we are.

  18. john bougearel

    Why not bury AIG before CDS/creditholders force GM into a bankruptcy. No counterparty guaranteeing those CDS contracts would exist?

    Looking at Chrysler as providing only a “limited parallel” is a scary proposition, indicating very little visibility dead ahead.

  19. Russell

    These shenanigans sound way too much like the Conrail/Amtrak mistakes. Conrail was a zombie for so long… when they finally became financially healthy they were taken over anyway, but at a higher cost. The Amtrak zombie still won’t die. We’d probably have better intercity rail NOW if Amtrak hadn’t existed in the first place.

    Conrail and Amtrak were the wrong answers then, and these plans to save GM and Chrysler are eerily similar. Rationalized stupidity.

  20. john bougearel


    Seriously, don’t you think the govt could circumvent the minority cds/bondholders by abrogating the CDS contracts written on GM?

    And so it does not appear punitive to holders of GM CDSs, they could abrogate all these contracts that benefit primarily banksters and spec hedge fund punters.

    The sanctity of all contracts is null and void in crises anyways, that is why in proceedings like bankruptcies all contracts become “negotiable”

    I like this “work around” solution, but how viable and implementable it would be is like winning the derby with a 50 to 1 shot and a name so horrible no one would ever bet on it

  21. Mark from Michigan

    Nobody want to talk about the fact that GM was chugging along just fine until car sales fell 50% overnight – Because of these same banks and hedge fund’s antics( pushing gas to $4 a gallon, requiring 750 ficos to buy a car, eliminating leasing overnight) Even today, with the highest oil inventories in 20 years, they’re prepping themselves to strangle the US economy once again, later this summer. The pundits beloved Toyota is burning cash FASTER than GM, but again, no one wants to talk about that.

  22. "DoctoRx"

    CDS need to be banned outright. Period. Taleb says so and is right.

    The world got on fine w/o CDS. Don’t make the loan if you don’t want to. Syndicate it if it’s too big for you. Sell it if you need your principal back prematurely.

    CDS are the currently most prominent of financial products that exist only as line extensions of a greedy financial sector that wasn’t satisfied doing its usual tasks.

  23. DownSouth

    People (including lawyers) tend to interpret the law like they do the Bible. They cherry pick those passages that support their position, discarding the rest, and cite the inerrancy and sanctity of those parts that bolster their case.

    While this is a rhetorical (and legal) strategy that, in some instances, may prove effective, in cases where the public is tuned-in and the issue salient it is of much more limited efficacy:

    Writing two generations later, Oliver Wendell Holmes, Jr., in “The Common Law,” paid tribute to Shaw–he is one of the very few judges Holmes mentions at all and the only one he calls “great,” quoting with approval Benjamin Curtis’s view that he was “the greatest magistrate which this country has produced.” Holmes spoke generally, not of this case, but he added: “the strength of that great judge lay in an accurate appreciation of the requirements of the community whose officer he was…. [F]ew have lived who were his equals in their understanding of the grounds of public policy to which all laws must ultimately be referred.” Shaw, along with the Suffolk County prosecutor and all the judges who sat on Kneeland’s case, knew that the governing elite of Massachusetts in 1838 would not accept the unconstitutionality of a statute protecting scriptural, Christian doctrine.~
    –John T. Noonan, Jr., “Quota of Imps,” The Virginia Statute for Relgious Freedom: Its Evolution and Consequences in American History~

    The problem facing the dissident bondholders is that, when it comes to moral capital, their balance sheet looks worse than AIG’s. They seem to think they can seek protection in the law. All I can say is: “Good luck.” To think that the law operates apart and independent of the society that undepins it is the height of arrogance and stupidity.

    Reinhold Niebuhr also wrote on the subject in The Irony of American History:

    In any event the political philosophy which underlies our Constitution is characterized by a shrewd awareness of the potential conflicts of power and passion in every community. It knows nothing of a simple harmony in society, analagous to the alleged reciprocity of the free market.

