It's a great piece - lots of details:

http://www.bloomberg...8&refer=worldwide

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[...]

Default Risk

Credit-default swaps protecting against a GM default for one year rose yesterday to a level that implies the market has priced in a more than 71 percent chance of default, according to CMA Datavision.

One-year credit-default swaps were quoted at a mid-price of 55.5 percentage points upfront, compared with 51 percentage points on Nov. 7, CMA data show. That means it would cost $5.55 million initially in addition to $500,000 over one year to protect $10 million of GM bonds.

Bill Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said GM shouldn't take government money because ``it has been hamstrung for years because it has too much debt and it has contracts that are uneconomic.''

Ackman, who said he doesn't have a position in GM securities, said yesterday on the Charlie Rose show the automaker should file for a so-called prepackaged bankruptcy with financing to keep operating while in court protection.

That may be difficult. Such debtor-in-possession loans have ``all but shut down,'' CreditSights Inc. said yesterday in a report. The loans, which are paid off when companies exit bankruptcy, aren't being made as lenders become more averse to risk, wrote Chris Taggert, a New York-based analyst.

GM would have no choice but to shut down, said Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut. A GM failure that stops production would cost 2.5 million jobs in the U.S. in the first year, according to the Ann Arbor, Michigan-based Center for Automotive Research.

``In this world, you don't go Chapter 11 reorganization,'' Keller said in an interview. ``You go Chapter 7 liquidation.''

To contact the reporter on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net
Last Updated: November 11, 2008 16:27 EST

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Maryann's been monitoring the Big 3 for decades and has been a critic of them almost as long. (She was often a guest on Louis Rukeyser's "Wall Street Week".)

Cheers,
Scott.