The Big Three Bailout is Old News
Sep 13th, 2008 | By Charles Delvalle | Category: Stock Market InvestingAfter this past weekend’s big bailout of Freddie and Fannie, investors are wondering if the big three are next. Sorry to tell you, but they’ve already been bailed out. It happened without much fanfare last December, when Congress approved a $25 billion loan package for the big three (about $8.3 billion per automaker).
This loan was passed in part to help spur the development of fuel-efficient engines, designs, and technologies.
To put this into context, the government bailout of Chrysler of 1979 - 1980 was a $1.5 billion package. Even worse, the big three are lobbying the government to double this bailout to $50 billion.
While a bailout is never good news, it does give the big three more than enough capital to keep operating past 2010. With the lowered default risk, GM (GM) and Ford (F) bonds are a great (and safe) proposition.
You could get into GM or Ford bonds maturing in 2010 at a great discount to par (and interest payments in excess of seven percent). To find them, simply go to the Yahoo screener here and enter your criteria.
Source: The Big Three Bailout is Old News
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Charles Delvalle is a self-taught market-timing professional and value analyst who uses a combination of technical indicators and fundamental research to achieve consistent gains on stocks, commodities and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering great companies on the cheap. He questions government reports and the status quo. In addition to swing trading options, Charles is also Co-Editor of the monthly advisory service - INCOME.
