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June 1st, 2009
09:19 AM ET

Bondholder furious over GM bankruptcy

[cnn-photo-caption image= caption="GM bondholder Debra June speaks to CNN's John Roberts."]

General Motors turns to bankruptcy today in the hopes of finding a new start. The move comes after a majority of those holding $27 billion in GM bonds agreed to swap that debt for a stake in the new General Motors.

Debra June is a small bondholder who six years ago invested $70,000 in GM bonds. She predicts that investment is now worth less than $200. She spoke to John Roberts on CNN’s “American Morning” Monday.

John Roberts: You invested $70,000 in GM bonds some six years ago. As a result of this deal, that is going to be converted to equity shares. What's that investment worth now?

Debra June: Well, what happened, John, I got this booklet at the original thing. This is a 200-page booklet and they sent this in the mail and the offering was two shares of stock for every $1,000. That's 140 shares of stock. They said originally in the booklet it was going to be 225 shares, but as you kept reading the booklet it said they were going to convert that to 101 reverse-split, which would be two shares of stock. $70,000 for 140 shares of stock.

There was no way I was going to take the deal. Then they came out and they sweetened the deal. And I tried to contact General Motors. I left a message with the people I called up. I talked to the people on the phone. I e-mailed two e-mails, “Please let me know what the deal is.” I'm with GM Bondholders Unite, the 60-plus group and also the Main Street Bondholders. What they're doing to the people is ridiculous. It's horrible. You're wiping out common people that saved money. I'm not a corporation.

Roberts: No, you're a school teacher, we should point out. So $70,000 is a huge amount of money to you.

June: It is. It is. And it's a shame. I mean what they're doing, they're saying 10% and this and that. I don't know what they're doing. People out there have saved their money. We've done the right thing. I pay my bills and here all of a sudden, they want to give me two shares. 140 shares of stock.

Roberts: And that stock, all in total is worth about what, $200?

June: I believe so right now.

Roberts: Maybe less than that.

June: Even less. When they regroup, even if the stock was $10. That's unbelievable. I mean I can't imagine someone doing something like that.

Roberts: So Debra, what was your reaction when you heard General Motors was going to go into bankruptcy? You said you resisted this plan, you didn't agree with this. The major bondholders were the ones who said go ahead and do this debt for equity swap. What did you think when you heard they were going into bankruptcy and that was the deal?

June: Well, I'm in shock. When I bought into GM, I thought it's a safe thing. I bought six years ago. I always thought it was safe even when the government came in. I was so excited, I said "Well they’re going to take over." But Obama’s task force, these people came in, they didn't negotiate. We had no say. The private investor had no say in the matter. They dealt with the big corporations. Obama is for the people, he said. How can you be for the people? How can he do this?

Roberts: So do you blame the task force? Do you blame the company, the unions? Who do you blame for getting in this situation?

June: I blame, originally, GM, for letting it go like this. It's like Bernie Madoff was their bookkeeper. It's ridiculous, but also for the task force to come in and not let anyone from the main sector, just a representative to go in there and try to negotiate. They never let us do that. I would have given...I'm not joking on this, I would have said to GM, "Here don't give me any interest, just take that." That would help them immensely… I mean to send this booklet out, the task force actually did this?

Roberts: So do you have any hope of recouping your investment? If this company gets lean and mean and agile, do you have any hope you can recoup that $70,000 and beyond that if the price of the stock goes up?

June: Nothing. Right now, I'm not even in on the new deal, the sweetened deal, I couldn't even get in on it. And that's - and it's in the paper. They didn't care about the people. It's in the paper.

Roberts: So you really feel robbed, do you?

June: I feel robbed. I know that there's an attorney out there for the GM bondholders Unite. That’s the gentleman Thomas Lauria and he's supposed to represent the small people. I hope and pray the judge, whoever gets this, is going to say “Wait, this isn’t right what's happening to the people, it's not right what's happening to the workers.” The dealerships are going to close. It's going to be a trickle down effect but they're taking income from me and thousands and thousands of other people who are in worse shape than I am and it's not right.

Roberts: We'll keep following this and maybe we can stay in touch with you and keep checking back.

June: Please, please people out there – contact your congressman. Do something. Say it's not right. I remember Michelle Obama said she was not proud of her country until her husband was in office. I'm a school teacher. If I was teaching her children, would she say she was proud that this is happening to a common person like myself? I mean you can't, you can't do it.

Filed under: Business
soundoff (700 Responses)
  1. California Bear

    Completely misquoting Michelle and investing so many "eggs" in one basket show equivalent levels of intelligence.

    June 1, 2009 at 1:01 pm |
  2. susan

    Americans really need to take an accounting class.

    Rule number one in a bankruptcy is the debtors get paid first. IF THERE IS ANY LEFT, IT GOES TO THE PREFERRED STOCK HOLDERS FIRST. Then the common. Bonds are a liability on the books until paid. They can be pushed to the bottom of the pile.

    Obama has done nothing that economics majors who have had lots of accounting classes don't know already. I think all high school students should take a mandatory risk and investment course, and learn what bankruptcy really is.

    Also, Honda and Toyota do not pay any taxes for police, fire, or aany local sercvices or schools for the communities they are in. The don't pay a dime for any of that. That's how the government of the US set them up when they first came over here.

    GM and CHRYSLER paid billlions in local taxes they are trying to get wiped out, and with bankruptcy they can. This means everyones taxes wlll go up. I learned this in high school civics class.

    It's going to take America a little while to figure out this is why a lot of their services they have come to rely on have and will be cut.

    June 1, 2009 at 1:01 pm |
  3. ceasar

    Lady, You invested in bonds which like stocks are investments with no guarantees....investing is like gambling... you throw your money down and hope for the sucks I know...but get over made a bad bet.

    June 1, 2009 at 1:01 pm |
  4. Colt I


    WOW, why can't people understand this, Wall Street, Banks, they are all an investment! I have no sympathy for people who invest, then when something goes wrong, they start crying and want their money back...

    "Never put all your eggs in one basket..."

    June 1, 2009 at 1:01 pm |
  5. Eric

    Well put Robert Johnson....These were bonds, not stock...big difference there. When someone buys a bond it is considered safe and less risky, pending it is not a junk bond. This lady has every right to be upset and feel robbed with what has happened. Of course, most Americans that are hard working, pay their bills on time, and live the right way should feel robbed. There are no programs out there for those of us that played our cards right....we have to pay for everyone elses mistakes and suffer the consequences of high taxes, high gas prices, and deadbeats getting let off the hook with our tax money!!!!

    June 1, 2009 at 1:00 pm |
  6. Kevin

    What a big cry-baby! I'm totally embarrased and ashamed she is a US citizen! Here's a tissue to wipe your tears with. Welcome to the wonderful world of RISK! Next time take your money and stick in your mattress and then you won't have to worry about it being worth zilch!

