Tom Blumer, in the WSJ, says, “Non-TARP Lenders Aren’t Making Up the Stories of White House Pressure,” citing conversations with anonymous Non-TARPies. According to these former holdouts, still masked and anonymous due to fear of reprisal, government officials went to the mats to pressure bondholders into compliance. Seeing as the group has dwindled from twenty to five since Obama called the group “hedge fund holdouts,” these tactics seem to have been highly effective. GM bondholders, pay attention (if you aren’t already).
According to Blumer,
One person described the administration as the most shocking ‘end justifies the means’ group they have ever encountered. Another characterized Obama was ‘the most dangerous smooth talker on the planet—and I knew Kissinger.’ Both were voters for Obama in the last election.
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.
In less depressing Chrysler bankruptcy news, the government has provided Chrysler with $3.034 billion in DIP financing instead of $3.34 as had earlier been anticipated. Why? According to the WSJ, “Chrysler had some remaining cash, which enabled the government to slightly scale back the aid to $3.034 billion.”
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.”
Meanwhile, Obama is out behind the White House playing with his new puppy…
dwford,
Which means either he is a softy, whose minions are painting as a bully, or a bully who is painting himself as a softy? I am not sure which way you were going.
At any rate, I would like to here the new new story on how this isn’t a big deal. Perhaps NBK wants to change his adjective from unseemly to something a little stronger? Or, will this evidence be dismissed?
My new new set of rules for these cases: The state shouldn’t lend. If they do lend, the administration needs to stay at arms length, if the administration gets involved, they should show restraint, if they can’t show restraint they ought to at least be able to hide the evidence of being a bully.
Long live Chairman Obama!!!
Sounds positively Nixonian. Interesting.
Let’s just leave as the states shouldn’t lend. If the enterprise had merit, private capital would fund it.
Saving a few jobs on the short term is not worth the damage being done.
“One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way.”
I’m surprised by anyone who would be surprised by this. Look, A LOT of people voted for Obama, even though they knew very little about him. We have a very un-curious electorate easily swayed by likability.
Ironically, they voted for the guy they wanted to invite over for a bbq. My sense is that if people actually paid more attention and voted their conscience, we’d have a viable 3rd party option.
Once the Obama-bots get tired of spamming the Zombie Watch 5 Thread, they’ll come here and tell us what wonderful ‘negotiating’ this is and how Obama is only protecting our ‘investment’.
I never EVER E V E R thought I would say this. And I don’t know if I can get it out right now, bbbbbuuutt I think Obama and team is doing an incredible job in crisis management while staying focused on long term goals. This is much bigger than a fat cat keeping all his wealth (non-tarp BH) They are making these threats and power moves to avoid an avalanche, and I respect the fact that they are confident enough in what they are doing to stop asking questions at a crucial time and start giving orders. I think people drastically underestimate just how damn ugly and nuclear this crisis is and could become. The Prez does, and that’s why they are acting this way. I didn’t vote for Obama, and I may not next time, but on this area I’m going to have to agree with him.
I thought we didn’t put much credence in unnamed sources around here? In any case, I have no empathy for the cowardly unnamed hedge fund masters who claim to be under pressure from the administration.
After 8 years of an administration where industry lobbyists wrote legislation deregulating their own industry while at the same time making massive campaign contributions to those who were supposed to “enforce” the deregulated regulations it’s a breath of fresh air to have an President and government that really is a counter-weight to the entrenched interests of the multinationals.
There’s a new Sheriff in town, folks and I’m diggin’ it.
Come on with the Chairman Obama crap, that’s just plain sour grapes. Get a grip. He won the damned election because the majority of voters were sick of being ripped-off, lied to and stolen from – from the previous clowns that used to run things (right into the ground). I’ll take “Chairman” Obama any day over the crooks, thieves and liars that made up the dictatorial Bush administration. Just what in hell good did King Bush do for eight years? I can’t name anything positive, either.
I am glad that Obama is out there getting stuff done. The financial crisis needs to end, and end quickly, and it is great he is being proactive about it.
China is rising, the EU is turning Europe into a potential world economic powerhouse, and the US is losing ground every day. I’d rather have a president who isn’t afraid to get his hands dirty and create results than one who fiddles while Rome burns, or golfs while New Orleans floods, as it were.
Sounds like a lot of hearsay to me.
How do we know if the “somebody” referenced in the article wasn’t Karl Rove?
A simple Google search on the author of this article tells you all you need to know.
Why this site chooses to promote such obviously biased material makes we wonder once again if this isn’t just a Republican front website.
breath of fresh air to have an President and government that really is a counter-weight to the entrenched interests of the multinationals
I wouldn’t go that far, but it’s still a good point.
The real silliness is that most of these folks who are hating on the current admin were not the beneficiaries of the last one. Most were screwed just like the majority of citizens. So, willing recipients of propaganda should not throw stones in their foreclosed glass mansion.
“He won the damned election because the majority of voters were sick of being ripped-off, lied to and stolen from – from the previous clowns that used to run things (right into the ground).”
So it’s better to have our pockets picked by the Democrats instead?
Great logic.
Remind me again… how much money has been pissed away at bailing out those that were ‘too big to fail’ under Obama’s watch? Team Bush and Paulson were horrible, and the best retort the Obama supporters come up with is, “He’s not as bad as Bush”???
Fellas, leave the 3rd grade playground arguing alone, wake up and stop thinking like a donkey or elephant.
So it’s better to have our pockets picked by the Democrats instead?
Yes, since Obama seems to exercising his control over this “his” investments…He is actually acting like a CEO president.. Remember who used to have that nickname?
Bush just gave the money and said “Have at it”.. “do whatever you want”.. “Give huge insane bonuses”… “hold a party”… “get massages”.. “see if I care.”
And the truth about the money (and the reason “his” above is in quotes) is because the lion’s share of money given to the banks, insurance companies, GM, Chrysler, GMAC, etc. were given by BUSH not Obama. Obama was/is only living up to the promises, commitments and contracts made by Paulson/Bush… Can you imagine what Boss Limbaugh would say if Obama had decided NOT to give the promised money to GM/Chrysler/GMAC… I can hear it now… “Breaking Contracts! mmm…That’s Socialism!”
