General Motors is defaulting on an upcoming $1 billion debt payment. A bankruptcy is "probable," says the CFO. So why isn't the stock at zero already?

The company's market capitalization is flirting with $1 billion. And yet the stock is perplexingly, up 1.7 percent today to $1.73 — a nonsensical result that's best explained by the random noise of Wall Street. Traders flitting in and out of the stock, trading on the volatility of its shares, are the only ones still holding GM — save for some true-believer retirees who still can't grasp the idea that their erstwhile employer might go under.

The last hope for those former assembly-line workers and any other dead-ender GM owners is a debt-for-equity swap. That's a scenario in which GM CEO Fritz Henderson, a finance man recently installed at Barack Obama's behest, cajoles bondholders to swap their bonds for new shares. The new shares will dilute existing shareholders — but a fraction of something is worth more than all of nothing. (A bankruptcy could theoretically leave crumbs for the shareholders after creditors are paid off, but that seems mathematically impossible, given GM's debt.)

The fact that someone, somewhere, thinks GM is worth even $1 billion shows how uncomfortable we remain with the capitalist ideal of creative destruction. No one wants unemployment ranks to swell, or dealerships shuttered, or factories silenced. But there must be some accounting for all the years that GM flooded the markets with sports-utility vehicles on zero-percent financing, and refused to pare back its unwieldy cost structure. The unions, too, must pay a price, for their insistence on retirement benefits which were never properly funded — a compromise which doomed both their members and their employers.

Sure, the government is backing General Motors — if that backing means anything, given the administration's apparent comfort with a bankruptcy filing. If General Motors doesn't have $1 billion to pay its debts, it's surely not worth $1 billion. The sooner everyone can face the reality — that GM is absolutely worthless — the sooner we can drive on to our next destination.

(Chart via Yahoo Finance)