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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Hawk who wrote (80280)	7/1/2008 8:48:22 PM
From: Real Man	Read Replies (1) \| Respond to of 94695

It's in part a manifestation of CDS blowing up. Credit derivatives blow up for their own reasons (leverage upon leverage in reverse creates more selling), folks assume the credit market is pricing BK, then short the stock. This creates fireworks like one we've seen in GM today when the shorts cover. I think GM had 30% of the float sold short - before today, that is -g- I also think due to "leverage upon leverage", the credit market may drastically overestimate the real chances of bankruptcy, just like it underestimated the risk of subprime default on the way up (due to the same CDS). GM and F, in particular, perhaps, don't have the risk of an immediate bankruptcy, but there is that risk some time down the road if their profits continue to go down the drain. Folks, however, act on models. -g-