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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: patron_anejo_por_favor who wrote (43310)10/12/2005 10:43:09 AM
From: Wyätt Gwyön  Read Replies (1) of 110194
 
if you look at GM capital structure, the market cap is just a wahfair theen meent on top of a gigantic dogpile of obligations. those obligations aren't going away and they don't care what some old guy with a bouffant hairdo does in the equity market. these are not just pension liabilities, which until fairly recently GM was underestimating as it assumed a 10% long-term return on its pension fund (LOL!). also GM has huge medical liabilities (which, in the past at least, it also underestimated as it assumed slow inflation of medical expenses, double-LOL!) for existing employees and in OPEB. the stakeholders in pension and OPEB may have an interest in keeping GM a going concern, but that could be in the context of a workout where equity holders are SOL. on top of that, their cars suck -g-.
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