VELSHI: 2009. Doug, I see an expression on your face that looks a little worried

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http://transcripts.cnn.com/TRANSCRIPTS/0809/27/cnnitm.01.html

YOUR MONEY

Significant Progress Made on Talks Over Wall Street Bailout; Is Your Money Safe?: Answering Your Questions

Aired September 27, 2008 - 13:00 ET

<snip>BONNIE, CALLER: I'm holding $79,000 worth of corporate bonds in both Ford and General Motors that will mature beginning May 15th of 2009 through September 15th of 2009. If I would have to sell these bonds at this point I would have to take a $12,000 loss. Would you hold on to these bonds in an IRA account?

ROMANS: So, the bonds for an IRA account, how much? $79 in Ford and GM bonds maturing in May 15th.

VELSHI: 2009. Doug, I see an expression on your face that looks a little worried.

FLYNN: yes. I don't know why you're still holding them in the first place given the state of the credit markets and those two firms which are could absolutely go bankrupt. We do hear from time to time people saying how could a company like GM go bankrupt or other companies go bankrupt and the fact of the matter is they can still operate and be completely bankrupt and all of those corporate bonds are completely worthless.

So the question I would ask is if what is going to bother you more? If you sell it now and take a $12,000 loss or if you try to wait until May or next September and you have zero?

VELSHI: I want to point out. Buried in all of this news that we've seen, this is the only weekend in history where a failure of the major bank is not the number one story in the news. Another piece of news is that General Motors has drawn down its entire credit line, its entire credit line. It took out the last three and a half billion.

Which means at this point General Motors' ability to finance its operations is entirely dependent on cars being sold and their finance unit working. If individuals are wanting to buy corporate bonds what is your advice to them? They should do this in funds, should they not?

FLYNN: Most definitely, but it will not have the same appeal in the semiannual dividend. You have to take a look at these companies and say how much are they earning relative to what the value of the company is? A lot of these companies have negative earnings and you know if you have negative earnings how long will you stay in business?

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