Government Motors

by Larry Levin

Are they or aren't they going into bankruptcy? Before President Obama was on TV again today (is that every day since election?) the word was that the government had had enough: no more cash for GM. However, when the President commented on the situation, he gave GM more time to fail and a promise of more of your tax dollars, clearly making it Government Motors. Without Uncle Sugar's handouts, GM is toast.

Do you remember when the automakers were given a huge pile of cash and told to come back at the end of March "OR ELSE?" Well, it's the end of March, the so-called plans have been submitted which apparently suck even by government standards, and there is no "or else." In fact, President Obama will be giving BOTH companies even many more billions upon billions of dollars.

The White House has effectively ordered Chrysler to merge with Fiat. One has to wonder: what did Fiat do to deserve such a horrible fate? If Chrysler merges with Fiat within 30-days, President Obama says he'll shake his magic money tree behind the White House and give it another $6 billion. Why hasn't the US dollar crashed and burned into smoldering ash yet?

The White House has also effectively ordered the CEO of GM to resign - as if that will make us feel warm and cozy inside. How'd that work out for AIG after its CEO was forced to resign?

Why wasn't Gettlefinger of the UAW shown the door along with Ken Lewis of Bank of America?

Government Motors has been given 60-days to come up with ANOTHER restructuring plan, hopefully one that is minimally better than the one recently submitted. Obama said the carmakers should use this time to work with creditors, unions and other stakeholders to restructure in a way that would justify them getting more U.S. taxpayer money. However, what Obama and every idiot Congress fail to recognize is that when government gets involved, there is little incentive for the aforementioned parties to give in. After all, Uncle Sugar is a phone call away.

You didn't really think GM would have a viable plan did you? You didn't really think the UAW would roll over and consent to draconian concessions did you? You didn't really think bondholders would consent to draconian concessions as well, did you? No sir, only the bankruptcy court can do all of that but the government just won't let it happen.

Why is that? It may be another form of bank bailouts little known to the public. There are roughly $1-TRILLION of CDS contracts in the market that would go BOOM if GM filed to reorganize under the bankruptcy protection laws. GM bonds would be nearly worthless, thus triggering the pay out of the "credit default swaps" (CDS). And who sold a great deal of those CDS contracts? Surely the s#!*-for-brains super stars at AIG sold a bunch - but so did the idiots at Shitibank, Bank of America, Goldman Sachs, and the others.

So if GM files bankruptcy, $1-TRILLION of bets must be paid off by the banks...err, ah, I meant by YOU!

Here's an idea: force the repayment of the CDS premiums to those who sold them and call the contracts null and void - then let GM restructure in bankruptcy.


Previous Day's Trading Room Results:

Trade Date: 3/30/09

E-Mini S&P Trades*
(before fees and commissions):


1) OTF buy @ 12:00pm at 783.00 = -1.00 (1 lot)

2) Algorithm positions (4)...combined Secret's and Algo total...-1.00


Electronic (YM) Mini-Dow:

1) Sell @ 9:10am at 7,500 = +20, +43 (2 lot)

2) Sell @ 11:10am at 7,450 = +10 (1 lot)

3) Sell @ 2:20pm at 7,440 = +15, +52 (2 lot)...+$700.00 net



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