Turn on your brain and follow the money… You will find a line of breadcrumbs that go back to the fall of 2008. This is not Obama money.
And no, I did not vote for Obama, but as every day goes by, I wish that I did.
Changing my last post… No need to say nasty things about POTUS… Things will go as they are meant to..
Life isn’t fair.. Bondholders need to grow up and realize that the US economy is a sinkhole and should be avoided…
Those Hedgehogs should grow a pair and stop whining. “Barry picked on me,” It sounds like they’re in first grade.
If you’re getting paid a million dollars to watch my money, you should stick by your guns and let the judicial branch do its job. Did they? Noooo. Instead, when danger reared its ugly head, they bravely turned their tail and fled.
Strongarm tactics in the White House have been the rule, not the exception. Bobby Kennedy strongarmed people for John, Johnson did it himself. Nixon did it. Karl Rove and Cheney did it, usually while Bush was playing Nintendo or something.
Does anyone in this comments thread actually believe that there is an end game for Chrysler that doesn’t eventually involve shutting it down and selling off the pieces? Only a few competitive products and not much new in the product development pipeline. Given the inevitable end result in a car market with lots of overcapacity, explain how this is crisis management?
” According to these former holdouts, still masked and anonymous due to fear of reprisal,…”
Gotta love the Captains of Capitalism – no balls.
“Does anyone in this comments thread actually believe that there is an end game for Chrysler that doesn’t eventually involve shutting it down and selling off the pieces?”
Think Amtrak.
Tom Blumer is not “of the WSJ”, he simply got an opinion piece posted there. Search the WSJ archives and you will see this is the first time he has had anything published by the WSJ. His usual shtick is doing financial management seminars.
His opinion piece on the so called non-TARP lenders originally appeared on newsbusters.org, and the Journal copied and pasted it.
What has the world come to when the Wall Street Journal is republishing the work of neo-con blog sites?
Carlos,
Which one of the nutbag bloggers do want to use to discredit the author of because he is a nutbag blogger?
The real shame is that we read bloggers because the supposed trusted sources have lost credibility.
Meh. I feel no pity for the hedge funds. The fact is that their investment was worthless and should have been liquidated before we spent a dime on it. I’m pissed we are giving them anything.
Truth be told, though, the whole thing went down a lot smoother and less nefarious than I ever thought it would. Still, now we paid the hedgies $2 billion for worthless assets and bought a controlling interest in Fiatsler!
# jpcavanaugh :
May 7th, 2009 at 4:52 pm
Sounds positively Nixonian. Interesting.
Obama may prove to be sui generis. Presidents have tried bullying companies in the court of public opinion and they’ve tried backroom threats, Truman even tried to seize the steel industry but this time Obama has considerable power with the TARP and he seems to be putting his stamp on what the relationship between government and business will be.
I wonder if Small Business Administration loans will start requiring a government bureaucrat telling you how to manage your company as well as demanding government equity in your business.
BTW, Andrew Coumo can’t go after Bernanke and Paulson’s actions in the BoA/Merril Lynch deal even though they served under Bush as that would question this entire venture in gov’t intervention in business.
guys, do any of you think you get to the top of the heap in politics by being sweet? especialy big
city single party politics, like oh say….. Chicago.
Its a speak softly and carry a big stick thing.
If you cross him in any way, you WILL pay for it.
think of what the local police and bureaucrats can do to
you.
He has the power of the entire federal bureauacy
at his disposal. I for one am not shocked or surprised.
carlos.negros,
So far blogs don’t have to follow any government “fairness” rules.
John Horner,
Do you even know who the first neocons were? Can you name one?
The left has so many boogeymen, neocons, Karl Rove, “corporations”, Likudniks etc etc. Lefties also prefer namecalling (racist, fascist (as if they know what the word means and it’s historical context), homophobe) to actual thought.
The real shame is that we read bloggers because the supposed trusted sources have lost credibility.
The media never really had credibility as much as it had gravitas. It’s lost that as it’s tried to broaden it’s appeal.
The problem with breadth is that you end up sacrificing depth, which ends up with your having a fickle and disloyal readership who will dump you at a moment’s notice. Right now, I think I’ve been reduced to reading the op/ed pages, sports during hockey season and Dilbert.
One of the nice things about blogs and Wikipedia is that it’s news by democratic consensus, rather than filtered through the views of whomever controls the outlet in question. It’s not necessarily any more accurate, but it’s at least been vetted, and can be further edited and reviewed. It’s also not given the automatic credence that traditional media gets, which is nice because it means people are (hopefully) more likely to approach it with a critical mind.
Automotive blogs are good example (and a forerunner, I’d suspect) of the decay of traditional media and the rise of it’s replacement.
P.S. Love the caption photo. Didn’t we run one of Mark La Neve that looked similar?
The left has so many boogeymen, neocons, Karl Rove, “corporations”, Likudniks etc etc. Lefties also prefer namecalling (racist, fascist (as if they know what the word means and it’s historical context), homophobe) to actual thought.
Yeah, yeah, we’re all zero-thought magpies. It’s kind of fun, actually. I see Dick Cheney on the news and I get this hot, tingly sensation all through my body. Then everything goes red.
Half an hour later I wake up exhausted yet strangely cleansed.
Tom Blumer, regular contributor to NewsBusters whose motto is “Exposing & Combating Liberal Media Bias”.
No, he’s not biased . . . Hell, one person said this real bad thing about Blumer and another said another bad thing. But, I don’t have to name names! Because I’m not biased either! Trust me.
Knock on Wood that the new owners of Jeep don’t screw it up.
I just wish that Chrysler & GM hurry up and die/merge or whatever and we can get back to what TTAC was a year ago before the creation of American Leyland.
