Few months ago, when the crisis was in  full swing and bailout talks dominated news, our leadership declared some companies as “too big too fail”. Presumably they had to be helped and nurtured because their failure would have devastating effects to entire economy. This applied mainly to banks and financial institutions, but at the time same approach was indicated to all large companies. One of them was General Motors, at one point not only the largest car manufacturer in USA but the biggest company in the world. In spite of huge cash injection from the government, GM is proving to be not too big to fail and follows in footsteps of Chrysler.
Today the company has filed for Chapter 11 bankruptcy protection, once attempts to save the giant through agreements with bond holders and unions didn’t bring desired results. During reorganization company will receive $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That’s on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans. If everything goes as planned, and proceedings are as swift as Chrysler’s emerging company will be 60% owned by US government, 12.5 % would be in hands of Canadian government, with the balance going to unions and bond holders. Current shareholders would no longer have a stake in the company. Our government will be in a car making business. Scary thought, but I’ll leave it that for now.
A moment for reflection. If GM is not too big to fail, what could be next? Any other security/company/market that the FED has been keeping on life support by pumping money into?
Yen fell hard today, especially the beast, supporting my GBP-JPY trade which was initiated last week. This is another one of the longer term trades I’ve been taking, or trying to take, since the beginning of the year. I decided to take some profits.

The entry at 151.65 happened after a few weeks of waiting. My target is 162-63, but after this nice move today I’ve decided to ensure profitability and closed half of my position for 720 pips gain. Yen lost ground across the board, probably on good news. This seems to be the pattern these days. Did I say that I liked today’s action? It was great. Larger time frame chart still point higher and I expect ultimate objective to be reached fairly soon.
While I wait for that to happen, possible shorter term trade is getting set up elsewhere.

AUD-CAD should become a buy above 0.8820. There is a catch, though, some kind of sell off is needed first. I’d like to see few hours of pull back in price, before entering into a trade. No firm order is set yet, because I don’t know the precise level. If this trade happens, objective will be 0.8930-08940.
A thought just occurred to me, is Dollar too big to fail?

Mike K.