Point for discussion. The GIC deal is converted preferred securities - ie share I suppose rather then bonds , so it rank one notch above ordinary share but behind all debt / bonds. So where the fuck is the downside protection that GIC claimed. Share price has came down from $30 to $3 these instrument are virtually worthless if the bailout fail. If it does succeed, equity price got to raise above $30 + 20% (conversion premium) before ots worth something . i think GIC lugi BIG TIME.. US$6.2B
Whether the bailout by the US government will work or last remains to be seen, as the amount of toxic assets will continue to increase as there is more foreclosures due to job losses in the US and the resetting of the ARM interest for the home loans made out. Understand the majority of the loans will reset only next year, this is only just the beginning.
As for the equity price, as it is being said, it is for the long term, whether if the is 5 years, 10 years or even 25 years would remain.
There is always the opportunity cost to think about.
