So it’s the “throw stuff at the wall and see what sticks” philosophy to predictions. I’m down with that, everybody’s done it.

If you make enough predictions, some of them are bound to come true.

an 84 percent chance of default, while Ford Motor Co. has at least a 75 percent risk, according to UniCredit data. Combined with Chrysler LLC, the probability that one of the three will be unable to fund its business is more than 95 percent.

They don’t give the Chrysler data, so I can’t be sure, but they probably suck at math.

If you have two independent events, each with a 50% chance of happening, it’s true that there’s a 75% chance of at least one of them happening.

However, Ford and GM and Chrysler going bankrupt are not independent events. There are lots of ways that all three of them could go down, or all three of them could stay afloat, since they tend to have the same advantages, the same problems, and the same management techniques.

The fear of the banks is that they are so far in over their heads with these loans that in bankrupcy they may go down with the auto company they are taking down.

It’s called being a large creditor and owning the bank. When your banker fears you may catch cold, he hands you a kleenex not a forclosure notice. When he has to tell the World he signed and packaged all of that worthless paper he is hisory along with the auto execs.

So not to worry, the banks must keep playing along.

It might be forgotten, that the collateral is all of these wonderful plants that make unwanted cars and trucks. These assets are worth a lot less in a smaller car market. In other words, if these mortgaged plants aren’t needed again to ever make vehicles they are now worth just real estate value.

I don’t have to see the papers to know that the banks put in far more than the basic real estate value. They valued platinum brands like Buick, pontiac, saturn, GMC. Plus it probably says in the loan docs that GM for instance is the Worlds largest car mfg with 27% of the US car market. Should these bankers be worried?

The only thing I see about prodictions is this, is that when the time comes there is a 95% change they are always wrong. And if its an estimated guess on how long they will last, then there is always that chance the company will still make it out of there.

What they don’t say is that it is a probability guesstimate assuming that nothing changes – like alternative fuels, end of the credit crunch, GM getting a BoD who can do their job, Fords Eurocars being successful (and profitable)…….

Of course the double tradegy is that the guys at the top of GM & Ford believe the same as Wall St (same MBO colleges), predictability is everything – no suprises.

And remember, there are more than two options here. One option, no defaults, bonds get paid, Big Three continue as going concerns. Another option, default and CH11. Third option, bond holders agree to a haircut to avoid C11, expecially if congress gives them some incentive (tax or otherwise) to do so. My bet is on third option for Ford/GM, Chrysler is toast and will be sold off before the end of next year.

Not exactly an edgy prediction from ol’ UniCredit SpA.

No one can say where oil will be priced in the next week, but they got the % of likelyhood that “one” of the big guys will buckle. In five years.

Damn. That’s risky.