    June 1, 2009 at 1:00 pm |
  7. Tarheel

    I feel for these individual bond investors. Thay made what was supposed to be an informed decision. They were told that the bonds were backed by GM's assets. Then President Obama changed the rules. The reason was political. The Unions have more votes than these private investors. I give Obama credit. He is a very skillfull Chicago politician. Knowing that He has changed the rules should make other people very hesitant about investing in anything, no matter how safe it might seem.

    June 1, 2009 at 1:00 pm |
  8. Lynn Anderson

    This is what Michelle Obama said:

    "for the first time in my adult life I am proud of my country because it feels like hope is finally making a comeback."

    Then she said in another city, "For the first time in my adult lifetime, I'm really proud of my country, and not just because Barack has done well, but because I think people are hungry for change."

    There is not doubt about it. The American investor has been screwed by this bankruptcy. NO HOPE HERE. The American worker has been screwed with the lay-offs, plant closings and outsourcing. It is a very sad day and even more sad when government can protect these loser corporations and not the ordinary citizen. The government is no different than Bernie Madoff.

    June 1, 2009 at 1:00 pm |
  9. California Bear

    Completely misquoting Michelle and investing

    June 1, 2009 at 12:59 pm |
  10. Annie

    Sounds to me like the educator needs to be educated as to how the stock market & ownership in public corporations work. I cannot stand this sense of entitlement and blaming others. If you don't want to or can't afford to lose any money – DO NOT INVEST IN THE STOCK MARKET!!

    June 1, 2009 at 12:59 pm |
  11. Mike

    Couple things to think about BOND HOLDERS ARE NOT FIRST, secured debt holders are (the banks that have issued lines of credit and secured loans to GM). GM s bankrupt because the amount of secured debt is greater then the assets they have on hand.

    If the bankruptcy went full normal route, she would have gotten less then the equity she will now have. The only reason there is anything to give is because of the government supply of liquidity to the company. Without it, GM would have been forced into liquidation where bondholders like her still would have ended up with nothing.

    The UAW (actually the money is for the retiree's benefit fund), had a stake prior to the bondholders. They allowed GM to not pay the final funding amount on time in order to try and help GM continue operations. If the UAW had wanted to force the issue, they could have forced payment at the beginning of this year, forcing the bankruptcy then, and likely still being placed ahead of the bondholders by the judge because of the long term agreement that existed.

    Also, if the government didn't allow the equity supply to UAW fund, your own tax dollars would then be used to pay pension/benefits because the trust is insured by the government.

    June 1, 2009 at 12:59 pm |
  12. Rose

    Investing in either stocks or bonds does not guarantee that you're going to make money, or that you're not going to lose money. As someone else said, it's legalized gambling. You take your chances when you put all your money in the middle of the table and wait on the dealer. And as others have said, she should have diversified. Sinking that huge pile of money into one company wasn't particularly bright on her part. If she wants to go after someone, she needs to go after the financial advisor who talked her into doing that.

    June, there are millions of people out there who are hurting financially right now. You're probably teaching the children of some of them. More and more families are becoming homeless because they are losing their homes (whether they owned them or were renting) simply because they can't make ends meet. In many cases, having enough to eat is an issue.

    I'll feel sorry for this woman when she's in dire straits. For now, all she's doing is whining. I'd like to know. Is she a tenured teacher with what amounts to a job for life (and union-brokered lifetime benefits) with her school district? It'd be nice to have a job like that...

    June 1, 2009 at 12:59 pm |
  13. Jim, Honolulu

    God, lady, you're a teacher, how can you be so stupid? Even little kids know playing the stock market is risky. If these funds were so vital to your future, why didn't you invest in something safer or stuck the money in a savings account? Sounds like you were just like many Madoff investors: greedy, greedy, greedy. And do you know what a huge percentage of the American public don't have, never had, and will never have $70,000? Whining and pouting just highlight your insensitivity and carelessness.

    June 1, 2009 at 12:59 pm |
  14. rcar

    Would you have been complaining if you doubled your money? Human nature to argue about what you lost, would you be on the air if you made money. Very wrong that top Exe. get bonuses when their Corp. is in the toilet. Another company who shows how to take care of the few and forget about the majority. Maybe we all need to start looking at a continous improvement program.

    June 1, 2009 at 12:59 pm |
  15. Mauricio

    I don't get how is Obama to blame in all this? are we to think that if the government hadn't stepped in her investement would be ok? what is the logic here? Previous administrations allowed this company to get in so much debt and continue with more than dubious practices. By the way the best Hood Robin I know was George W. Bush, it was during his time that the gap between the rich and poor reached the highest margin in the history of the country.

    June 1, 2009 at 12:58 pm |
  16. Jim Bob

    I am grateful for Luke and others who clarified the difference between bonds and regular stock market investing. Big difference!

    I am a very small investor who believes in America. I buy (very small) pieces of solid American companies. And now I wait. I will not lose any sleep. I believe in America. Not the president, but America. Pray for America. There is Hope.

    June 1, 2009 at 12:58 pm |
  17. JT Thomas

    Well, let's get a few things straight.

    1. This situation was created long before Obama came into office, right-wing fanatics. In fact, GWB gave GM enough cash to pass the buck to Obama just last year. So stop with the anti-Obama crying.

    2. To those who are talking about the stock market, just stop. These are bonds. Both are investments, but bonds are generally a lower-risk investment.

    3. It's estimated that bondholders will get about 10% of their investment after this all plays out. So her $70,000 should be worth about $7,000.

    4. An above poster was incorrect. It was estimated that in a full liquidation of GM, bondholders would have received somewhere around 5-7%, so she should come out better in this deal. The institutional investors might get more due to some credit default swaps. I doubt June has any swaps, so she'd get the lower amount.

    5. Bondholders have voted and the majority have chosen to take this deal. She wants someone to look out for the "little guy"? It appears that she's whining that she should get special attention over other bondholders because she's not an institutional investor.

    Simply put, she made a bad investment and should stop pointing the finger at everyone else.

    June 1, 2009 at 12:58 pm |
  18. MissingThePoint

    You are all missing the point, stupid, or a little of both. She bought bonds NOT STOCKS. Go google the difference between bonds and stocks before voicing your overly righteous indignation. The government FORCED her to take worthless stocks for her bonds. Just like the BOND holders of Chrysler got the shaft while the Unions, who played a major role in driving the companies into the ground are majority owners.

    The ineptitude displayed here is astounding. Way to go.

    June 1, 2009 at 12:58 pm |
  19. Xavier

    "Don't put all your eggs in one basket"... or in very few baskets. Diversifying one's investments is a common sense rule, one seemingly ignored by large numbers of investors. The general public is woefully ignorant about investing, with very unfortunate results. The solution is to take a little extra time and learn about investment options and the marketplace in general.

    It is not like I don't have sympathy for Debra June. Losing a pile of cash sucks, regardless of the reason. She did not deserve that at all, but this is not about what one deserves or does not deserve. How can she feel robbed? Nobody owes her anything and there are no guarantees in life. Debra, look on this as a $70,000 investment in your education, one which will quite possibly prevent far larger losses in the future.

    "A fool and his (her) money are soon parted" – another relevant addage. There is no reason for anyone to be a fool.

