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To: Think4Yourself who wrote (197273)	4/21/2009 6:22:12 AM
From: Travis_Bickle	Respond to of 306849

Last I saw CDS for GM cost .85 so it doesn't do much good for people buying them now ... if you bought the CDS back when GM bonds were deemed worthy it was a lot cheaper but you also paid a lot more for your bond. I imagine when the bonds default they will be subrogated Subrogation is the legal technique under the common law by which one party, commonly an insurer (I-X) of another party (X), steps into X's shoes, so as to have the benefit of X's rights and remedies against a third party such as a defendant (D). en.wikipedia.org to AIG. So I buy a bond today for .10, I pay AIG .85 for the CDS ... down the road AIG has to pay me $1 so I made .05 on the deal (before being discounted for time value of money). AIG is out .15 but they may recover enough on the defaulted bond to make them whole, and they earned a little on the float.