GM CDS Scapegoat-herd

Recalcitrant creditors were made scapegoats for the collapse of Chrysler. They may play the same unhappy role if General Motors runs off the road. GM bondholders who have hedged their exposures are said to want the US carmaker to file for bankruptcy. But that doesn’t make them opportunistic speculators. If GM files, these investors may indeed collect on their credit default swap contracts. But in many cases, they’ve already suffered big losses on their bonds. Making up for those is what hedging...