EP the blogger at Finem Respice added to Mr. Lauria’s story:
* * * This (as yet unproven) yarn goes exactly like this: Confronting the head of a non-TARP fund holding Chrysler debt and unwilling to release it for any sum less than that to which it was legally entitled without compelling cause, this country’s “Car Czar” berated the manager of said fund with an outburst of prose substantially resembling this:
“Who the fuck do you think you’re dealing with? We’ll have the IRS audit your fund. Every one of your employees. Your investors. Then we will have the Securities and Exchange Commission rip through your books looking for anything and everything and nothing we find to destroy you with.”
Faced with these sorts of threats, in this environment, with valued employees in the crosshairs and AIG a fresh, open wound upon the market, the fund folded.
Several commentators, including the likes of DealBook erroneously assumed that the confrontation I referred to was merely a second description of the now famous “never happened, seriously” dispute between Steven Rattner and Perella Weinberg.
It was not.
What I failed to make clear was that, unlike the supposed experience of Tom Lauria’s client, the tale of woe that has been passed to me does not have as its agent of malice the White House Press Corps, which, while certainly annoying, lacks a certain killer instinct and terror inducing reputation. Instead, the creditors to which I refer were purportedly threatened with the Securities and Exchange Commission and the Internal Revenue Service. Moreover, the fund whose tale I am privy to is allegedly not the only entity that was subject to such inducements. There are, according to my source, two others.
EP also observed:
There are three things that are scarier than the actual resort to common thuggery. The ease with which it comes to this administration. The ubiquitous and rank ineptitude that makes a resort to thuggery necessary in the first place- and promises it will become a common tactic in the days to come. And the forgiveness the population regularly affords the administration after one or another of these episodes is, yet again, made public.
The tantrums that follow missed targets sketch an interesting family portrait of a class of politically spoiled children, think Hillary Clinton meets Paris Hilton — totally devoid of real executive experience but somehow still used to getting their way no matter what some silly law book says. I believe I’ll take my chances with the “speculators” over these alternatives any day, particularly when the spoiled children have the 82nd Airborne Division in their toy chest.
Yeah, yeah, we’re all zero-thought magpies.
Not all, but many. Christopher Hitchens can think. Orwell (Eric Blair) was a man of the left and could think.
I just get tired of hearing about neocons, Karl Rove and Dick Cheney.
It comes down to those who are statists and those who are not. The USA was founded by anti-statists. With more than half the populace either not paying income taxes or working for some form of government, the power of the statists will increase.
jwolfe: “I think people drastically underestimate just how damn ugly and nuclear this crisis is and could become.”
Oh, come on. Chrysler has been dying for a decade. Mr. Farago has been running the GM Deathwatch for 4 years. This is just the last spasms of institutions that passed senile a long time ago and are now just empty sockets. Chrysler needs to be liquidated, if only to save Ford. If Fiat wants a US operation they can greenfield one faster and a lot cheaper than the 8 G$ that have already been poured into Chrysler’s rotting carcass. This isn’t a crisis. Its a remediation.
amadorgmowner: “He won the damned election because the majority of voters were sick of being ripped-off, lied to and stolen from – from the previous clowns that used to run things …”
I did not think he was given a mandate to explore being even more feckless with the public fisc.
NulloModo: “… the EU is turning Europe into a potential world economic powerhouse, …”
Stop right there. That is rubbish. Europe is in worse shape than the US.
agenthex: “The real silliness is that most of these folks who are hating on the current admin were not the beneficiaries of the last one.”
Again, just because the last guy spent like a drunken sailor, it does not justify this one spending like a crank addict on a binge.
forest: “guys, do any of you think you get to the top of the heap in politics by being sweet? especially big city single party politics, like oh say … . Chicago. He has the power of the entire federal bureaucracy at his disposal. I for one am not shocked or surprised.”
I not surprised either. However, that does not mean I have to happy about it, nor approve it. I was afraid that we were letting the nation be run by made men from the Chicago machine. And I was right. I would much rather have been wrong.
I’m starting to think the Obama administration is paying an army of shills to go out and post shiny happy nonsense about his administration on blog walls.
Look, when Obama was elected I expected a whole bunch of corrupt nonsense, misguided policies and wasteful spending, but lo and behold – now we have have the complete and utter destruction of the economy for generations to come (via extreme deficit spending) as well as the irreversible shredding of the Constitution. All in the name of good intentions and “It’s not Bush”.
If you guys really think Obama’s policymaking here is “worth it”, then you need to have a collective head check. (And for the record, I’m no Bush supporter either – I thought that man’s economic policy was damn bad to say the least.)
What would you expect from a Che/Chavez-loving Chitcago parasite…..
kowsnofskia
now we have have the complete and utter destruction of the economy for generations to come (via extreme deficit spending) as well as the irreversible shredding of the Constitution. All in the name of good intentions and “It’s not Bush”.
I am Canadian first off. I know little of american politics but did not “bush” and “his” administration run the country 8 years prior to this? Obama is just a baby as presidents go. Far too new to tell much now. But be certin that the US was entering this dismal condition before Bushes departure.
Again, just because the last guy spent like a drunken sailor, it does not justify this one spending like a crank addict on a binge.
I don’t know why this is reply to me since it has nothing to do with what I posted. But it’s real cute how ideologues like to simplify fairly diverse activities that involve using money into the same boat since evaluating different decisions individually makes it too hard to fit neatly into their worldview.
—
I wonder if Small Business Administration loans will start requiring a government bureaucrat telling you how to manage your company as well as demanding government equity in your business.
EP the blogger at Finem Respice added to Mr. Lauria’s story:
So it’s pretty clear all this is built on innuendo. Did anyone find this surprising? Seriously, did anyone?
The USA was founded by anti-statists. With more than half the populace either not paying income taxes or working for some form of government, the power of the statists will increase.
So doing things one way to match some folks a long time back is THE compelling argument here?
Also, shouldn’t people who don’t pay tax go in one bucket and those who pay (and the gov employees that payment employs) go in the other?
Maybe I’m going about this wrong. Maybe this was not supposed to make sense.
Seeing as the group has dwindled from twenty to five since Obama called the group “hedge fund holdouts,” these tactics seem to have been highly effective.
The fact that the bondholders wouldn’t be able to support their valuation argument has a lot more to do with this.
The issue is fairly straightforward here. When you go into the case with fairly weak facts, as have the bondholders, your best friend is time and the ability that it gives you to stall. The hope is to use procedural delays to wear down the opponent, so that the opponent gives you what you want — in this case, more cash — so that you’ll get out of their hair.
The problem with that for the bondholders was that the judge announced this asset bidding/ sale process. That pretty much took the wind out of the stall strategy.
The bondholders had to ask themselves whether it’s worth paying legal fees for such a small increment of time that wasn’t long enough to force the government to capitulate. In something like this, a few weeks wasn’t enough of a delay to gain any leverage. If the bondholders could have kept filing motions to drag things out for several months or a year, it would have been a different story, but that wasn’t looking likely.
Also keep in mind that they were a small piece of the pie. If they were able to make some gains, the lion share of the money would be split with other creditors who weren’t financing the battle. As a “non-TARP” bondholder, there’s a point at which you’d have to ask yourself why you’re paying the legal bills to enrich other people who aren’t supporting your case. This deal gets less sexy by the day.
Unfortunately, political pundits like Blumer are going to miss the business issues that would be the compelling drivers for the decisions being made by the bondholders. If you can step back and actually look at how this case was moving, it’s easy to see why the bondholders are waving the white flag.
Now, the defeated hedge funds just want to lick their wounds, and make it appear to their losing investors that they fought the good fight. It’s easier for fund managers to make allegations to a sympathetic blogger than it is to explain to their investors why they put their clients into Chrysler in the first place.
Wish Obama would pay me to blog for him. It would have to be the easiest job in the world. When not searching in a thesaurus for jargon to make me sound more “enlightened” than everybody else, I’d get to hide behind a computer and call people names that disagree with the administration. I’m not exactly a liberal kind of person, but if the price was right I think I could do a pretty good impersonation online.
There was a time when I thought the current Administration was comprised of buffoons who didn’t know what they were doing, and just making it up as they went along. After all, the transformation of what, heretofore, was a private concern into a government controlled entity was beyond belief in America.
Now, I am convinced this is simply a well planned out strategy in order to fundamentally change the nature of the US economy, and more. These are very strange times. The rule of law has become rather tenuous, and who can say what tomorrow will bring?
I’m reminded of the old Buffalo Springfield lyric: “There’s something happening here, what it is ain’t exactly clear…” You know the rest.
Wish Obama would pay me to blog for him. It would have to be the easiest job in the world. When not searching in a thesaurus for jargon to make me sound more “enlightened” than everybody else, I’d get to hide behind a computer and call people names that disagree with the administration. I’m not exactly a liberal kind of person, but if the price was right I think I could do a pretty good impersonation online.
As long as you didn’t have to hang out with any of them in person, it could be a good gig.
Well at least I feel better I didn’t vote for this guy. I worried a bit about my soul because I didn’t throw in with The Messiah but ifthe election were held today I doubt he would win.
It is a bit startling to see the White House getting directly involved at this level with business. For many years pundits accused politicians of being an arm of big business. How do they feel about the tables turning?
This is short term thinking at it’s finest. Who is going to invest or back a company knowing that when the going gets rough the government porks the investors over the unions. But when you’re trying to be loved by the masses long term thinking goes out the window.
The fact that the bondholders wouldn’t be able to support their valuation argument has a lot more to do with this.
The fact that more than 2/3 of the dollar amount of debt had already agreed to the deal had the most to do with the judge’s ruling. That they may have agreed because of presidential intimidation, fear of additional hassles over the TARP, or just the natural fear of bankers over government regulators (it is, after all, one of the most regulated industries around) may not be for a bankruptcy judge to decide.
In a bankruptcy it’s hard to buck a large majority of creditors.
Still as Robert Schwartz says, the deal stinks and shines.
The government is already having trouble selling bonds. Obama’s actions in regard to the Chrysler bondholders may have seriously harmed investors’ trust in the US government.
I’ve long said that India will surpass China as an industrial and economic power because while flawed, India is a democracy. In China, your partner, your vendors and your customers are often state enterprises. With everyone including the judges who try lawsuits involved with the state, the chances of contracts not being enforced is high.
There’s a reason why contract law is at the heart of law school curricula (at least it is in the US). That’s because contracts are the essential need of business. Without contracts and their enforcement you can’t have any business.
When the government usurps the position of senior debt holders, contracts don’t mean as much as they used to.
As I said yesterday, when Michael Barone calls it “gangster government” (using your power as a lender of last resort to extort control of a business for you and your friends, what defenders of Obama’s auto policy describe as “protecting the taxpayers’ interests” others might call acting like a loan shark from organized crime), you have a problem.
This isn’t just those on the extreme right. Conservatives and libertarians of all stripes are outraged by what’s been going on but some of the strongest criticism of the PTFOA’s abuse of the senior creditors has come from former supporters of Obama in the financial industry.
Hence the lack of demand for government bonds in their latest offering. If the government is going to change the rules (at least how they are played if not de jure) on contracts to which the gov’t is not a party, how can it be trusted to pay its own debts? If corporate bonds can be dismissed by the gov’t, what’s to stop treasury from reneging on repayment of its own debts? But in a sense, that’s exactly what the president is doing by taking control of Chrysler and not discharging its obligations to senior debt holders.
Just who will invest in the proposed public/private venture to clean up the mortgage backed securities mess?
Hence the lack of demand for government bonds in their latest offering.
Is that what the right-wing columnists (who apparently wouldn’t know a long bond from James Bond) are telling you these days? Seriously?
Wow, that’s quite amazing. The fact is that long-bond yields are going up, i.e. investors pay less for them. You see, the sentiment that the world is going to end has been burning off. The natural result: more interest in more risky investments, leading to expectations for higher yields on the safe ones.
We’ve had ridiculously low treasury rates because of global fear of collapse. This has been widely regarded as being a Treasuries bubble, with investors paying more for them than they probably should when they were desperate to protect their money. Economic improvement was bound to put an end to this, and that means higher yields/lower prices for bonds. No need to retreat to US government securities when you can make more money on more risky stuff.
My advice to you is this — get your information about finance and business from people who understand finance and business, not from political columnists who are always looking to justify their political religions. The political pundits don’t tend to understand business or markets, and get it wrong pretty much every time. (And that includes the politicos on both left and right.)
Oh, and PCH101, Chrysler’s current debt to the gov’t is unsecured, at least according to CNN.com that reported so. Future debt to be used in the restructuring will be secured and exchanged for the government’s 8% equity.
Considering the reports that the billions already loaned to Chrysler will not be repaid, it doesn’t sound like they were secured by much.
I’m still not clear on the math. The bondholders get 30% of what’s owed to them. The UAW gets 80% of what’s owed to them.
Chrysler’s current debt to the gov’t is unsecured
I’m not sure what you mean by that, but the UST loan docs executed last year are secured loan agreements. I’ve now posted them for you twice, so go read them.
Considering the reports that the billions already loaned to Chrysler will not be repaid, it doesn’t sound like they were secured by much.
Look, I’ve been berating you for months that they were effectively grants, not loans. But you’ve been confusing the legal standing of the government loans with the practical real-world value of the collateral behind them.
It’s quite possible to have a security interest, but to have security that is inadequate to collect everything one is owed. It’s like having a $1 million mortgage on a $100,000 house; yes, you legally have collateral, but the collateral isn’t worth enough to satisfy the debt. Referring to such a loan as unsecured would be inaccurate; it is secured, but the value of the security isn’t enough to make a difference.
The bondholders get 30% of what’s owed to them
And where would you suggest that the other money come from?
Come on, folks — if you lend money to people (or businesses) that can’t repay it, then you don’t get repaid. That’s fairly simple. The moral of the story: Don’t make loans to companies that are losing money if you expect to be repaid in full.
The UAW gets 80% of what’s owed to them.
They got no cash and worthless stock. If you want to keep whining about that, go ahead.
If you guys spent more time studying finance and less time reading right-wing blogs, you’d see that the UAW got a whole lot of nothing. I’ve never seen so much handwringing about stock that has no real value to it.
Since most of us have our doubts about Chrysler’s turnaround, that means that the union’s failure has simply not yet been made official. Their VEBA value is one step above one of those Nigerian email scams.
@PCH101
(gratuitous Michelle Bachman channeling) You be da man! You be da man!
It is simply astounding that so many commentators are whining because multi-millionaires were denied yet another opportunity to pick up ‘distressed’ assets at 10 cents on the dollar and get paid back in full, while the UAW was essentially handed $X billion in Lotto tickets.
Is there a name for this socio-political equivalent of Stockholm Syndrome?
Is that what the right-wing columnists (who apparently wouldn’t know a long bond from James Bond) are telling you these days? Seriously?
Nope, just my own take on an AP report. Folks said it’d be harder for the government to raise money and that’s what happened. It’s possible that it’s correlation without causation, but it’s a natural conclusion.
I admit to being an ignoramus about business, as I am about most things. You, on the other hand, claim to have some working knowledge of business, finance, and law. Do you mind sharing your CV with us? How did you get your expertise in those areas? I currently do embroidery, some writing, and dabble in collectibles. I have professional experience working with computers, chemicals and waste.
I don’t live in the world of finance. An old friend, however, has 25 years experience as a trader and risk manager. He now is global head of risk services for a financial services company that is in the top 100 global risk and financial technology specialists. I have an email to him asking him how he thinks the capital markets will respond to the President’s actions.
I’m willing to learn, as long as my teachers have appropriate resources.
As for “right-wing columnists”, I suppose that to some I might resemble that remark, since as a classical liberal that makes me somewhere on the political right these days and also because I’ve written for PajamasMedia, which is center right and publishes a number of conservative voices. I haven’t built my brand much yet as a writer, but I’m working on it.
Since my writing has ended up on the National Review’s site and other influential conservative/libertarian sites, and since I’ve exchanged correspondence or spoken with many of those “right wing columnists” you disparage I suppose that rather than being the mindless dittohead caricature you have of conservatives I’m actually part of a discussion.
There’s a lyric in Bob Dylan’s delightful outlaw song Joey, about Joey Gallo, “always on the outside of whatever side there was”. I’m a contrarian by nature.
Weak Treasury auction sends stocks lower
By TIM PARADIS and SARA LEPRO – 16 hours ago
NEW YORK (AP) — Weak demand at a Treasury bond auction touched off worries in the stock market Thursday about the government’s ability to raise funds to fight the recession.
The government had to pay greater interest than expected in a sale of 30-year Treasurys. That is worrisome to traders because it could signal that it will become harder for Washington to finance its ambitious economic recovery plans. The higher interest rates also could push up costs for borrowing in areas like mortgages.
it’s a natural conclusion.
No, it really isn’t.
When the world is pricing in a depression, US treasuries became the equivalent of putting money into a mattress. Investors paid high prices to buy them and money flooded into them, because that was the place to go when everything else (stocks, corporate bonds, commodities, real estate) was going to hell in a handbasket.
In the last several weeks, stock markets have had a 35+% rebound, and a lot of the negative indicators seem to be plateauing and improving. The urge to pay high prices for Treasuries — to put more money into the mattress — subsides when things are looking up. Which they are.
So Treasury yields are going up. This is not surprising, and a lot of us were expecting this result when optimism returned.
All of this has nothing to do with Chrysler. Nothing. If everyone was so scared of the government, they would be buying nothing in the US — not stocks, not bonds, not anything — but that is clearly not happening. When investors lose confidence in a country, they just stop doing business there, they don’t push up its stock market more than 35% in a few weeks.
Leave politics out of it. They will only confuse and mislead you when you’re trying to figure out what’s going on.
Is there a name for this socio-political equivalent of Stockholm Syndrome?
Actually the Torah warns judges to not favor either a rich man nor a poor man. When a rich man and a poor man strive in a court, compassion for the poor should not outweigh justice. Stealing from a rich man/company is still stealing.
Those who are outraged by the government’s actions are concerned about some very fundamental issues.
Leave politics out of it. They will only confuse and mislead you when you’re trying to figure out what’s going on.
It’s interesting how your business analysis (and every other analysis) makes your own political views to be benign. It’s always nothing to see here, normal market forces, now that Obama’s in charge.
Concern about the gov’t cutting the queue ahead of senior debt was first raised by Prof. Edward Altman during the congressional hearings last December. He’s not a “right wing columnist” and Obama wasn’t in power just then.
In the meantime we’ll see what happens. The response to the gov’t bonds is just one data point and Occam’s Razor says that you’re correct and it’s normal market reactions to a slowly improving economy (or more accurately, an economy that has more or less bottomed out). We’ll see over time. Will people immediately pull all their money out of the US? Of course not. We live and work here, but the climate for business investment in the US may deteriorate.
One of Michigan’s problems is that the tax and political structure here are not that inviting to new business. The US will experience that writ large.
The Gramscians have won. Reagan may have brought down the Iron Curtain but the leftists won the long march through the institutions in this country. Education in this country has been so dumbed down and politicized over the past four decades, in no small part due to teachers’ unions, and now the country is shifting left.
With a majority of the country either paying no income tax or living off of tax receipts, the trend left will continue.
“I Won.”
Actually the Torah warns judges to not favor either a rich man nor a poor man. When a rich man and a poor man strive in a court, compassion for the poor should not outweigh justice. Stealing from a rich man/company is still stealing.
Well, yes and no. Income redistribution for the continuing function of society isn’t stealing, at least not in the classical sense. Everyone is participating to a degree in a social contract, one in which they, in theory, have a voice in.
Don’t like it? Campaign against it, or move somewhere that the social contract doesn’t exist.
For the record, I don’t like this much either, though for different reasons (I’d rather they be nationalized outright). But this compromise is sadly necessary to avert a worse situation.
Those who are outraged by the government’s actions are concerned about some very fundamental issues.
Again, yes and no. The government is making a decision based on the needs of the people it has to serve. In this case, it’s trying to float Chrysler and GM through the recession, or at least wind them down in a controlled fashion. That they’re having to play a little hardball shouldn’t be surprising: if they didn’t, the cost to society as a whole would be higher
And no one is dying as a result of this. That’s important to note. This is just putting a small number of people to financial inconvenience in order to prevent a much larger number of people from being put to a much larger financial inconvenience.
It’s always nothing to see here, normal market forces, now that Obama’s in charge.
The president has little bearing on this assessment. Obama has been good for consumer confidence, because he’s charismatic, which is good. Geithner did a good job initially of spooking the markets, but he has improved his interview skills and seems to have inspired investor confidence again. In that sense, the leadership matters.
The point here is that there isn’t linkage between Chrysler and treasury rates. You’re trying to find relationships that aren’t there.
It’s not all about this polarized right-left black-and-white war that you constantly wish to engage. A lot of times, it’s just about people trying to make money.
agenthex :
May 8th, 2009 at 3:13 am
“Also, shouldn’t people who don’t pay tax go in one bucket……”
I have truly enjoyed reading many of the comments here and in other threads, there are some very knowledgeable people here and one can learn a lot.
This is probably off topic but I do have a question though concerning the above quote which I have seen or heard many times. Just exactly who are these people who don’t pay taxes?
The only people I can think of are illegal aliens and even they pay sales tax and other taxes when they buy something or pay for a service.
I thought maybe you were referring to single parents or low income families that have kids because of the deductions they get but many of these folks still pay property taxes and sales taxes and social security taxes and or a host of other state and local taxes.
I looked over my own taxes to see if I fit this category as a single male with an income that is probably lower than most of the folks here, I discovered that I get very little of the money they take from me in federal taxes back and I get nothing at all most of the time with state taxes unless I ask them to take out money in addition to my taxes. I also pay a rather hefty amount in social security taxes and Medicare taxes that I don’t get back.
I realize what people like me might pay is probably only a drop in the bucket compared to what some others might pay but then again my income is no where near as great as others and the same could be said of the single mom/dad or low income family so I have to wonder who are these people who don’t pay taxes?
Buzz,
Your post is both factually wrong, and displays a sad class warfare mindset that, like the post, based on a set of falsehoods.
The non-tarps are not millionaires. Reading this site should be enough to educate you that the holders are mostly funds. In fact, I didn’t see any rich guys listed.
I already posted the problem with screwing speculators on this site. If you burn the speculators, you burn the original holders of the debt, and the borrowers because the speculators keep the risk down and thus the rates down. If the speculators won’t play because of class warfare by the government, then everyone loses.
Also, the stockholm syndrome quip shows that you think the commentators are ignorantly beholden to their rich masters. That’s a typical illusion held by people who blame their own lack of self actualization on a conspiracy of power to keep them down. Sadly, it’s fostered by a conspiracy of power to keep them down – by the left. Those on the right believe that with less interference by government, we can all achieve more. Those on the left think that most cannot achieve on their own, and must have help from them which they use to justify taking property from those who have achieved in order to do so. Thus, they make the underachievers dependent on them, so they can continue to hold power. The folks on the right are trying to stop a conspiracy from taking power, those on the left are trying to take power and hold it. Those on the right can identify the people that are trying to take away freedom. Those on the left usually blame faceless groups and corporations.
So, wake up and smell the coffee.
The non-tarps are not millionaires.
Actually, they probably are mostly corporate and high net-worth investors, because the holdouts were mostly hedge funds. There are federal restrictions on who can invest in hedge funds that effectively keep the little guy out of them:
A significantly higher minimum investment is required from hedge fund investors. Under the Investment Company Act of 1940, certain hedge funds only may accept investments from individuals who hold at least $5 million in investments. This measure is intended to help limit participation in hedge funds and other types of unregulated pools to highly sophisticated individuals.
http://www.ici.org/funds/abt/faqs_hedge.html
The buyers of GM’s baby bonds are most likely the little people. But the “non-TARP Heroes of the Chrysler Revolution” were identified, and they aren’t the husband-and-wife leaders of the Kettle family.
Also, the stockholm syndrome quip shows that you think the commentators are ignorantly beholden to their rich masters. That’s a typical illusion held by people who blame their own lack of self actualization on a conspiracy of power to keep them down.
You’re baiting me, aren’t you?
Tony,
First, as a single male under retirement age, you likely do pay taxes. No matter how small your income. I was a net payer at 15.
However, the left will use you in their arguments to prove that the capitalist system is unfair, and that people who make more should pay higher taxes. The truth is that one day, you will be the one making more, and are no charity case now.
The right may indeed be saying people at your income don’t pay taxes. They are referring only to federal taxes. You will get sucked into that group even though you aren’t the problem because you probably don’t get back more than you pay. In this case, the right is no better than the left in their methods.
Most of us on the right believe it’s just fine for you to pay little or no tax. What we do not believe is that a single parent family with two children that currently gets a larger rebate than they pay should get a tax cut. They can’t get a tax cut, because they are not paying taxes. They are getting tax system welfare, and will get more with the so called “cut”. Welfare is welfare, tax cuts are tax cuts.
A few more terms.
FICA is not a tax for low earners. It’s an investment plan, albeit bad, and enforced. It is a tax for high earners because it has now become a redistribution scheme.
State taxes vary from place to place and are not what is being discussed unless specified that they are.
Average Household Income is a figure which is used to show things it doesn’t. Whenever you hear that stat used to show economic change, hold onto your wallet. A lefty is now trying to use their success in destroying families as proof that the right hates poor people.
Payroll Taxes – these taxes are lied about by both sides. Workers pay all taxes because taxing wealth is insufficient, and besides, all wealth is a product of labor. Your pay stub is a lie. There are more taxes on you than you know. Your employer is supposedly paying those taxes, but in reality, he pays it out of the fruits of your labor. If you don’t produce more value than you are paid, plus all the other costs of having you around, then you will be let go. If you make 30k today, you likely cost your employer double that. OTOH, if you make 60k, you likely cost about 95k. The hidden costs go up as income goes up, but they also lessen as a percentage of total costs. CEO’s now, by law, have their pay 100% declared. Even that doesn’t include the cost of producing the document that declares their pay, and that likely costs more than you make.
The Rich. This term is used to describe high income earners whether they actually have a positive net worth or not. If you got a severance package for 150k, you would be rich. Then you would figure out how poor you are because after taxes, you wouldn’t even have enough to buy a home in most cities. Welcome to the upper class you greedy bastard.
The poor. This term is used to describe low income earners whether they own their own homes outright, drive fancy cars, or are homeless.
I could go on and on. The bottom line is that the whole thing is confusing, and is purposely so. The confusion gives the government power and cover.
PCH,
That law doesn’t work anymore because retirement funds invest in the hedge funds.
Yes, I will admit that Yale University is a bunch of rich bastards, but the others?
Also, if a corporation holds the fund that holds the bond then who holds the stock in the corporation? Again, the kettle family. Firemen, teachers, laborers, office workers, managers, etc. If there is some huge proportion of the holdouts really held by a few rich folks then they have yet to be identified. I await your identification.
If you want to start a class warfare revolution, why don’t you figure out how to eliminate the huge profits made by the middlemen who mostly provide little value? And when I say eliminate, I don’t mean tax away, I mean eliminate at the source.
That law doesn’t work anymore because retirement funds invest in the hedge funds.
You are grossly exaggerating. The average individual investor is not going to have a substantial amount, if any, funds in a hedge fund, either directly or indirectly.
The affected parties here should have known what they were doing. They shouldn’t be placing money here if they don’t.
I must admit, I find it kind of amusing that we could spend many, many months on this website discussing the eroding value and performance of these auto companies, now to see the politically motivated suddenly discovering asset value where none previously existed.
Chrysler is a crappy company. Hardly anybody wants it. That pretty much assures everyone that there is not much value here.
I don’t care whether Obama, McCain, Bozo the Clown or Hitler had been elected president in the last election, the problem remains that we have a rotten company in a weak economy that is on the chopping block, which means that it ain’t worth much. If you knew that during the heyday of the Chrysler Suicide Watch series here on TTAC, then surely you must not have already forgotten?
PCH,
You know as well as I do that the complaint is not the number, it’s the process. The fear is that if the process is corrupted, the value of everything plummets. Well, except beans and bullets.
I don’t know, or care what the real value of the assets are. It doesn’t matter if those assets can be stripped from their owners and handed over to political supporters.
@Landcrusher
If you want to start a class warfare revolution, why don’t you figure out how to eliminate the huge profits made by the middlemen who mostly provide little value? And when I say eliminate, I don’t mean tax away, I mean eliminate at the source.
I’m all for it!
http://www.amazon.com/Perfectly-Legal-Campaign-Rich-Everybody/dp/1591840694/
http://www.amazon.com/Free-Lunch-Wealthiest-Themselves-Government/dp/1591841917/
To the barricades, comrade!
You know as well as I do that the complaint is not the number, it’s the process.
Actually, it seems to have a lot more to do with the election, the one that you lost.
This should have nothing to do with that. The legal issue is one of whether the bondholders got a fair price based upon liquidation value. It looks as if they did, because the company is basically dead otherwise, the brands suck and there is no market for used car factories or the stuff in them.
If you don’t think so, then provide some compelling, factual reasons that have some bearing on the automotive industry to convince us.
Note that your answer should not include any references to political parties, Obama or his choice in puppies, but things like the depreciated value of assembly equipment, the brand equity in the badges, or underlying real estate value. You know, stuff like that. Automotive stuff.
In a bankruptcy it’s hard to buck a large majority of creditors.
