Oct 16: Prof Edward Altman talks about a GM or Ford bankruptcy

Edward Altman, the Max Heine Professor of Finance at NYU's Stern School of Business, says the probability of General Motors defaulting withing the next five years is significantly over 50 per cent. The metric he uses to measure a company's distress - the Z-score - has for the first time dropped below zero for GM and is close to the Z-score for a typical firm that goes bankrupt. A bankruptcy of the scale of GM would be significant, in the same way that the recent bankruptcy of Lehman Brothers has had a severe impact on the bond markets.