It's likely we'll have news about General Motor's (NYSE:GM) ongoing operations before the end of the week. While the company's stock has dipped into the $1 range, the company's mismanagement over the years may have finally driven it into the ground.
As General Motors (GM) teeters on the edge of bankruptcy, there are issues at play that are unique in today's market, and bring to the forefront some somewhat unknown financial instruments that are causing some bond-holders to root for the auto-maker to go belly up. The instrument we speak of are credit default swaps.
Credit default swaps are, for all intents and purposes, simply insurance contracts for bond holders. However, to really understand these relatively new financial instruments—after all, they were only created in the late 1990s by folks at JPMorgan Chase—you have to start from the beginning and take a look at how companies and corporations raise capital.
Essential Reading for Traders
Here is a selection of articles every successful investor should read and understand:
