automotive bankruptcies and systemic risk

Discussion in 'Trading' started by zmodp, Apr 3, 2009.

  1. zmodp


    Hello All,

    What do you think the systemic risk to the stock market might be given a string of automotive bankruptcies that could be just around the corner?

    And, I don't mean just Chrysler and GM, which seem to be inevitable at this point.

    I am talking numerous automotive suppliers that are currently hanging on a thin financial thread and will most probably file for bankruptcy (to liquidate) this year.

    The banks will not even touch this stuff for potential DIP financing with respect to restructuring, which seems to be the market pundits underlying assumption for a turnaround.

    Do you think this scenario is already priced into the stock market in general?

    -what's your take?
  2. It will make synthetic CDOs have to have a portion paid back. This might have a big effect on the market. It's actually a good thing for the banks, bad for the charities, municipalities, etc, that bought them.