Apparently, GM bondholders want the government to relent on their requirement GM bondholders drastically reduce their debt burden on GM so GM can qualify for additional loans. The government's response should be absolutely no way. Any GM restructuring plan that doesn't dramatically reduce GM's bondholder debt would be a farce, a doomed plan, the bondholder debt load on GM currently is huge at $27.5 billion. If GM doesn't get this debt load down dramatically it will almost certainly have to come back to the Government for additional loans in future years to pay its bills and that is not only wrong but not a viable option, the American people are about at the end of their rope for bailing out U.S. automakers. GM bondholders have a legitimate concern in so far as their views on why should they agree to convert their bonds into equity when it is far from clear that GM will not have to enter bankruptcy within the next few years; not only does GM have financial challenges but the industry itself has serious financial challenges with depressed sale figure outlooks over the next three years at least. The GM bondholders have raised an issue that is worthy of the government taking action on and that is how about the government guaranteeing some portion of their investment here? It is a legitimate request because the government is asking the bondholders to take a very sizable cut in their investment, that is, a two-thirds reduction in their bondholdings. From a justice standpoint if not a legal standpoint, the bondholders would be well within their rights in forcing GM into bankruptcy and liquidation once GM defaults on their bonds and with a bankruptcy liquidation that would throw a hundred plus thousand workers across the nation out of work so the bondholders are being asked to give up a lot in this plan the government is trying to implement with GM. Moreover, the guarantee could be structured where the government does have to pay a dime now, it only has to pay any money at all if GM goes into bankruptcy over the next seven years, if GM makes this seven year date it will be clear GM's restructuring will have been a success. One of the keys here is that the government should be prudent about this indemnification and not put the U.S. taxpayers on the hook for any more than they have to. The indemnification to the bondholders should not be for any more money than the bondholders would get if come April 1 of this year GM went into bankruptcy filing a liquidation petition. Moreover, the indemnification should not be for more than 20 to 25 cents on the dollar for the bondholders, some of the bonds in question currently are trading for only 19 cents on the dollar and if the indemnification is 25 cents on the dollar that would put U.S. taxpayers on the line for $7 billion dollars and after the $13 billion the taxpayers already lent GM and the $17 billion it will likely be lending GM over the next two years, $7 billion seems like a good limit - it probably amounts to the costliest bailout by the U.S. government for a manufacturing company in U.S. history. Following this indemnification strategy, the U.S. government should use this strategy to move the negotiations along between GM and the UAW. Whatever indemnification amount which is given to the bondholders should be given to the UAW for their retirees health care fund. It is reported in the media that GM would like the UAW to take equity in GM in lieu of promised payment by GM to the UAW retiree health care fund. Well why doesn't the government offer if the UAW accepts the equity in lieu of money payment proposal on the retiree health care matter and otherwise modifies its union contract with GM to allow GM to reduce its labor costs so that it can be a competitive and profitable company, the government will guarantee that if GM goes into bankruptcy over the next seven years the U.S. government will pay into that GM retiree health care fund the same number of billions of dollars it will pay to the bondholders if GM goes into bankruptcy. This type of action on the governments part would be responsible action. If the government has to force GM into bankruptcy to get GM restructured into a long-term profitable and competitive company they absolutely must do it; it will be an extreme betrayal to the American people if the White House bows to union pressure and just loans GM additional monies without first guaranteeing a good restructuring at GM. Nevertheless, the government should really pursue an indemnification initiative here with the bondholders and UAW stakeholders here because the government wants to do everything possible here to avoid a bankruptcy for GM because not only will a bankruptcy hurt the U.S. economy in this time of severe recession in the U.S. but also foreign governments throughout the world are watching closely what the U.S. government does with GM and it will affect the action they take with GM subsidiaries in their countries, the countries of Germany and Canada would be two examples. The stakes here are really big in many respects one being the fate of GM as an automaker that is truly a world-wide automaker and that has the power to take full advantage of the world-wide auto market.