No. of Recommendations: 0
It will force them to acquire the capital they need to be safe, either in the stock market or from the government. This is bad for stock holders, but good for bondholders.

Wendy,

I have no way of knowing for sure but the government action in the Chrysler case leads me to doubt that the bond holders would be guaranteed by the government.

It looks like that in that case the bondholders are being forced to the back of the list and are being demonized as greedy by not accepting the Government proposed deal.

Whats to keep the govt from insisting on default as a condition for providing more capital?

I do not write this as a political question, I just want to know what risk comes with government backing in the current political climate.

OxBeaux
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.