In debt exchanges, companies typically ask creditors to swap current debt for equity, new debt with a lesser value that matures later, or a combination of the two.

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Japan would, indeed, become more exposed to foreign creditors if the current account were to slide into deficit, but that is unlikely unless the world economy takes a turn for the worse and oil prices soar two things which are unlikely to happen simultaneously.

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The bondholders are protected from the bankruptcy filing, but unsecured creditors and especially city employees, both current and retirees, will suffer most.

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Indeed the current sovereign-debt jitters may be a sign that creditors are starting to assert themselves again, and demanding higher yields from less prudent governments.

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And that means that everybody is going to have to give a little bit -- shareholders, workers, creditors, suppliers, dealers -- everybody is going to have to recognize that the current model, economic model, of the U.S. auto industry is unsustainable.

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But if the foreign resources are badly employed, or if the current-account deficit grows too fast, a country may not be able to meet its obligations to foreign creditors.

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The FDIC's current approach, subject to change at the whim of the bureaucracy, is that it will seek to protect the creditors, and particularly the short-term creditors, of the operating subsidiaries while seeking to impose losses on the long-term creditors of the parent companies.

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