    Our political experience has enlarged upon this wisdom without always being in conscious relation to its explicit early formulation. The American labor movement was almost completely bereft of the ideological weapons, which the rebellious industrial masses of Europe carried. In its inception it disavowed not only Marxist revolutionary formulas but every kind of political program. It was a pragmatic movement, born of the necessity of setting organized power against organized power in a technical society. Gradually it became conscious of the fact that economic power does try to bend government to its own ends. It has, therefore, decided to challenge a combination of political and economic power with a like combination of its own…

    Naturally, the “semi-official” creed of a bourgeois community, as distinguished from the philosophy which informs our Constitution, was arrayed against this development. The right of collective bargaining was declared to be a violation of the rights of employers to hire or fire whom they would. Supreme Court decisions, directed against the labor movement, were informed by the generally accepted individualistic creed. But ultimately, in the words of “Mr. Dolley,” the court decisions “followed the election returns.” Long before the “New Deal” radically changed the climate of American political life the sovereign power of government had been used to enforec taxation laws which embodied social policy as well as revenue necessities; great concentrations of power in industry were broken up by law; necessary monopolies in utilities were brought under political regulation; social welfare, security and health and other values which proved to be outside the operations of the free market were secured by political policy.

  24. profnickd

    Having GM’s debt restructured outside of bankruptcy is preferable to whom?

    The CDS debtholders have rights as creditors — to circumvent those rights under the guise of “restructuring” simply favors some parties over others. There’s no efficiency or rationality to it: those with the political connections win, those who don’t lose.

    Pretty good system for some crummy tin-pot dictatorship (or, alternately, some Euro-style socialist state) but not for a free market — “capitalist”, “open market”, take your pick of adjectives — economy.

    The article assumes a federal judge will ask these debtholders, “What’s your alternative?”

    Plenty — Corvette and Camaro will continue as a brand as will certain GM parts and electronics.

    The value of these alone will be worth it for certain creditors to see GM going into bankruptcy.

    Any discussion of bailouts or trampling creditor rights is just deluding oneself into thinking GM has a future — it doesn’t.

  25. depresso

    Yves, you misunderstood my comment. GM has been on it’s way to bankruptcy for many years. Saying that some CDS holders are forcing bankruptcy on GM is either a misrepresentation of reality or a lie.

    GM is a drag, a zombie and it must die. And the only way for a company to die is through bankruptcy. If there is anything worth living in GM, it will reemerge after the bankruptcy is done.

    If the government will be on the hook after GM is in bankruptcy, it’s the governments fault, not the investors’. The gov should never get involved in stuff like this.

    Also, GM is still alive (technically) and the taxpayer is on the hook anyway. GM costs taxpayers billions of dollars. That is OK?

    So again, Yves, stop with the socialist nonsense. Let the zombie die!

  26. depresso

    Once off-setting positions are considered, the DTCC estimates CDS holders would make a net profit of $2.4bn if GM were to default.That’s the big scary number? What a joke! Zombie GM costs taxpayers more over long term (nowadays, even a few weeks or months can be long term)

    Socialism and trust in government are pathological. Let the zombie die! Let all zombies die and let’s start with a clean sheet!

  27. chegewara

    i’m sorry, but this witchhunt on CDS and hedge funds is really getting absurd. CDS contracts been trading points upfront for ages now, just as the GM’s bonds were at distressed levels. to say that anybody could somehow gain anything major here is simply wrong.

    totally agree with other posters that say that GM’s bankruptcy is of UAW’s and managements’ own doing. Pls read 1st chapter of Roger Lowenstein’s book “While America aged”. It might really change your perspective. The way GM has been run for the most of the last 50 years is an unsustainable ponzi scheme transferring wealth from shareholders and bond investors into pockets of the unions. retirments below 50 years. being paid for not coming to work. overtimes for less than 40hrs per week. grand total (healthcare and pension included) compensation of $80/hr. OPEN YOUR EYES!

  28. marsha donner

    1. clearly owning CDSs without an interest in the underlying asset should be illegal.

    2. the addtional incentive for big money to see GM go into BK is the chaos it will create…hence less willingness to allow big banks to go into receivership…”see what happened to the ‘supply chain’ when GM went BK”?? that will be the mantra into the future.

  29. Eric L. Prentis

    Which companies wrote GM CDS, if AIG is to make good on these derivative contracts then the US government is paying the recalcitrant GM bondholders twice, once through the AIG CDS payments and then through debtor in possession financing and then again in bankruptcy exit financing, The GM bondholders holding CDS have every incentive to block a reorganization and force GM into bankruptcy, i.e., in order to line their own pockets at the expense of the US economy. Financial innovation without any regulation is a disaster for America.

  30. Jim T


    Plain and simple that is exactly what they are! A Presidential political IOU being repaid at the expense of the people that invested in GM & Chrysler. If I wrong look at the winners & losers below!

    1.) UAW receives Lion Share Cash & Equity for least amount owed.
    2.) Bond Holders get NO CASH and pennies on the dollars in Equity.
    3.) Share Holders WIPED OUT

    If it wasn't for the UAW and Pres OBAMA's Debt to them GM & Chrysler would have gone BK like Lehman Brothers in the blink of OBAMA'S EYE!

