Fair and accurate.

The latter, unfortunately. I'd say that GM is basically a government-controlled company at this point. Apparently they are also planning on replacing the majority of the board with government nominees at the next annual meeting.

I thought he quit?

You guys are misreading the situation. The bondholders are a far bigger problem than the unions, and a credible threat of bankruptcy may be the only thing that's going to bring them to the table in a serious way. That said, if the bondholders are adequately covered by CDS's, they may prefer a full on bankruptcy to a pre-pack which may not trigger CDS payouts.

I'd say the administration has played a horrible hand pretty well so far by essentially sacrificing Chrysler and providing GM the best chance possible for a meaningful restructuring of its obligations.

Why would the bondholders negotiate at all if they're hedged? If I'm a hedged bondholder I'm rooting for bankruptcy- getting paid in full now is the best possible outcome.

We all need to make sacrifices to preserve one of the most reviled brands in American corporate history. It's the patriotic thing to do.

Also, if I'm hedged, the last thing I would EVER do is swap my debt for equity, unless such a swap constitutes a default so my CDS payment is triggered (which I think depends on the terms of the CDS contract).

Better late than never I guess.

LOL not according to Obama, they aren't running it they are just determining what business plans are viable along with which employees are acceptable... (insert facepalm here)

I don't have the ISDA Credit Definitions (standard CDS docs) in front of me, but the "bankruptcy" credit event is defined relatively broadly. If by "pre-pack" you mean anything that involves filing a petition under the bankruptcy code, even if it's a filing combined with a plan for a "quick rinse" (code, roughly, for "get rid of the unions?), it should be a credit event.

Less clear to me, and interesting if anyone knows anything about it, is an exchange offer. I believe that North American investment grade names normally trade with "Mod R" (a version of the restructuring credit event). I don't recall the definition of Mod R well enough to know whether a big exchange would be a credit event. No idea what market convention is for names like GM that once were better credits than they are now. (Sigh.)

Clearly right, though, that bondholders are an obstacle to a successful restructuring.

If it takes a punch in the gut to get our heads straight I'd be happy.

qf "inevitable bustaments"

Russian Auto Bailout Protects Jobs, Not Efficiency

Hilarious and depressing article about auto bailouts in Russia. How anyone can support continuing to give GM and friends money is beyond me at this point, it is incredibly stupid.

If they didn't bail these failing companies out, market forces would bankrupt the business model of selling inefficient SUVs on aggressive financing, put incompetent management who couldn't answer simple questions in a hearing out several months ago, and give someone the opportunity to start a new, better car company that makes more efficient cars (after all that is apparently what people want these days) and replace them. Obama says he wants fuel efficient cars but he is preventing it from happening. It is NOT a better alternative to keep these workers employed in crappy jobs, that is just delaying the problem into a bigger one.

I LOL'd

QFLOL

How long after the 15th are these being delivered?

http://www.cnn.com/2009/POLITICS/04/...nt.auto.fleet/

So we're spending $285 million to save around $3-4 million on gas costs. I there another reason we need all these new cars?

didn't you hear? Keynes in, logic out.

No worries, the service life on these fine examples of US engineering is easily 100 years, right?

We would have bought them anyway. The government owns tens (hundreds?) of thousands of cars. This is likely as much about PR as a change in spending priorities.

OMG! I cannot even believe how stupidly my government is spending my money right now.

PR directed at who?

The auto industry and those who care about it. They want the government to help Detroit and this a way govt can help and get something out of it.

Since the gov't is incredibly inefficient at pretty much everything we shouldn't worry about this one little minor thing.

FWIW, I think private companies in America are incredibly inefficient too. In theory the problem should self-correct via shareholders and boards, but that doesn't happen (thanks in no small part to bailout fever).

Actually I thought Prez Obama was touting the fact that the vehicles got better gas mileage than the vehicles being replaced.

former house-rich/paper-rich suburbanite soccer moms with too much time on their hands.