[jyl]

Circuit City (CC), which filed bankruptcy today, is trading at either 10 cents or 2 cents per share, depending on which quotes to believe. For all practical purposes, the equity is worthless.

Anyone in GM stock is presumably nervously watching the CC chart.

I've railed against bailing out GM. But regardless of what I think, it seems GM is very likely to get emergency govt loans. Both candidates said they would deliver aid to Detroit, Obama is clearly going to carry out those campaign statements, and Bush looks like he may do it even before the new Administration take over. Why? Besides the obvious political stakes, the economy has already lost 1.2MM jobs in 2008 year to date (600K of that in the last 3 months), and is likely to lose another 1.0MM+ in 2009. The Big Three employ something like 200K directly (250K in 2005 and I am guessing 50K shed since then) and the Big Three's suppliers employ something like 700K (850K in 2005 and I'm guessing 150K shed since then). So that's nearly 1.0MM additional job losses at stake. Today's headlines claim that a total collapse of Detroit automaking could theoretically cost another 2.9MM jobs in the US - that sounds like a worst-case estimate that includes follow-on effects. Either way, no President is going to risk ballooning the 2009 job losses to 2.0MM+, and sending the unemployment rate to over 8%. And presumably someone is looking at the math on unemployment benefits (assuming $300/week unemployment benefit, 1MM out of work means $1.3BN/mo of unemployment benefit payments) and lost tax revenues if Detroit goes away. So, I'd guess GM is going to get its loans.

However, what will be the pound of flesh extracted? That might be an interesting question to ask here.

Assume the govt gives GM $25BN in emergency loans. What would you like to see the govt demand in return? Financial conditions and/or govt stake, management changes and/or compensation, business actions, other?