    June 1, 2009 at 12:58 pm |
  20. Dean

    Again, lets get rid of the UAW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    June 1, 2009 at 12:58 pm |
  21. Charles

    I wish people would quit calling June names like "stupid", "lazy", and "dumb". It's clear she made an unwise investment decision, but that does not merit the personal insults she is getting. She invested too much in one vehicle and clearly did not understand the risks. But, I'll bet she knew this at the time and did the "smart" thing by going to a financial adviser, who is probably really responsible for her debacle.

    BTW, many have stated that the bondholders should have been "first in line". This is not at all true The bonds are unsecured debt. They are ahead of the shareholders, but not much else (maybe payables?). I'm sure there's plenty of secured debt in front of them (secured by property, mostly). In all likelihood, a bankruptcy without the government intervention would have meant zero returns.

    Who should you be griping about? How about GM management. Want to guess who WON'T be penalized? Chapter 11 is actually a business tool. Kmart came out of Chapter 11 and bought Sears.

    June 1, 2009 at 12:58 pm |
  22. Honest Abe

    What did she say.... "Michelle Obama???" This lady doesn't believe in any type of diversity! She gambled and lost – end of story! Better luck next time – I don't feel sorry for you.

    June 1, 2009 at 12:58 pm |
  23. People First

    What a bunch of mis-guided folks. Forget the lady or her views on Mrs Obama, think about your government side stepping Priority of claims, basically wiping out peoples assets and providing a company with more tax payers money. This is wrong. Socialist I am not, but any other country on this planet would save, its GM's, MircoSofts and Boeings, and we should too, but don't halfass it,do it farily. Do it completely or don't do it at all. By wiping out these people you are doing far more harm to our financial system that they can imagine. Save the billion-airs and save the little guys or you create a bitter system of us vs. them.

    June 1, 2009 at 12:57 pm |
  24. irritated

    This is borderline irresponsible reporting. This woman has no clue when it comes to business and investing. She doesn't seem to think its fair that she lost all of her money investing in a terrible company. What should happen when you invest in a company losing billions of dollars annually, you get all your money back? The article is chock full of unfounded and normative statements, why is CNN bothering to give this (no offense) ignorant woman such a significant platform from which to cry foul (illegitimately)?

    June 1, 2009 at 12:57 pm |
  25. Diane

    It seems a lot of readers don't understand the difference between bonds and common stock. Buying high rated bonds offer protection over buying stock–even more so in bankruptcy. I suggest you fully understand what you're talking about before disparaging her. My grandfather bought GM bonds. He worked in a GM factory in the 1920s. He passed away last year leaving me with a $50,000 GM bond. When he bought his bonds they were top rated. The government changed the rules on the bondholders–forcing them to become stockholders and now their bonds are worth pennies on the dollar. A bankruptcy judge, without the government's meddling, would never agree to that. That's what's unfair and why bondholders are justified to be angry. Please understand the real circumstances before ranting. You sound foolish.

    June 1, 2009 at 12:57 pm |
  26. Tman

    The first rule to investing: "Never invest more than you are willing to lose." Bonds are an investment and there is risk that you will lose money. Why would you ever invest $70,000 in 1 company without understanding that risk?

    June 1, 2009 at 12:57 pm |
  27. tony bickert

    Blaming Obama for the fall of GM is akin to blaming the Good Samaritan for attempting to help the victim of a robber, a victim that ended up dying anyway. GM management was the robber, folks. Working people who directly or indirectly rely on GM for income are the victims. Obama only tried to help – and with the stimulus money did help GM to avoid a sudden collapse. Those who blame Obama for this are either corporate apologists are right wingers falling for the classic propaganda technique of diversion. – Tony in Spenard, AK

    June 1, 2009 at 12:57 pm |
  28. Pat D. New York NY

    Sorry for your loss but as eloquently pointed out by FL450 you won't miss any meals and you have many advantages others with fewer resources and no job don't have.

    No one has gone unscathed in this economic meltdown. The president has to focus on the big picture and choose the path he and his team feel will best serve the country. Painting yourself as the little guy that isn't cared about reflects the narrowness of your vision on what is happening both nationally and globally. I can understand your frustration and anger but kicking and screaming won't change things. You think the president and his team wanted to do this? This is their last best shot at reforming a core industry that had no hope without government intervention. There will be many casualties because the company ran itself into ruin long before President Obama took over. This is a salvage operation to preserve an industry with thousands of jobs that has been badly mismanaged for decades. Where would we be if they just let the company fail? Some think that should have happened but I'm glad they took action so those who own Chrysler and GM products will still have warranty coverage and the legacy of those brands will have chance to live on. I'd like to see auto factories thriving again in this country with innovative cars that lead rather than follow Japanese and German manufacturers.

    I lost quite a bit more than you did in investments but there's nothing to be gained blaming those doing the dirty work that must be done to clean up this mess and get the economy going again. I feel your pain and then some but the path we are on now gives us hope we can work through both our losses and lost dreams. Even the markets seem to think so based on today's positive response to the news.

    June 1, 2009 at 12:57 pm |
  29. Marshall in Texas

    Like other viewers, I had compassion for her until she brought the First Lady and the President into it. While I understand her anger, she may want to look at GM's balance sheet and last income statement. This company was headed for liquidation last year. It now has a chance to emerge as a leaner and more competitive company, thanks to the Obama Administration.

    It is an unfortunate fact of life that during bankruptcy only the lawyers win...everyone else has to get in line.

    June 1, 2009 at 12:56 pm |
  30. no sympathy

    i have no sympathy for the shareholders, especially this one. its a stock market where you deal in risks. what would she have to complain about if GM went under and went out of business? lets just be glad for what we have, and that GM is not going under and they did try to work a deal with the shareholders. but shareholders knowing they take risks with money in stocks that they now are complaining they are getting screwed... think of all the other markets throughout history where people have lots tens of thousands of dollars. it happens!

    June 1, 2009 at 12:56 pm |
  31. BC

    Poor but not stupid, you wrong, you real name is poor and stupid. Hello stupid, the real loss here is how this man and his cronies are dancing on "YOUR" right, rights as an investor, citizen and would you like it if they took the company you work for and gave it a union. Don't worry, you get everything you want in life by sitting there, your president will take it from other people and give it to you. How funny is your name.

    June 1, 2009 at 12:56 pm |
  32. RT

    I understand Debra's plight regarding the large sum of money – 70K she stands to lose.. However as with any financial investment in the market, this came with a risk too. Unfortunately GM sunk and with it went Debra's investment. How can she start expecting the Govt to bail her out for her poor choice? How can she place the burden on Obama for her financial investments?

    If the Govt's job was to bail out each and every individual in the country, they would have to resort to printing a lot of money which would be worthless anyways? Just can't believe some people !!!

    June 1, 2009 at 12:56 pm |
  33. Have your cake and eat it too?

    Yeah. I don't feel sorry AT ALL for this lady. We all understand that investing in the market like that is a risk that we take because the possibility of the pay out is more than that of "safe" investments at times. Quit whining and suck it up. Stuff happens and you don't always win. She should try a CD or money-market savings account.

