After 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 and Ford 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.
By Charles Delvalle
Posted 12 Sep 2008
For more investment ideas visit www.myinvestmentadvice.info
Disclaimer...The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.
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