The real poker game started today. President Obama upped the ante by claiming that he was prepared to see GM go into bankruptcy.

Now the unions and the creditors have to figure out if its a bluff or not. It’s not an easy call when you consider that the guy you’re playing cards with has a bunch of backers that might make him change his strategy in mid-stream. In other words, he has to talk to Congress before he can respond to any bets that up the ante.

For the unions it’s probably a little easier game to play. Whether true or not I suspect that they figure that what they give up now can be taken back later. After all, some of Obama’s chips were purchased for him by them. Basically, cave to the extent necessary and live to fight another day. Chances are your friends will make sure you don’t suffer too much.

The real action will be with the creditors. Whatever they give up is gone forever. Trading debt for equity in a company with a badly fractured business model is bad enough. Layer on the fact that the company operates in an industry that has far too much capacity and you’re rolling the dice (sorry about mixing metaphors here).

They have a couple things going for them. The government blinked the last time it tried to force a debt for equity swap. Recall that was part of the GMAC bailout and when the debt holders didn’t step up as required the government looked the other way. They also have time. Obama set a sixty day or else time limit. The problem with that is if there is no agreement at the deadline his or else option isn’t so inviting.

If the feds want to take GM into bankruptcy without some prearranged agreement with the creditors, you are not talking about a clean, quick rinse. That would mark the beginning of a war. It could take years to sort everything out and while a lot of people think the company could survive a prepackaged Chapter ll, few think it would make it through a protracted battle.

A lot is going to depend on how hard the Obama administration wants to play this game. They can exert substantial pressure on the creditors, particularly if the bondholders end up being the only sticking point. Given the unprecedented involvement of the government in the financial affairs of the country at this point in time, they can probably exert not too subtle pressure behind the scene as well.

It’s going to be interesting to see who folds first. It shouldn’t be a surprise if this goes down to the wire or that the finish line gets pushed out a bit. Just a guess but I think that this will go right up to the brink before anyone blinks and I think that one will be the government.