    June 1, 2009 at 12:56 pm |
  34. Jonathan

    Everyone on here that is saying people are stupid for thinking that bonds carry risk is in fact the people that don't understand what bonds are. The only difference between a bond and a stock is that a bond is a loan to the company and a stock is the purchase of a share of said company. You still take on the risk that the company will not be able to repay your "loan" to them and you also have to fight it out with all of the other creditors for the remaining assets in the case of a bankruptcy. Bankruptcy law does not guarantee that bondholders will get all of their money back just that they have first right to any assets. The point most people are missing is that this ladies share of all GM bonds in probably less than 1/10 of a percent of the total bonds issued by GM and all thise other bondholders have a claim as well. The "mortgage backed securities" that caused the whole economic meltdown were a form of asset backed security which is also a bond. Also Obama is not telling them what they can and can't do in their bankruptcy it is all getting directed by a JUDGE probably appointed by a REPUBLICAN so get off his case. He inherited this mess he didn't create it.

    June 1, 2009 at 12:56 pm |
  35. Sandy

    I lost $70k in a real estate investment also. All I can do is sit on it, rent it out at less than I am paying for it, and hold on. Her stock will rise again. We are all suffering. She should never have invested more than she could afford to lose...and all in one company? If she is that risk adverse it hsould be in T Bills or Certificates of Deposit.

    It will come back.

    June 1, 2009 at 12:56 pm |
  36. Walt

    Debra June seems to have missed, was that she will be getting stock in the "New GM". I sure hope that the stock price of the "New GM" will eventually be worth more than the stock price of the "Old GM" today.

    June 1, 2009 at 12:55 pm |
  37. Addison

    VONNIE get your quotes correct. You may hate haters, but I hate people who lie or are to stupid or lazy to get their facts straight. here is the quote.. which is much closer to the person you criticize than you quoted..

    "For the First Time in My Adult Lifetime, I'm Really Proud of My Country"

    This is not exactly a good way to put it. So relax Vonnie... you are human and not perfect either as the other poster is also... and not a hater.. so careful of the judment..

    June 1, 2009 at 12:55 pm |
  38. John S.

    To most of you people criticizing this woman:
    Please re-read the post by Claude Montreal on June 1st, 2009 at 11:34 am ET. He summed up the point y'all appear to be missing...

    June 1, 2009 at 12:55 pm |
  39. Lisa

    I feel the same about this as I do homeowners in foreclosure whining about how the government should help them. You and you alone are responsible for your investments and mortgages and credit cards and interest rates. No one forced you to invest $70,000 in ONE COMPANY (hello – "diversify"!!) just like no one forced all those idiots to take interest only 3-year ARMS and, oh, gee, now my mortgage payment is $3000 and I can't afford it. While even people like me who are in diverse investments like index funds and mutual funds have seen their value drop like a stone, thanks to the greed and incompentence on Wall Street and Washington, we aren't asking for bailouts.

    June 1, 2009 at 12:55 pm |
  40. affectedone

    IT is easy to call some one stupid, if that persone is not you yourself. Come on guys. The system has been unfair for small people who work hard and try to make little (Very little) extra buck or two. Mind thay you may be so called "smart" in this game, but can always be stupid in some other game. That time, I am sure you will be feeling the same pain as this person.
    Anyways, BOA (Bank of Obama) should do fair justice to EACH AND EVERY PERSON. Government cant choose and pick~. Why not spend a few Billions on these small people and keep them in their houses and let them pay their bills in time? Also Have we seen ANY executive(s) being Prosecuted for the mess they have created? Take all the savings of GM's executives for last 6 years... Take that and give it to those who's it is.

    June 1, 2009 at 12:55 pm |
  41. CJinCali

    quite frankly she had my sympathy cord until she dragged Michelle Obama into her comments. What in the HE-double hockey sticks does the first lady have to do with all this.
    Investing of any kind carries risk and unforutnately many of us have placed our eggs in one basket when it comes to investing versus diversifying and been burned as a result.

    It could have been a lot more disastorous for the entire nation had the administration not stepped in at all and just let GM fail, which as we all know, is what the prior administration was intending to do. This rescue is more like paradise compared to the alternative of doing nothing.

    It's sad that people are losing their hard earned money, but we need to remember that GM didn't fail overnight – it's been years in the making and a variety of events that brought it to the point it is now. From ignoring the fact about building more fuel efficeint vehicles,to reining in costs, the list goes on.

    Unfortunately not everyone wins in this, but please stop blaming the government for you losing your money.

    June 1, 2009 at 12:55 pm |
  42. Ken

    Welcome to Capitalism. The rigged, "free market" capitalism that privileges the rich and their "managers" over the people who make them rich, that is. Always been that way, always will be, because every generation has its majority crop of brainwashed suckers who fall for the establishment's propaganda and take it literally. All the government and corporate boys who robbed America this past decade got out with "theirs" a long time ago, and are now watching everything they ruined crash and burn from inside their gated communities and multiple residences at various and sundry resort-like locations around the world.

    June 1, 2009 at 12:55 pm |
  43. c_s_l

    What does Michelle Obama has anything to do with this? Anyways when she said that she's "saving" money, she obviously have no clue what saving money is about. Saving money is putting you money in a BANK, not a CORPORATION. Usually you get very little for putting it in a bank, but at least you are insured for $100,000. It's her fault for putting money just so she could earn alot more WITHOUT having to do anything for it. That's what's wrong with people these days, they expect more money without having to do anything.

    June 1, 2009 at 12:55 pm |
  44. R Saw

    What on God's earth does Michelle Obama has to do with this situation she is in!! Please Stop dragging names and proving your stupidity further.
    I invested in GM stock and I lost it. Simple.
    Debra June is not different from any other investors as in that they invested on 'speculation'.
    I understand your pain but stop being bitter to poeple ( read: the current president, his wife) who had nothing to do with this ordeal.
    This all started in the last 8 years of free capitalistic " Humvee Culture" run, remember.
    PS. I am a centerist who supported Ron Paul in the last primary presidential race.

    June 1, 2009 at 12:55 pm |
  45. impska

    People on this comment board are having a great deal of difficulty understanding what her investment is. She did not have her 70k in the stock market. She did not buy GM stock. She bought bonds.

    In buying corporate bonds, you "lend" the company money. This is considered a low risk investment because during bankruptcy, bond holders and other lenders are LEGALLY ENTITLED to get some money back. They are supposed to be able to sell off the company assets (which LEGALLY back the bonds – just like your mortgage is backed by your house, so if you fail to pay, your lender gets to take your ASSET) during bankruptcy to recoup their loss.

    But when the government stepped in to handle these auto bankruptcies, it changed the rules. During the Chrysler bankruptcy, the Union got about 50 cents on the dollar for its pensions and other benefits, whereas lenders (bondholders) got only 5 cents on the dollar. LEGALLY that situation should have been reversed. There was no way for a bondholder to predict that the government was essentially going to rob them of their legal right to pursue what they are owed.

