blatantninja, I'd like to get your slant on the credit default swaps the automakers are said to be burdened with in their loan programs--at least I think that's what they were talking about yesterday--the GAO guy and some of the senators seemed to be saying that one of the major factors for the crisis was the relationship between lending institutions and the automakers, and that this was a place where so far no concessions, negotiations etc were taking place. Wouldn't this be an even larger factor than the 10% of their budget devoted to payroll and benefits being FUBAR?
Sorry if that's too vague but I'm economically handicapped. If you can explain it in words of one syllable, I'd be grateful.
I am not aware of any CDS exposure in the Big3. If there is it's probably minor. There are a TON of CDS out there on them, but that's kind of like someone else having a life insurance policy out on you. It doesn't cost you anything or affect you in anyway (unless they push you in front of a bus), but they get paid if you croak.
The way the credit market is affecting them is two fold:
1) Each of them has an wholly or majority owned finance company (I think GM spun part of GMAC off, but not all, but I don't remember). They generally run all their ultra low interest rate offers through them. That's a losing proposition though obviously if you are lending money at lower rates than market rates. They would make it up though by also running most of the ultra high rate (IE low credit score) loans through there as well. They were often lenders of last resort for car buyers.
Well, these companies don't just have tons of cash they are sitting on to lend out. They're doing the same thing as what goes on in the mortgage industry. They make a loan to the customer, take the loan an package it with a bunch of other loans, then sell it off in the form of an asset backed security (they can all sell the actual loans and just service them as well, but that is less common these days).
Just like the MBS market, the ABS market has dried up. The ABS market isn't quite as bad off. Defaults have risen, but not as much as in MBS, and while MBS are being crushed by depreciating asset values (thus making them under collateralized), the ABS have always had depreciating asset values (all cars depreciate over time), so that risk is built in, and cars aren't really depreciating any faster than they used (In fact, in economic downturns, the used car market often goes up as people look to by used rather than new).
Regardless of that, there are still less people buying ABS securities, which means GMAC and it's brethren have less money to lend.
2) The second area they get slammed is in the one-off financing side. This is when you finance through a third party, generally banks and credit-unions. SometimesWell, lending has decreased significantly in this area as banks are hoarding what little credit they have.
Those two basically have made it much more difficult to get a car loan, especially the teaser rate loans they advertise and the 100% loans, which hurts auto sales since basically no one buys vehicles all cash.
So loan issuers want larger down payments and/or better credit scores, which, combined with people feeling the pinch in their wallet already, means a sharp downturn in auto sales.
Add a sharp downturn in auto sales to the fact that the profit margin on the Big3's main lines is far less than their foreign competitors (partly due to the wage issue I put up before, partly due to having to offer heavy incentives to get people to buy them) means perfect storm for the Big3.
Stop the madness!! 
Okay, better now--carry on. 