  31. Mrs. Watanabe

    I like john bougearel’s comments. Sure looks to me like an unintended consequence of propping up AIG.

    GM…I worked for GM for 8 years. To give you an example of what it was like to work there, GM intentionally misspelled employee as “employe” to save money on the extra “e.” I’m not kidding. You can google stuff about this.

    Here’s a link:

    I left GM in 1998. I’m amazed GM has lasted this long.

  32. Jim T

    What to call the new companies after Bankruptcy? The names should reflect the NEW OWNERS! MAKE YOUR SUGGESTIONS!



    What’s that? You don’t understand TWD Motors it stands for TAIL WAGGING the DOG MOTORS!


  33. Mrs. Watanabe

    “then the US government is paying the recalcitrant GM bondholders twice”

    —Not true, real hedgers deliver their bonds as part of CDS settlement.

  34. lucky

    Wolves have teeth. Sharp enough to use ’em as weapons. Wolves kill sheep. Yes, its sad, and its quite gory. But more often than not wolves kill the weakest and the sickest of the herd, and the next generation of sheep is actually better off for it. It keeps evolution rolling.

    IMO, the main problem in the US is not in the lack of regulation. It’s the lack of self-regulation of the government. If a company is dying – let it die. Let the natural forces of capitalism take their course. Yes, some people will suffer, but next time everyone will think twice about what they are doing. The worst part about socialism in general and protectionism in particular is that it breeds the sence of irresponsibility, which can ruin a country before you know it. I know – I’ve seen it happen before.

  35. HoosierDaddy

    stupid question: Are the CDS writers TARP banks?
    As I understand the process, When GM files BK (and thus defaults) buyers of protection will be paid face value by the writers and then convey the bonds to the CDS writer (who then tries to recover as much as possible). If most of the CDS were written by TARP recipients it seems possible we could have a repeat of the Chrysler scenario where those institutions are strong armed into agreeing to the Government’s plan.

  36. springsteeninanaheim

    It’d be more fun if it played out like this:

    In surprise move, GM forces government to file for bankruptcy
    – Automaker turns tables on Obama Administration, saying nation is bleeding red ink and taxpayers shouldn’t be asked for endless bailouts. U.S. will shed unprofitable states as part of restructuring.

  37. bob

    Where does this idea that the government is strong arming anyone come from?

    Its the governments money either way, they should have some sort of say. That is anti-capitalist, but the only capital is coming from the government.

    GM does not have enough money to pay back the money it has borrowed. It borrowed that money from banks.

    Those banks are now owned by the government. That means the tax payers are on the hook for the loss in value on those bonds if they are held by a bank that is participating in any of the alphabet soup of government programs.

    The government is also going to pay out on the CDS contracts(AIG), again owned by the government.

    So the tax payers loose twice. The bank executives keep their jobs, and management at GM can keep running a company that sells loans.

    Its win, win, win for the banks(mostly people getting a pay check from the banks), and all of the down side goes to the government.

  38. run75441


    Interesting Comments coming from the masses. Any idea how many investors held "naked CDS" or were over hedged with CDS worth more than the bonds?

    To the rest:

    <10% of the manufacturing cost of building an automotible is tied up in Direct Labor, the rest is Overhead and Materials. So blaming blue collar for W$ cliff diving and management mistakes is silly. GM and Chrysler were well on the way to downsizing products, capacity, and labor well before W$ took the dive.

    Union pensions and healthcare were drastically underfunded for years before this economic collapse due to overforecasting of returns by companies with the idea the stock market would continue to increase. The safe bet would have been less speculative investments. Hence legacy debt which is not the union's fault.

    All of the new contracts stimulated new union workers would be hired in at ~60% of the old wage, benefits would be different, and the union bought the pensions at 60 cents on the dollar from GM forever making it their problem. Mybe the gov should have went after the companies in the same manner they went after Hoffa when he manipulated pensions and stole a few million.

  39. Andrew Bissell

    Yves, have you considered the possibility that no viable company should rise to take GM’s place? That the level of automobile demand that can be supported by an economy no longer gorging itself on easy Fed credit is not high enough to support 3 large automakers?

    You seem to think that the uncertainty created by bankruptcies renders them unthinkable, but this conclusion is simply assumed rather than effectively supported by argument.