    In fact, what's happening is very serious for our country. If lenders can't guarantee their priority during bankruptcy it will make it much more difficult for struggling companies to raise the money they need to keep going during difficult times.

    June 1, 2009 at 12:55 pm |
  46. Fred

    Please... She invested $70K in GM six years ago? And she though that was a good investment given how far behind US auto manufactures had fallen even back then? I'm sorry, but there is such a thing as personal responsibility for bad choices. Any investment has risk, especially a bad investment like this, and trying to blame GM or anyone else is childish. I feel for anyone who loses important retirement money, but grow up and take responsibility for making better investment decisions.

    June 1, 2009 at 12:54 pm |
  47. SeriouslyWhat


    Where's the alternative perspective calling out:

    1) She's a bondholder, not a stockholder. That means she loaned the company money as is bound by the terms therein. She doesn't get a voice in restructuring above and beyond those terms.

    2) She's a middle aged woman with a masters degree who sank a (presumably) vast share of her personal wealth in an uninsured investment in a historically troubled industry. This is not a case of misrepresented risk or unconscionable investment guidance, it's a case of head-in-sand finger pointing.

    I get as mad as the next guy when the average investory gets taken advantage of. Almost as mad as I get when the media stokes misperception and polarization in the name of advertising revenue/market share.

    June 1, 2009 at 12:54 pm |
  48. srichey, san diego, ca

    I feel bad for her but everybody is getting screwed over these days. I've lost 60% value on my condo and now i'm stuck. Why the heck did she invest in an American Car company anyway? Real Estate I can understand but an American Car company?

    June 1, 2009 at 12:54 pm |
  49. Mike

    All of the people getting on this bondholder and others need to learn a little about the meaning of bonds and secured debt. The reason that these investments are seen as so safe is that in the event of a bankruptcy, these debts are suppsed to be first in line to be paid back. This is written very clearly into bankruptcy law and bond agreements. Should they lose some principle? Yes....but not everything. Bondholders own about 65% of the debt in a normal proceeding they would do no worse than receiving the same value of the restructured company.

    This process has been completely turned on its head by the Obama administration who has chosen to pay back the UAW first, the Government 2nd and the bondholders last. This is basically exactly the opposite of how historically and contractually these things are supposed to work. I would be ticked off too. Honestly, I do not know how they are getting away with this.

    June 1, 2009 at 12:54 pm |
  50. Reggie from LA

    Now Paul,
    What's really happening here is that Obama is acting like Robin Hood trying to straighten out the mess that was made by "robbin hoods", (those would be the folks you're probably backing from what is being implied). It wasn't Obama who tore up the economy. He voted to stave off an economy-draining, false-reasoned war, that has hurt our economy when very few others would stand up. That along with trickle down economics that few have seen drips of. With ANY administration there is going to be pain to "right this ship". People like Ms June and others of us are going to feel some pain for our country's past pleasure. We are going to get a whole lot done in this country by spending future years blaming...ya think?

    June 1, 2009 at 12:54 pm |
  51. Susan

    As a former GM bond holder, I got out when the getting was ok – earlier this year, I got $.75 on the dollar and am glad I did. There are times you just have to take a loss and go on.

    The people I feel sorry for are the retirees and then the GM workers. Bond holders obviously have enough money to invest. These two groups won't have enough money to live.

    We've all suffered through this economic downturn, but it will come back.

    June 1, 2009 at 12:54 pm |
  52. Tired of Liars and Lawyers

    Thank you BOND_lamebond. I think there are very few of us on this blog that understands the difference in bonds versus stock speculation. This country is going to hell in the proverbial "hand-basket" and nobody sems to care, or are too stupid to realize it. The little snowball at the top of the mountain is moving full speed ahead towards every city and town in this country. Better get all of your money out of US companies and buy a case of mason jars and a shovel.

    June 1, 2009 at 12:53 pm |
  53. Mike

    It takes two to make a deal: a corrupt, bloated corporation and a stupid investor............................we have a deal.

    I'm sorry for your loss but you broke the first rule for investing: DIVERSIFY. So, quit bitching, lick your financial wounds, don't blame the government and look in the mirror to learn something.

    It's not the government, it's not even the corporations: If we AMERICANS stop being so stupid with our money and our votes we can have a different country.

    June 1, 2009 at 12:53 pm |
  54. maryg

    Obviously, there's always more than one side to every story. As regards this one, this is exactly why GM should have gone through bankruptcy in the first place, before getting bailout money, so that they could restructure & possibly save some of the value of their company. But instead, as Washington is want to do, it's all done backwards. We throw billions & now their still where they should have been in the first place. I do feel for this teacher losing all her money, but this is always a chancey thing. If GM would have been booming & her money would have tripled, she'd be thrilled. Any time we buy stock we buy it with the hope to make money, but we have to be realistic & realize this is 50/50.

    June 1, 2009 at 12:53 pm |
  55. Wow

    Please try to pull more blame for this into Obama's lap.

    Your stupid shows more and more each day and it's only a matter of time until you have lost SO much dignity and respect in this country of progress that you and your "party of morals" (which in all actuality started this snowball) will be wiped out for good.

    So please do keep trying to fling the mud and grasp at those straws.
    From this view it's quite entertaining.

    June 1, 2009 at 12:53 pm |
  56. Tim

    I love the response from people that don't understand the stock market. Bonds are suppose to be the least risky investment that is why you get such a low return on your investment. Obama should be ashamed of himself. He is running the country like a socialist govenment and appears to not have any appreciation of a democratic society. He is basically taking our money and giving it to his friends. For the bond holders it would have been better for them to liquidate under Chapter 7 and let the bond holders get what they can get. There is no possible way GM would ever be able to pay back this debt. So what happens 4 or 5 years from now when they are still not able to service the debt to the US?

    June 1, 2009 at 12:52 pm |
  57. Mike

    This is truly a shame. What Obama is doing with these reorganizations is awful. This is just an excuse for liberals to take over private enterprize all in the name of "fixing" the economy. Meanwhile, the Democrats are piling on the debt at a time when the average american family is cutting back and getting back to living within their means. Go ahead – this is a surefire way to lose in 2010 and 2012. The GOP will be back in power before you know it!

    June 1, 2009 at 12:52 pm |
  58. Mike Stoken

    Here's my follow-up comment, and then au revoir...

    First: the security so many readers feel they'd have because they bought a bond instead of a stock is almost totally illusory, Finance 101 notwithstanding. In north of 90% of bankruptcies of publicly held companies, the stockholders get zilch and the bond holders get close to zilch. That looks like it'll be the GM story. All those yokels who think they'd be in good shape because they bought bonds can go buy Enron's, WorldCom's, Czarist Russia's, Mussolini's, the last seven defaulted issues of Peru, Brazil, Rapid-American, Germany, etc., etc., etc. ALL of Mike Milken's Drexel Burnham underwritings collapsed, and they were ALL bonds. Duh-h-h-h!

