Hey buddy, remember that $100 you loaned me? Well I can pay back $22. Does that work for you?

That is basically what GM is telling its lenders this week. Chrysler is offering even less to its lenders and the stock of both companies is probably worth nothing in a bankruptcy.

Wow!! Think about that statement for a moment.

Lending is the backbone of business and here we have some of America's oldest, largest corporations not even close to paying back their loans. And car companies are not alone. There are 10,000 publicly traded companies on our stock markets. I hear the overall bond market is expecting higher rates of interest and default rates of 40% to 50% over the next few years. That default rate is astonishing.

As I write this, the stock market is up today and the S&P500 has been hovering around 8,000. The stock market indicates stability and a possible bottom for recovery; the bond market indicates financial disaster. That is a major disconnect that is not being reported in any significant way.

This is a very strange time. One week we hear about "depression" and "deflation" and the next week we hear about "profits" and "recovery" and the "bottom". How is a regular guy supposed to make sense of it?

Do you remember J. Wellington Wimpy? This kind of bankruptcy talk makes me think of him. Always hanging around, asking for a loan, when you know he wont pay it back.

What are American's thinking when they see major companies like GM walking away from their debt? When families see that corporate behavior, how will they feel about paying their own mortgage and credit cards and car loans when they run into trouble?

Corporations have always have financial advantages over households but this current economy really highlights those differences. The tax tea parties were a side-show. Will there be bankruptcy tea-parties? Should there be?

Yes, it is a very confusing time.