  40. Yves Smith

    Mrs. Wantanabe,

    CDS experts are encouraged to correct me if I am wrong, but I am pretty certain the bonds do not need to be presented in a DTCC settlement, which is how the vast majority of CDS are closed out. In Lehman, some foreign banks opted out of a DTCC settlement, which meant the CDS holders had to present the bonds.


    Dunno how the government meme showed up here, that was an issue with Chrysler.

    The banks are most decidedly NOT owned by the government, even though in an economic sense they should be. That is why the meddling annoys people. We have a very inconsistent process here, we pretend they are private, which means they can reap profits on the government nickel for the benefit of private bondhholders and stockholders, but then they meddle on symbolic issues. It would be far more honest to put the dud ones in receivership, but that’s a third rail issue.


    I have never said anywhere that GM does not need to be downsized and rationalized. That is one of the reasons it was ridiculous for the Administration not to have a top auto expert involved heavily in the dealmking.

    The issue with bankruptcy is no auto company has ever emerged. Chrysler is effectively being sold. GM is too big for that.

    While in theory bankruptcy has a lot of advantages, the proponents have not given sufficient thought to what it entails. Team Obama is running the fantasy that they can use a 363 sale here. Per Dizard above, that looks dubious.

    And if they cannot get a 363, they can’t say, “whoops, reset” they are stuck in court. Per the previous post linked to above, which cites at some length a detailed article from The Deal, a GM BK is close to a two year affair.

    How will consumers take to seeing “GM bankruptcy” in the news? Some surveys suggest consumers would be deterred and turn from the automaker. I’ve said repeatedly that this is a crucial issue. If GM sales collapse in BK, it goes from a Chapter 11 to a Chapter 7 liquidation, which will be fatal to some of its suppliers and hurt all US based automakers, including the transplants.

    That’s why an out of court restructuring, if it can be achieved, is a decent option.

  41. Andrew Bissell

    But again, what reason is there to believe that other U.S. automakers should not also take some pain, and that some GM suppliers should not also go out of business? A Chapter 7 liquidation of GM would be very painful for a lot of people, but I haven’t seen any argument that, over the long run, it cannot possibly result in a more rational reordering of our economic resources.

  42. bob


    I disagree on the ownership issue.

    A teenager is given a car by his parents to get to his job. He uses his job to pay for the maintenance and insurance and to pay his parents back for the loan etc….

    The car gets in an accident and is totaled.

    Who is going to get stuck driving that little shit to his job?

    The parents always owned the car, and have to deal with the problems of it not being there, and have to subsidize the kid (drive the kid to work) in order to make the loan whole.

    The bank/government relationship is on the same level as a family with a bratty teenager.

    Just like the parents are ultimately on the hook, so is the government on the hook for the banks.

    No more lehman’s.

  43. Jim T

    Yves Smith said…

    And if they cannot get a 363, they can't say, "whoops, reset" they are stuck in court. Per the previous post linked to above, which cites at some length a detailed article from The Deal, a GM BK is close to a two year affair.

    OK Yves, your point of view says it's in the best interest to save GM for the UAW and America, and that would be done best out of BK Court. You seem very concerned that it may end up a lot more difficult for GM and TEAM OBAMA should this reach the BK Court.

    NEGOTIATIONS! Where are the negotiations? I heard 1 plan set forth by GM and nothing else! The Bond Holders said (Bullshit) since the day it was proposed because they were getting screwed and they are, so I don't blame them! One plan gets floated and then its in stone "This Way or No Way" from GM & TEAM OBAMA " AN ABSOLUTE TAKE IT OR LEAVE IT MENTALITY!


    If GM, UAW and Team Obama want this settled out of court then they need to NEGOTIATE a deal that is fair to all!

    CURRENT DEAL (Heade to BK Court)

    GOV = Trades $27B owed for 50% Equity Stake.
    BH = Trades $27B owed for 10% Equity Stake.
    UAW = Trades $20B owed for $10B in Cash and 39% Equity Stake

    You don't have to be a math major to see Bond Holders are getting SCREWED! While the Gov & UAW are getting SWEET HEART DEALS!


    GOV = Trades $27B owed for 42.75% Equity Stake.
    BH = Trades $27B owed for 42.75% Equity Stake.
    UAW = Trades $20B owed for $10B in Cash and a 13.5% Equity Stake.


    TEAM OBAMA NEEDS TO GET OFF PAYING Presidents Obama's political debts with BOND HOLDERS MONEY!

  44. bob


    Were you able to contact perella weinberg and tell them about your thinking on this issue?

    Who are you upset with? All of the bond holders agreed to the settlement. It sounds like you are upset that they agreed. You should be talking with them.