    Second, a good thing about buying most securities, CERTAINLY INCLUDING THE GM BONDS, is their liquidity: you can find out every day what you could have sold them for, and in fact their price declined very slowly (but inexorably) for years. To sit year in and year out watching them go from 100 to 95 to 80 to 78 1/2, etc., etc. until FINALLY they collapse, choosing to never at least diversify away with some of the money, and then to assert your victimhood, is just plain stupid.

    June 1, 2009 at 12:52 pm |
  59. duVitt

    That's the a way a communist are working, ripp off people with money and assets. Hopefully bankruptcy judge will throw away this deal into junk.

    June 1, 2009 at 12:52 pm |
  60. Alex

    Mick, your wrong-sided arrogance is an example of why you left winged nuts won't be in power as long as you think. Please take the time to learn what a common stock is and a bond. Also, the difference in the two. Obama is screwing the bond holders in this deal... like it or not.

    June 1, 2009 at 12:52 pm |
  61. Jeff

    There are some really uninformed posters on this subject that appear to know nothing on this subject. The problem with the government driving this and any other private business activity is that the government changes the rules. The law says that bondholders come before any other groups in the pecking of bankruptcy (secured bondholders first, then unsecured, etc.). That factors in to an investors decision process in choosing stocks vs bonds or other investments. But with Chrysler and GM, the Obama administration decided to ignore bankruptcy law, change the rules screwing people like M. June who relied on them in making decisions, and craft special deals where the union comes before bondholders and stockholders. That's unprecedented and will have profoundly negative effects on the US in the future. It's complex, but I strongly encourage people to see through populist rhetoric when considering teh future of our country.

    June 1, 2009 at 12:52 pm |
  62. ken

    Hard to sympathize with someone who invests in corporate bonds. They are risky by nature and when you purchase them you automatically incur that risk. This should serve as a lesson to others...safeguard your nest egg with a little more common sense.

    June 1, 2009 at 12:52 pm |
  63. Scott

    It appears that most folks don't realize that the Obama administration has really sweetened the deal here for the UAW at the cost of the bondholders, like they did for Chrysler. Quid pro quo, I suspect. If the UAW would build American cars for a fare wage/benefits, then the "American" auto industry wouldn't be bankrupt-

    June 1, 2009 at 12:51 pm |
  64. Gary

    It is obvious there is great dearth of financial market knowledge (including bankrupcty law) in this country among its citizens. Knowing that, the government will be able to get away with anything.

    June 1, 2009 at 12:51 pm |
  65. Martha Reese

    Many, many, people share your pain, especially those losing their jobs their homes their livlihood, and their investment stakes in America. The unknown is yet to come I fear.

    June 1, 2009 at 12:51 pm |
  66. Michael

    I am shocked that CNN is portraying this story as highway robbery to GM's stakeholders (both debt and equity). The fact is, this investor did not look closely enough 6 years ago into the Company's horrible balance sheet situation (pension liabilities, billions more in debt), and didn't realize there was a possibility that both the equity AND the debt were very risky (and perhaps lousy) investments into GM.

    In a bankruptcy situation, when enterprise value is less than debt outstanding, the bondholders lose. She deserved to lose this investment, this was not an unfair situation.

    June 1, 2009 at 12:51 pm |
  67. jtcmart

    BOND_LameBond stated BONDS ARE LOW RISK... exactly but they are still a risk. I agree that Obum-a is turning this country into a socialist country, but she should have known it was a risk whether high risk or low risk it is still a risk. What no one seems to realize is that it is the union's fault they are in this condition to begin with. Thanks to the UAW the guy sweeping the floor was making $35 an hour. So now we give controlling intrest to the group responsible for taking down the company. Brilliant!!! Get rid of the unions and pay people reasonable wages and US car makers will flourish. Toyota has no unions and they are profitable. Lets take a lesson from our Japanese friends and bring that capital back to this country.

    June 1, 2009 at 12:51 pm |
  68. Ron W.

    The only person she should be furious with is herself.

    June 1, 2009 at 12:51 pm |
  69. HD

    All I can say is I hope June is not teaching kids her own beliefs of entitlement and blame for her mistakes. She made a bad investment, that's it. GM has been failing since the 1970's, but I guess this teacher didn't study up before making this investment. It's terrible that so many people are loosing money, but this company failed. The investment went bad. Where did she think the cash was coming from to pay her bond? Sorry June, you are just clueless.

    June 1, 2009 at 12:50 pm |
  70. RyanH

    Why would you put so much of your investment into one thing? Not very smart and now you're going to pay for it.

    June 1, 2009 at 12:50 pm |
  71. Jim

    Risk is one thing. Having the government steal your money is quite another. This makes high taxes look like no big deal.

    June 1, 2009 at 12:50 pm |
  72. Curtis

    Not fair? invested money in highly competitive industry... You kept your money in too lose. Sorry.

    June 1, 2009 at 12:50 pm |
  73. Shane

    You people are so ignorant its funny! First of all she has a responsibilty as an investor to know where she is putting her money. However, I think her main complaint is that everyone else is getting bailed out, but the private citizens that put money into GM!
    The Unions that completely ran GM into the ground are getting bailed out yet again! With my f'ing money! yet the bond holders have to take it in the butt while these morons get bailed out! Its complete BS. Obama is a tool and he catered to the Unions...totally expected! His administration should have just let the whole thing go in the tank...not picked sides...but what do you expect from a big eared, ugly ass partisan!

    June 1, 2009 at 12:50 pm |
  74. Crazy From The Heat

    If you were going to buy bonds (not stock folks, she didnt buy stock) in automotive, maybe Ford would have been a better bet. Better run car company, not bloated like GM, with some experience.

    Ford faced the music a while ago and went "all in" (including mortgaging everything including the Ford logo) and decided to invest in the future. They also did not sell off thier financing arm (GMAC) for a quick profit to prop up thier dying car company. They are not drinking from the Federal trough.

    The reason I bring this up is that doing a little bit of research would have saved you a lot of tears now. And believe me, I truly am sorry for your loss. Bonds are supposed to be a solid investment, but the Feds are cutting off the branches to save the tree.

    Oh yeah, I'll join the "pile on June" and mention diversity. know.

    June 1, 2009 at 12:49 pm |
  75. Seth K.

    I think her point about Michelle Obama is that the Obamas rode to the White House on the hard working backs of Progressives, minorities and average folk who busted their asses for someone who said he would work for the people - and instead he's turned out to be just another stooge for the corporations. She's right, there is not much to be proud about about in the U.S. government as currently constituted, even less so as it tosses the Constitution into the shredder (again) in order to semi-nationalize GM. There isn't much for the Obamas to be proud about either. Some constitutional law professor he turned out to be. Those Chicago students should demand their tuition back.

    June 1, 2009 at 12:49 pm |
  76. woody

    There's a huge difference between normal investment risk and the government coming in and dictating the course of action a company must take.
    Also, anyone who thinks the government can run GM efficiently is crazy. That's like putting a sumo wrestler in charge of the weight loss support group. Good grief.

