Trying to understand the GM bankruptcy deal

[brimic]

That should send a clear message to investors- don't buy bonds or stocks in Union companies.

The effects of the GM nationalization will be felt in many ways we could only begin to imagine.

[RevDisk]

Our local conservative talk show host did a segment this afternoon on the nationalization of GM. He made the point that, if someone would have told him a year ago that the government would own GM, he would have said they were nuts. The speed at which Obama is moving is alarming. What's even more alarming is that nobody seems upset.

Shareholders and bond holders are upset.  However, the bold holders have been told that their historical first claim on assets is no longer the case.  They will get pennies on the dollar, and they best be grateful to get even that.  I noticed the anti-shareholder vibe in the media and the Administration.  Not good. 

I swear I'm not a conspiracy nut, but I moreso see all of this as trying to implement the Chicago Model at a federal level.  Destroy, drive off, or unionize any business that has any size or strength.  Not because they are 'evil', but because they are power rivals.  Any businesses who survive, allow them to 'thrive' if they accept the centralized power structure and are willing to play ball.  Use taxes/pull to buy off enough folks to stay in power. 

They want to replace the aristocracy of wealth or merit with the aristocracy of pull or connections.  That's how Chicago runs, that's how Obama wants the US to run. 


Not friggin good.  Gods, we get rid of the militant neocons, and who replaces them?  Chicago style organized corruption.  When we throw the bums out, I wonder what brand of nightmare will replace the current one?

[Balog]

Not friggin good.  Gods, we get rid of the militant neocons, and who replaces them?  Chicago style organized corruption.  When we throw the bums out, I wonder what brand of nightmare will replace the current one?

[De Selby]

I find it hard to feel all upset for the bondholders losing their "historic" right to get paid before the actual employees, who were under a contract to do work in exchange for their money (whether you think they were overpaid or not).

I also don't think it is accurate to say the unions had coercive power that the bondholders didn't.  Secured lenders can strangle a company faster than a union can organise a raffle. 

[brimic]

I find it hard to feel all upset for the bondholders losing their "historic" right to get paid before the actual employees, who were under a contract to do work in exchange for their money (whether you think they were overpaid or not).

Bond holders are owners of the company, Unions are mere tenents. A Union contract doesn't mean anything if the company goes out of business and there is no more need for labor.

[Monkeyleg]

Shootinstudent, let's suppose you lent someone money to start a business, and you entered into a contract to cover your investment, making you a secured party in the business. If the business went under, would you expect to get as much of your money back as possible per the contract, or would you expect to share your money with employees who were laid off? The employees have no secured interest in the company. They worked for the company and were paid for their work. When they stop working, they stop getting paid. Or would you have it that they continue to get paid even when they're not working?

If the government overrides bankruptcy laws and gives bond holders whatever the government feels like giving them, companies are going to have a very hard time raising cash. Those investors can find safer havens for their money. Maybe they'll buy bonds in the new Hummer company in China. It sounds outrageous to say it, but the Chinese are now more trustworthy than the US government when it comes to business.

[buzz_knox]

That should send a clear message to investors- don't buy bonds or stocks in companies.

I fixed it for you.  The law concerning investments was just changed radically and not for the better.  Investing in any company that the US decides is critical enough to get involved with just became too risky to engage in.

I work on bond deals for a living.  If our bondholders suspected that the US would say "screw you, you get paid last or not at all," we'd never see another bond sold. 

[zahc]

It will end with our being TOLD what cars we can buy.

We already are "TOLD" what cars to buy, and have been for a long time. If you don't think so, go try to buy a new car with no ABS, no catalytic converter, one that doesn't pass safety regs. There are tons of cars on the world market that we are not "allowed" to buy a drive in the US. You are already being told what cars you can buy.

I think it's somewhat amusing to see people get upset when they lose another increment of their liberties, when they already are boiling alive, but are just used to it. After a period of time, the new status quo will become comfortable and they will settle down, until the next straw is piled on. The slippery slope is a logical fallacy but a political reality.

[longeyes]

If bondholders are not going to get paid back first, they are going to demand a MUCH MUCH higher rate of interest.  So much for reasonable borrowing for private enterprise.

All of this is basically an attack on capital, which for leftists is a form of theft anyway.  They don't cotton to the idea that capital comes from somebody's savings, which comes from somebody's work, deferrerd gratification.

What we are seeing is a transfer of wealth from the saver/investor class to the government-dependent and -controlled worker class.

Who knew the revolution would start in bankruptcy courts?

[Gewehr98]

Well, there you have it.

Longeyes has his long-awaited-for revolution, sparked by GM's bankruptcy, and wrapped in a government conspiracy.

Considering it only took 33 posts to get to that point, the thread did amazingly well prior.

Put a fork in it, this one's done.