    I spoke with them earlier, they said for you sit by the phone, they want to talk with you, but didn’t know when they were going to be able to call. Just wait by the phone, I am sure they will call.

  45. Yves Smith


    To echo bob, you seem not to be up on what is going on.

    First, there appears to be a negotiated deal that may get aborted because some bondholders have more in CDS than they hold in bonds. They very well might have bought the CDS a long time ago, expecting GM to do worse, and then bought some bonds SOLELY to hold up the settlement and force bankruptcy. That appears to be the case with at least some of the Chrysler dissidents.

    And you are most certainly not articulating my position correctly. This is not about “saving” GM, this is about coming up with the best resolution of a bad situation. A GM liquidation is not the best answers, there are some viable operations in GM. A liquidation would lead to large scale job losses due to the damage to suppliers.

    You clearly have a pathological hatred of GM, which even in a worst case scenario. will cost the taxpayer far less than either the Citi or BoFA rescue. I fail to understand why you are so furious with GM.

  46. Jim T


    This is the last Post I will make trying to get you to understand reality. If you can't grasp it this last time, then I have to just CHALK YOU UP to you living in your own LITTLE FANTASY WORLD where it is completely JUST & FAIR for a President to circumvent law to reward his Supporters at the expense of other American Citizens!

    I asked you in an earlier post but you did not answer! Again just for the record!

    3.) OR BOTH?

    I'm just trying to figure you out and why you seem so driven to defend the UAW's Sweet Heart Deals and President Obama use of other peoples money to repay his own political debts?

    The Chrysler Bankruptcy!

    For the last time Bob, the VAST MAJORITY OF FUND MANAGERS THAT HELD SECURED BONDS, Did Not Settle Prior to forcing Chrysler into Bankruptcy! YOU KEEP INSISTING THEY DID! They Did Not!

    GET THIS BOB! If everybody agreed and settled before Bankruptcy as you claim. WHY DID CHRYSLER FILE FOR BANKRUPTCY?

    They settled in Bankruptcy, ONLY AFTER their effort to block the 363 sale to Fiat FAILED! Then they Settled, SO YES, they have all settled NOW, BUT NOT BECAUSE they were happy to do so, they had no other choice! (THEY WERE FORCED!)


    The GM battle isn't over yet! If GM, UAW and TEAM OBAMA don't get real and start negotiating a much better deal for the bond holders GM will be dragged into Bankruptcy too.

    But this time, GM, UAW & TEAN OBAMA just may find themselves on the losing END OF THE STICK!

  47. depresso

    :))) Yves resorts to ad hominem.

    Sure, it is “pathological” to expect that the rules of success and failure will apply to everyone equally, right?
    On the other hand, socialism, corruption and rule bending are OK if they result in the “best resolution of a bad situation” – where what’s best is arbitrary because nobody cares about rules of the market anymore. Only political favorites matter.

    Ok, let’s blame the greedy speculators and the free market and feel good about ourselves. Until we all find ourselves in USSA.

  48. Jim T

    Dear Yves,

    You are reading me totally wrong!

    I don't give two hoots about Chrysler, GM and or the UAW. They have done nothing to me and I wish them all well. They just happen to be part of this particular picture with their respective Bond Holders (Investors).

    What got my undies in a knot was TEAM OBAMA getting involved and them deciding that they could pay President Obama's Political Debt to the UAW by screwing their Bond Holders. I'm sorry, but I have a problem with that. I don't think TEAM OBAMA needs to be threatening any American Citizen for standing up for their rights! PERIOD!

    lIKE I SAID SEVERAL TIMES TODAY IN DIFFERENT POSTS. If President Obama wants to repay his political debts, he needs to do that with TAX PAYER MONEY! Why, because if the tax payers don't take kindly to him giving the UAW a Sweet Heart Deal with their money, they might just remember that at the next election.

    I'm sorry, I just don't see anything fair about the deal that saves Chrysler/UAW and or GM/UAW. I think the Bond Holder are being made the SCAPE GOAT AND THEY ARE GETTING SCREWED while the UAW gets a sweet heart deal on the bond holder tab.

    Then on the other hand, NO BANK BOND HOLDERS (because who they are "Foreign Sovereign Investors")will NOT be allowed to lose any money. Hence the TRILLIONS OF DOLLARS TEAM OBAMA has pissed into the Bank's coffers to keep them happy & propped up.

  49. Andrew Bissell

    I would actually be perfectly fine with the government refusing to pay out on GM CDS’s issued by firms on government life support, as a negotiating tactic. Absent government bailouts those CDS’s would have been worthless in the first place anyway.