    June 1, 2009 at 12:49 pm |
  77. CC

    GM is another example of Obama's Chicago style strong-arm tactics. He learned very well there in the "cradle of Acorn, Alinsky, Ayers" how to do business. "Never let a crisis go to waste" school of business.

    GM is another notch on his belt now. What is next? Perhaps the coal industry which he has already said he would bankrupt.

    He is a scary guy with a plan, and his supporters better wakeup before we're all slaves to the Federal Government and all our rights are usurped.

    Yes, I wonder too if Michelle is now especially proud.

    June 1, 2009 at 12:49 pm |
  78. Brian

    Who would put their entire nest egg into one stock/bond/etc? I feel badly for her loss as well as anyone's loss in today's economy, but in my opinion, she is the one responsible for her current situation.

    All too often people make poor investing decisions. This is another case.

    Lessons learned (i hope):
    – do your due diligence before investing
    – diversify
    – don't complain or shift blame for your losses

    June 1, 2009 at 12:48 pm |
  79. Bob Lutz

    Weren't the bondholders the same group that were critical of Rick Wagoner for getting into the Chinese market (the only good decision he made) ? Regarding the bondholders not getting first dibs on what was left (which is NOTHING by the way), it's not uncommon for presidents to use their executive power in matters like this. Like Reagan firing traffic controllers in the early eighties, or Nixon putting wage freezes in place in the early seventies.

    June 1, 2009 at 12:48 pm |
  80. TonyL

    You invested $70k in bonds from ONE company. If you had a $700k bond portfolio that might be appropriate. As it stands, you made a terrible decision. Live with it.

    June 1, 2009 at 12:48 pm |

    Putting all your eggs in one basket is one way to ruin your portfolio and lose your life savings. The higher the yield, the higher the risk.

    She should have asked herself 6 years ago, " why are these bonds paying such a high interest rate?" and why does S&P rate them as "Junk"?

    June 1, 2009 at 12:48 pm |
  82. Malcolm E Reding

    A school teacher by definition is a small investor who should have been warned not to put so much money in one corporate bond issue. We have owned corporate bonds for years but mostly in bond funds. Individual bonds we have or currently own are government backed municipal bonds etc. Even when New York city filed for bankruptcy, they never missed a bond payment.

    June 1, 2009 at 12:48 pm |
  83. Conrad

    This flagrant abuse of the law by the Obama administration must be stopped. We've got to get back to the days of due process by George W. and Cheney we enjoyed over the past eight years.....

    June 1, 2009 at 12:48 pm |
  84. KLM

    Definition of a Bond Holder
    The owner of a bond. In addition to receiving regular interest payments and the return of principal, bondholders are given precedence over stockholders in case of asset liquidation.

    From Wikipedia:
    Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely. An exception is a consol bond, which is a perpetuity (i.e., bond with no maturity).

    In simple terms, this lady did not buy stock, she lent money to GM, and this loan like any loan requires collateral which in this case is the company’s assets. What OBAMA did was to release the company from its legal obligation to this woman and others. Something no president has any legal right to do.

    The fact is the current administration is doing the same thing they accused the Bush administration of doing.

    And by the way, Obama may have backed it, but I wish the American people would realize that it is the legislative branch that makes these things happoe3n not the executive. The legislative and the Judicial Branches of our government are out of control and have been for some time, However they are good at the game and keep whatever sitting president on the hot seat and in the public eye.

    Please think before you vote next time and if they are incumbent regardless of party vote for the other person, which is the only way you will see any real change.

    June 1, 2009 at 12:48 pm |
  85. foxfan

    Why are so many of you so hateful....even the person that "hates the haters" people are very mean hearted...Like so many others this person is losing a large sum of money and all you people can say is too bad..wise up...dont be a cry baby....How about the fact that in a bankruptcy her investment is paid back first...not's her legal position and she is much better off if the company just it is now she has been over-ridden by the government and barely gets anything...thats why you buy the bonds and not common stock you dumb a**'s...but the President is making new rules and this lady would be very unpatriotic if she disagrees....
    maybe we should hang her for treason.....

    June 1, 2009 at 12:47 pm |
  86. Rich

    It's simple...whoever invested in GM, whether bonds or equity, should just face reality that they made a bad investment..that is just the way it goes...some win, some lose. It's capitalism..

    Move on & try to be a better & wiser investor in the future.....

    June 1, 2009 at 12:47 pm |
  87. Mike

    Is anyone paying attention to this? She invested in BONDS, not stocks. Bonds typically yield a lower rate and are lower risk. As someone said below, "she should have been guaranteed a modest return on her investment." She was going for lower risk. The US Government changed the rules basically took the money. They took it from everyone on this email. Even those of you that are bashing this lady. Don't you understand that? it's like the government is shaking your hand and with the other they are reaching into your wallet and taking whatever they want, and then sharing that but not with you – only those that elected them.

    June 1, 2009 at 12:47 pm |
  88. Finance God

    Stupid Piece of Journalism. It is her mistake. CNN just needs some sensationalism. In capitalistic country no one forces you to invest and you are responsible for your acts. You made bad choice. Doesn't matter if you are school teacher, ceo or anything. Out of context to bring Michelle obama too. Wierd news!!!!!!!!!

    June 1, 2009 at 12:46 pm |
  89. Lee

    I believe we have alot of uneducated comments on this post. Understanding the difference between Bonds and Common Stock is pretty elementary or so you would expect. The majority of uneducated comments on this post show why this Country is heading down a path I am not sure we can reverse. The Gov't is rewriting the bankruptcy laws as they go and the majority of Americans are blind to what is happening. It is easy to direct the uneducated as they know not what is right from wrong. Hello socialism here we come.

    June 1, 2009 at 12:46 pm |
  90. Goodtime Charlie, VA

    When executives are getting paid excessively (ie: 200 times their employee wage average) and have golden parachutes valued at millions; they don't care about their companies, employees, bondholders, or stockholders long-term future.

    When unions forget that the end-product must be compressively priced or people won't buy it; they don't care about their companies, employees, bondholders, or stockholders long-term future.

    When the government makes it advantageous to buy/sell stocks & bonds every 10 minutes by day traders; they don't care about the long-term future either.

    GM, Chrysler, Ford have had problems with "bang for the buck" since the early 1970s. They did not learn from the gas crisis in '79-80 and instead built Hummers and other gas hogs. Their

    Toyota, Honda, Kia, etc., have happily watched the US auto industry destroy itself while they were successfully build plants/cars within the USA.

    In the past 10 years how many of your friends & family invested in GM cars? You should base your investment choices on your knowledge of real market conditions, etc., not "hopes" presented by some broker who only wants a commission.

    The US auto industry has been in a downhill slide for a long time. The GM management knew this and continued to prefer to build unreliable gas hogs without a long-term future.

    Ask yourself: why did you invest for long-term gains with a short sighted company?

