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Who Stands To Lose The Most From GM's Bankruptcy?
by
Edward Niedermeyer
(IC: employee)
Published: May 20th, 2009
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GM’s secured bondholders may not be getting the Chrysler treatment, but anyone still holding onto GM stock has another thing coming. US News & World Report has compiled a list of the 30 investors who stand to lose the most from the GM bankruptcy. They’re all big, evil banks and investment firms (California’s public retiree system being the big exception), so don’t expect anyone to shed a tear for them. Unless of course one of them happens to manage your retirement. Meanwhile, GM stock is still going up. Huh?
Edward Niedermeyer
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Published May 20th, 2009 12:57 PM
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Attacking banks and investment firms can only go so far politically. The past 40 years have seen an explosive growth of the "investor class" to include a large chunk of regular Americans, not just wealthy white shoe bankers. Class warfare only works until the bulk of Americans who are in the middle realize that they share interests with those investment firms and that their own assets and wealth are at risk.
I am completely befuddeled about why GM's stock still has any market value. Can it be because it is still part of the DJIA and S&P100? One reason not to own an index fund is that they are required to own zombie stocks until the index manager finally pulls the company off the list. Why does Rupert Murdoch's Dow Jones company keep GM in the Dow Jones Industrial Index?
[...] Read the rest here: Who Stands To Lose The Most From GM’s Bankruptcy? [...]
GM stock is trading on a "Geithner Put": What is the probability that in the bankrupcy a) The stock is not diluted to 0 and b) Post bankrupcy, there is a significant recovery. EG, if there is even just a 10% chance of GM's bankrupcy and the resulting diluted stock being worth $10, the share should be valued at $1. Since its the believers who define the price, the price does make some sense.