  50. bob


    This is the problem, everyone is reading you completely wrong, because you are WRONG.

    I have just one question for you-

    Are you a chrysler bond holder?

    If you are not, you have no standing. You can have an opinion on the matter, and you can feel as strongly as you like, but that just makes you another asshole with an opinion.

    An opinion which is wrong.

    I am not defending anything, I am stating a fact.

    You have no standing in this matter. None. The people who did have standing gave it up with the settlement, you should to.

  51. Jim T

    depresso said…
    :))) Yves resorts to ad hominem.

    Sure, it is "pathological" to expect that the rules of success and failure will apply to everyone equally, right?
    Jim T said:

    Thank you Depresso!

    I was beginning to think FAIR & JUST teatment of all citizens had become public enemy #1.

    (Pathological hatred for GM) Where did she get that?

    By the end of this month there will be no GM. I think there is a hidden agenda behind the defence of GM. (UAW?, Pres OBAMA? maybe both?)

  52. bob


    ad hominem? When it walks like a duck, talks like a duck and sounds like a duck, its pretty safe to call it a duck.

    “On the other hand, socialism, corruption and rule bending are OK if they result in the “best resolution of a bad situation” – where what’s best is arbitrary because nobody cares about rules of the market anymore. Only political favorites matter.”

    Please enlighten us on the “rules of the market”. According your your line of thinking no rules are required for the magic of the free market to cure all.

    Who enforces those rules? You can’t have a rule without enforcement. Who pays for that enforcement?

  53. bob

    "I was beginning to think FAIR & JUST teatment of all citizens had become public enemy #1."

    Which citizen was being treated unfairly and when?

    In the case of a person being treated unfairly, only they have the right to defend and challenge that treatment.

    Or did they get paid, and leave you sitting here continuing to demonstrate your extreme ignorance and lack of mental capacity defend a line of thinking that they didn't even believe in to begin with?

  54. Yves Smith


    Since when is a well established practice, namely negotiating a settlement out of court “rule bending”? Hate to tell you, it’s done all the time. Talk to any bankruptcy lawyer or lender.

    And I similarly see how a negotiated settlement is “socialist”? Here the government is legitimately a party to the negotiations by virtue of having been a lender, yet you act as if they should have no role.It is now a question of whether in court or out of court resolution offers the best solution. I argued that the assumptions that many of the advocates of BK may be incorrect.

    You are really straining to make your point, and frankly, they don’t hold up.

  55. Jim T

    Bye Bob,

    (I warned you last time)

    This is the last Post I will make trying to get you to understand reality. If you can’t grasp it this last time, then I have to just CHALK YOU UP to you living in your own LITTLE FANTASY WORLD!

  56. bob

    “This is the last Post I will make trying to get you to understand reality.”

    DoES YoUR REALITY mandate RAndom Caps AND Terrible rEASoninG?

    I prefer mine thanks, although your ventures into apparent insanity do intrigue me.

    What are the rules to your kingdom, please elaborate…

  57. Jim T


    I have no hidden agendas. Plain and simple it is exactly as I’ve been saying all day long.

    1.) I have a problem with Team Obama making threats when someone doesn’t agree with them and other strong arm tactics they have employed.
    2.) I have a problem with Tean Obama using Bond Holders Money to repay Pres Obama’s political debts.
    3.) I have a problem with the lack of any negotiations trying to improve the bond holders deal. Instead its take it or leave it and if you don’t take it we will villainize you. Thats not negotiating!

    That’s it in a nut shell.

    Sorry if my wondering about your defence of GM was possibly something more. Maybe you could explain it in detail? Regardless of BK or no BK at the end of this month there will be “NO GM”.

  58. bob

    I have no hidden agendas. Plain and simple it is exactly as I’ve been saying all day long.

    1.) I have a problem with Team Obama making threats when someone doesn’t agree with them and other strong arm tactics they have employed.
    What threats? To release their names? That’s not a threat, and in any case you have no proof that there were any “threats” If there were, the bond holders can just walk away at any time and go into court. They chose to settle, that is their right.

    Should they not have been allowed to settle without talking with you first?
    2.) I have a problem with Tean Obama using Bond Holders Money to repay Pres Obama’s political debts.
    What money? How do you quantify ‘politcal debts’? Is that in dollar of neptune terms?

    The bond holders were in negotiations because there was NO MONEY.
    3.) I have a problem with the lack of any negotiations trying to improve the bond holders deal. Instead its take it or leave it and if you don’t take it we will villainize you. Thats not negotiating!
    So if I walk into a GM dealership and make an offer on a car and tell them to take it or leave it, I am being unfair?