    I lost some too but I diversified as best I could ... remember don't bet if you can't afford to loose

    June 1, 2009 at 12:46 pm |
  91. Mike

    While it looks like this lady made some foolish mistakes in how she invested I think people are missing the point. Look at your 401K investment options, a fund that is invested in stocks, equities etc are higher risk and pay more return (usually) but are more volatile. Investing in Bonds or Bond funds, government or corporate generally pay lower rates of return but are supposed to be more safe (they are based on company assets not a companies annual profit performance. The US govenrment stepped in and changed the rules after everyone put there money in the game. If anyone has any money invested in Mutual Funds I would be very worried about the precedent this sets even if you are diversified. I don't mind taking a risk with my money but how can you make a decision based on risk tolerance if the rules can be so easily altered after the fact.

    June 1, 2009 at 12:46 pm |
  92. Slider

    Geez. People. What's with all the bashing the victim?

    What's happened here is that Obama has, simply, changed the rules. With a wave of his hand. The rules and regulations on which all investors rely, apparently, under Obama, can change. Momentarily. Without warning. Without reason. Without compensation.

    All of us (in the U.S.) have learned to look left/right/left when crossing the street, based on the rules that we expect everyone to follow. You think if Obama just willy nilly decides to reverse the flow of traffic there will not be mayhem and destruction? And whose fault will it be? The driver? The pedestrian? Or perhaps the madman that changed the rules willy nilly?

    Suppose Ms. June got raped on the beach in broad daylight, in view of police who stood by because their boss told them, for the next few days, let's not enforce the rape laws. You'd say it was her fault for wearing a bikini?

    I think, perhaps, if it was your $70,000, you might feel differently.

    June 1, 2009 at 12:46 pm |
  93. George

    She made a choice to invest. She expected benefits in return for her investment. She also should have understood, even though the phrase "low-risk" was applied, that she could lose her investment. That's the nature of business. All businesses run the risk of closing down.

    June 1, 2009 at 12:46 pm |
  94. tony

    Thank you for your post Mick.... everytime I read the post of a foaming-at-the-mouth rightwinger, I am reminded of the "a little learning is a dangerous thing" adage.

    June 1, 2009 at 12:46 pm |
  95. rick

    I feel for her, $70,000 is a lot of money, however, as a school teacher she probably has a healthy pension, financed by taxpayers, to fall back on. As a private business person, I invested in 401ks at the advice of "financial professionals" and lost more in value that she did, and that is the basis for my retirement.
    The bottom line is that there are a lot of people in all walks of life that feel that they have been screwed by the financial industry due to the economy. Everbbody is at fault, but nobody is at fault. It sucks for everybody.

    June 1, 2009 at 12:46 pm |
  96. GKD

    A lot of interesting comments, but one significant fact forgotten by those who think the government is ripping off the bondholders. The Government is the single biggest creditor to GM, and is expected to sink another US$30B into the company to keep it going until it emerges from Bankruptcy. Therefore, it is protecting its interests and those of the taxpayors as a whole, not a select few that invested in GM in taking the 60% stake. On the other hand, they could just as easily not put any money into the company, and the company declare bankruptcy, and complately liquidate to pay off bondholder (at what would likely be less than 10 cents on the dollar). Doing this would not have satisfied bond holders any more than the current deal, and would have left 10's of thousands of workers out of jobs, and likely prolonged the recession for many more months. Bottom line – the path they took is not the most optimal outcome, but due to years of mismanagement, may have been the only one.

    June 1, 2009 at 12:45 pm |
  97. Air

    WOW! You people really are dumb. Most of you on here could really be on the "Jaywalking All stars". I mean you are probably a product of the no-child left behind philosophy. Look up what "bonds" are. Then post. As most of you don't even know what the S&P 500 are or what the stock market is. Nowhere in the article does it state it was her life savings, it was just one of her investments. i am sure she was diversified, but yes this should have been a low risk investment, that is backed by a companies' assests. She loaned them money, not bought stock and hoped the company would perform well. If you bought goverment bonds and then the government said hey we can't pay out we really need your money, so tough luck, how'd you feel. This is no different. This creates a lot of uncertainty for one of the safest bets out there. Now noone will want to buy bonds. Let alone the 20,000 people that are getting laid off. Guess what happens when the bank loans you money and you go belly-up....the liquidate all of your assets and use that money to pay off the debt you acquired. How nice would it be if the government stepped in and said no, you don't have to liquidate and pay back that money. The banks would stop lending in a heart beat. For the people are sick on the cool-aid.

    June 1, 2009 at 12:45 pm |
  98. Joseph

    The following was posted earlier:

    Wow- to the people who say- “she knew the risks of speculating”; “the Stock Market is a dangerous place”. HELLO!!!!!!! These are people who invested in BONDS; FIXED INCOME; LOW RISK INVESETMENTS: – NOT THE VOLITLE RISK TAKING STOCK MARKET!!

    These BONDHOLDERS were GIVEN NO CHOICE but to bend over and that it in the rear! They were offered WORTHLESS STOCK for their FIXED BOND INVESTMENTS.

    If we are now going to say there is NO DIFFERENCE in investing in high rated BONDS than in speculative stock- then our nations entire capital investment market is WORTHLESS!

    My Response:

    I will not critique your grammar or inability to spell; this is not the forum. However, I will critique your lack of understanding of fixed income investing: bonds are not "low risk" by nature, their risk varies on a scale (for illustrative purposes) from junk, to speculative, to investment grade. GM has seen its market share progressively and steeply decline over the past TWO DECADES. Further, the company has posted massive losses for the past FOUR YEARS; losses that have cumulatively exceeded 80 BILLION US DOLLARS.

    Additionally, bondholders had plenety of choice: they chose to invest in a degrading company, and they chose not to sell the bonds of a company whose worth had been progressively worsening with each year for the past two decades.

    As an investor, Mrs. June should be aware of the risk of any investment vehicle in which she places her monies. Further, she should have enough common sense to work to understand the underlying fundamentals of the company within which she chooses to invest.

    She invested in a market-traded instrument that she could have traded – that is, one that she COULD HAVE SOLD AT ANY POINT – when she realized, OVER THE YEARS SHE OWNED THE BONDS, that the company: had a credit rating that has been progressively cut, was losing market share, money, and had no profit for years, was growing its debt, having a progressively harder time funding its working capital, and, overall, was poorly managed.

    How many of you would invest a large portion of their money in a company with the aformentioned traits?

    Mrs. June should face the reality; she made a poor investment choice, chose GM solely by its name, and FAILED, I repeat, FAILED to understand the risks explicit when investing. It is always the same in this country: blame somone else, blame a politician, blame a broker when the blame should really come from one's own finger pointed at one's own face.

    June 1, 2009 at 12:45 pm |
  99. Judy

    Sorry, Vonnie. You're are the one that is incorrect concerning Michelle Obama's comment. If you pull up the YouTube that shows Michelle Obama's speech, she does indeed say that she has never been proud of American during her adult life.

    June 1, 2009 at 12:45 pm |
  100. Kendall

    geezus – the lack of knowledge of what a stock is as compared to a bond, and the lack of understanding of how our president is well out of his constitutional role is just astounding... I pray for our country and I pray for each of you that you are not the next one to get trampled in the chase for votes.

    -signed – the educated

    June 1, 2009 at 12:45 pm |
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