New Op-ed at Fox News: Auto Bailout a Bad Investment
My newest piece for Fox News
starts this way:
General Motors’ bonds are currently yielding a whopping 56 percent. But, with the interest rate on U.S. government bonds paying close to 0%, are people rushing out to buy these General Motors’ bonds? Do people really think that this is a great way to make a killing? Hardly.
General Motors’ high interest rate means one thing: investors who have their money on the line don’t believe that these bonds will get paid off. In fact, this interest rate is so high that investors don’t even believe that General Motors will make it to Christmas two years from now without declaring bankruptcy -- a bankruptcy where bondholders would get little or nothing back.
The extraordinarily high interest rate shows that a bailout obviously won’t fixed the problem. . . .
Labels: Economics, op-ed