    And, yes, it is negotiating.

    You are worried about the bond holders being vilianized? Don’t, they got paid. They always will, they have lots of lawyers that work for them.
    That’s it in a nut shell.

    Sorry if my wondering about your defence of GM was possibly something more. Maybe you could explain it in detail? Regardless of BK or no BK at the end of this month there will be “NO GM”.

    And now you are a prophet, telling us the future.

    What about next month? What are your predictions for 2020?

  59. bob


    Your entire argument seems to be based on the writing of Faux news.

    Fair and balanced, helping to defend the hedge funds.

    The “story” is at best editorial, and more accurately a complete propaganda piece written by the “hedge funds” as part of the bargaining process that you claim did not exist.

    There is no basis in fact for you line of reasoning, and no reason in your supposed facts.

    I still want to hear your predictions for 2020, just don’t try to pass off more fox news crap.

  60. Erick

    a negotiated settlement is “socialist”? Here the government is legitimately a party to the negotiations by virtue of having been a lender, yet you act as if they should have no role.What are the goals of the Obama’s negotiated settlement? Ostensibly, Obama claims to represent me. I do not immediately see why using my taxes to give UAW 50c on the dollar and nearly 40% of the company is in my best interest.

    this is about coming up with the best resolution of a bad situationI can see how this is the best resolution for the administration and UAW. I can also see how it might be the best resolution for bondholders too.

    How is this a good resolution for you, me, and the 300 million other taxpayers making this possible?

    I do not understand why I am interested in the government taxing me and/or plunging me further into debt in order to providing GM, UAW and large banks with subsidized financing. This seems to exacerbate the debt-based problems Elizabeth Warren articulates so well…

    I have no interest in bailing out the bankers and UAW leadership managing insolvent pension programs. I do not see how this is different from the crony-capitalism so visible with AIG, PPIP, TARP and everything else in the past year…

    I can understand an argument that people rely on these pension programs. I’m not being asked to help those people directly. I’m being asked to bail out people who managed that company and its pension programs into insolvency.

    Why do I want that?

    I’d much rather stay uninvolved. Liquidate all of the debt. My next car will cost far less. It will be a better car, probably made somewhere else in the United States.

    I am okay with that.

  61. bob


    I don’t think anyone would disagree with your points.

    Its still a straw man argument. The government ALREADY backstops those pension plans, and already extended money to the auto companies.

    It would be nice if they never got involved in the first place. They did, under past administrations. Now they have to figure out how best to continue, at the least cost to them, or wind down.

    Forcing a liquidation is not in anyone’s interest, especially the government who is going to have to fill any holes in the pension funds, and the balance sheet of the banks holding those bonds.

    You can’t just stick your head in the sand, this is the reality of the situation, the checks have already been written.

  62. Erick

    It sounds like you are saying that the pension plans and auto companies only still exist today because of government backstops.

    If this is the case, why are bondholders and UAW entitled to anything, much less billions of dollars and nearly a majority of the new company?

    It seems like subsidizing the pensions and banks will happen regardless. Therefore I do not understand why liquidation runs against my or your interest.

  63. bob

    First of all liquidation of what? You said debt in your other post. You don’t liquidate debt, you liquidate assets.

    There are assets that are worth some money to someone. They are worth the most to an auto company. They are worth a lot less as scrap metal to be hauled away and melted.

    People still buy cars. They will probably still buy car for a while.

    The majority of the money made on a car is made on the parts, fixing that car. No GM means no parts and no dealership network to do the work.

    This also kills a whole other industry group that supplies the parts. If your only customer is GM, and GM is gone, who do you sell to?

    No one is talking about giving GM any more money, at least now. They are talking about who is going to lose money, and in what order they are going to lose it.

    And the subsidization of the banks has and is taking place. The subsidization of the pension plans hasn’t yet happened, and only needs to happen if they stop making cars, and/or if the UAW gets pushed to the back of the line in BK court. The administration is trying to keep them at the front of the line, it seems.

    I don’t like it, but it doesn’t cost us as much as stopping everything and then having to take care of all of the UAW retirees for the next 40 years….

    That is just the pensions. The health care has always been the biggest cost, a cost which the feds and the states would share 50/50 in medicare.

    This would all be done so that the bond holders, who lent GM the money knowing about the pension/medical liabilities, could get 40 instead of 30 cents on the dollar.

  64. Jim T

    Yves & Bob

    Below is an excerpt from a story ran 12 May in Mish's Global Economic Trends, Titled "1000 GM Dealerships Forced Out May 15; Executives Dump Shares; Restucturing May Fail" link provided at the end.

    Please read 4th paragraph of the excerpt below very carefully. Where it reports what Edward Altman, a professor of finance at the Stern School of Business at New York University, thinks of the treatment of Chrysler's and GM's credit holders. It appears that I am not the only one that thinks they got screwed!
    General Motors Corp. will “absolutely” seek bankruptcy and its reorganization plan could fail if the automaker emerges too quickly from court protection, said Edward Altman, a professor of finance at the Stern School of Business at New York University.

    “Yes they can come out in 30 to 60 days but I think that would be a mistake,” Altman said today in an interview on Bloomberg Radio. “They’re going to be coming out in the teeth of a severe recession. They probably will not have plugged all the holes necessary. And the very viability of the plan is, in my opinion, still up for grabs.”

    Altman, creator of the Z-Score formula that calculates a company’s probability of bankruptcy, also said “they still come up very seriously in the Z score test into the bankrupt zone” after a 30- to 60-day reorganization.

    In a separate interview today on Bloomberg Television, Altman the government is treating debt holders of Chrysler and General Motors unfairly. “They’re taking a hard line with respect to the creditors and they’re forcing them to take, in their eyes, a very poor deal,” Altman said.

  65. Jim T

    Well I’m not too fussed about regulations for any company that has had to take Government handouts of any kind (TARP, TALF. etc….) during this crisis, but that is absolutely where the line gets drawn.

    Going beyond that “Comrade” is getting a little TOO BIG BROTHER / TOO BIG GOVERNMENT for me.

    I wish we could wake up from this nightmare now, before TEAM OBAMA completely exploits this crisis to turn our once great nation into a socialist disaster!

    And as if you needed any more reasons to hate the idea of this HUGE GOVERNMENT INTERVENTION into private enterprise, House Financial Services Committee Chairman Barney Frank (D., Mass.) would have HIS STENCH ALL OVER IT TOO.


  66. bob


    Give up what freedom? The freedom to have my tax dollars used to fund pension and healthcare benefits for the UAW that should have been paid for already by the management at GM/chryler?

    You don’t understand what you are arguing for, and all of the seats at this table, there are more than two sides in this story.

    Stop believing your own BS for a just long enough to consider another opinion.

    Having the UAW own such a large share of the continuing business of the auto companies is a very good thing, especially for a union hater like you.

    Do you really think they are going to strike when they have such a large stake in GM or chrysler?

    Do you think that maybe the bondholders settled for a smaller piece of the equity because they realize this?

    Think UPS, look into them.

  67. Yves Smith

    Jim T,

    Think Germany. Germany exports more than any country in the world, with a much smaller population, and tough unions. Union members are well paid and have board representation.

    The Germans I know, wealthy investors and business owners, are happy with the system.

    I have some high school dropouts as friends. They are far more intellectually curious and better read than you are. It’s one thing to be uneducated, it’s another to be willfully ignorant. You are obviously angry and resentful, which does not endear anyone to what you are saying.

    As for the debtholders, their interest has been paid by the government since the rescues last last year. Had the companies gone BK then with no government intervention, they would have liquidated. There was no DIP financing so Chapter 11 would be impossible. And the credit markets were in worse shape then too. It isn’t clear what if any brands could be salvaged under that scenario. Without DIP, all operations would cease immediately and the factories would be mothballed. That (particularly the impact on the dealer network and the brands) would have made the various brands less valuable to buyers.

    The bondholders would have done worse. For them to complain that they are getting a raw deal when they would have gotten less without intervention shows how presumptuous they are. They are acting like this is a normal negotiation when considerable value has been preserved by not letting the companies default last year.

  68. Jim T


    I get it! You really, really want to save Chrysler, GM and the UAW and it is perfectly fine with you that it comes at the expense of the bond holders.

    My last Post to you gave you someone other than me saying the very samething, Edward Altman, a professor of finance at the Stern School of Business at New York University. But with your determination to only see it your way that meant nothing to you.

    I think at this point we just need to agree that you and I disagree on this issue.

    I must say that it has been very eye opening (sometimes disturbing) debating with liberals. To disagree with a liberal, you are called names, accused of being angry, ingnorant, and a hater of institutions (GM & UAW) that you don't hate at all. (By the way my mother was a Shop Stewart for the Retail Works Union in San Francisco the last 10 years that she was in the work force)

    Ta-ta until we bump heads on the next issue!

Comments are closed.