Still as Robert Schwartz says, the deal stinks and shines.
If you think they’re getting a poor deal, the concerned “conservatives” should pool their money together and make a bid for the assets.
I have a feeling that’s not going to happen as the ones with the money on that side are not the stupid ones.
–
There’s a reason why contract law is at the heart of law school curricula (at least it is in the US). That’s because contracts are the essential need of business. Without contracts and their enforcement you can’t have any business.
More repetition. I’ve asked before for the legal precedents they’re violating, and I don’t think that’s coming.
–
If there is some huge proportion of the holdouts really held by a few rich folks then they have yet to be identified. I await your identification.
The judge required the holdouts to be publicly identified. They then pulled out of the case, so start making up excuses for them.
Oh, and the “death threats”? I guess there are less ramifications to lying to the tools than to lie in court.
—
If you want to start a class warfare revolution, why don’t you figure out how to eliminate the huge profits made by the middlemen who mostly provide little value?
That’s exactly what’s coming with new regulations, and I fully expect the conservative types here to be ranting about how the big bad admin’s violating freedom of markets.
—
As a final note, the posters who’ve been wrong repeatedly should issue apologies. Not doing so would only cement their already tattered reputation.
Just exactly who are these people who don’t pay taxes?
It’s more of a figurative term for poor people with low wages who are in under the 25% middle class tax bracket.
To conservatives they’re lazy sob’s who don’t pull their weight even tho some of that weight is the former group doing their best to suppress wages.
Landcrusher :
May 8th, 2009 at 1:05 pm
agenthex :
May 8th, 2009 at 2:09 pm
Thank you both for your replies.
“To conservatives they’re lazy sob’s who don’t pull their weight even tho some of that weight is the former group doing their best to suppress wages.”
Excellent display of ignorance beyond comprehension.
How easy it must be for you to make up a straw man argument and then rip it apart. Think of that on your own, did you?
PCH,
You are trying to change the subject. The election is another straw man argument.
You tried to win an argument by misusing technical terms to support your position. I called you on it. You couldn’t squiggle out of it. That’s all there is to it. I think this is 3 in a row.
If you have issue with one of my statements about the President or the Administration, then quote it, and object to it. None of it was key to this line of discussion as I can recall except that we shouldn’t have to take their word for it that the figure offered is fair.
Also, it is not up to me to prove the number is too small, I did not argue that it was. I merely argued that your position on the fairness of the process was flawed, and you helped prove that by flipping your position to no one can prove it’s not a fair number. I don’t have to prove the number is wrong, I have shown that your argument that the process is fair was based on misdirection.
The courts get to decide the rest.
it is not up to me to prove the number is too small, I did not argue that it was.
Sure you have. First, you redefined it to serve your purposes to a method that nobody but you uses, because redefining it your way would lead to a higher number. Then, you claim that the result must be a lowball because the guy who you disliked in the election had something to do with it.
Please. The companies aren’t worth much of anything, and anyone who isn’t kidding themselves already knows this. Every reader of TTAC knows it.
The bondholders can’t claim to have been ripped off if they receive everything to which they were entitled. That’s the principle at work here, and there is no apparent violation of it.
The problem for the fund managers who served as bondholders is that they have some ‘splainin’ to do to their investors. Their investors probably took it in the shorts on this deal, and not all that long after they made their initial investments. Some of these funds may end up being sued themselves by disgruntled investors who are going to allege all kinds of nasty things about the people who made the decisions.
Don’t be surprised when managers who are worried about the impact on their reputations start trying to create excuses and distractions. They made a bad investment, they blew it, and now they’re going to have to deal with it.
agenthex: Which is the straw man part? Hating on the poor or suppressing wages?
Pointing out that well-intentioned government programs often end up hurting the poor instead of helping them, or that taxpayers are tired of funding the bottomless pit known as welfare, or that 50 percent of Americans do not pay federal income taxes, is not “hating on the poor.”
Your suggestion that this represents hate is, in fact, a strawman argument, and is not accepted by people who truly understand the issues or the debate surrounding it.
And the fact that people aren’t paid as much as you think they should be is not evidence that wages are “surpressed.”
Pointing out that well-intentioned government programs often end up hurting the poor instead of helping them
As just one example, opposing reasonable minimal wages is exactly hating on the poor while keeping them that way.
There are plenty of place all around where marketism has created large and permanent and lasting class divisions. But leave it to the either dishonest or ignorant to argue that ghettos build character and incentive, the social safety net doesn’t work, or even worse, that America in the now is a magical place where lessons from elsewhere and other times do not apply.
amadorgmowner :
May 7th, 2009 at 5:45 pm
Come on with the Chairman Obama crap, that’s just plain sour grapes. Get a grip. He won the damned election because the majority of voters were sick of being ripped-off, lied to and stolen from – from the previous clowns that used to run things (right into the ground).
——————————————–
Why is it crap, when it is true?
Chairman Mao (or Fuhrer Hitler) had massive grassroots support because the majority of his countrymen were sick of being ripped-off, lied to and stolen from – from the previous clowns that used to run things. You just don’t win a civil war or election without popular support.
“Perhaps I missed the memo to cease those practices, since I don’t subscribe to the newsletter, but I doubt it.”
Agenthex:
Maybe if you spent less time on virulent websites spewing propaganda and spent more time reading actual news, you’d see both political parties do what is necessary to stay in power. Singling out one political party to aim your hatred at is your choice to do, but it’s intellectually dishonest.
If you would like to have an honest debate about wage surpression and see how both political parties contribute directly to it, see the illegal immigration problem.
As an example, 25 years ago, trades like roofing and drywalling were heavily represented by blacks in the Los Angeles area. Now, it’s mostly illegal immigrants doing the work for less than half the price. Hey, when you’re okay with living 20 people to a 3 bedroom house, you can make do earning less. We’re importing the poorest of the poor. And look whose wages got surpressed!
Democrats AND Republicans are in support of this policy.
Or how about an issue near and dear to leftists and Democrats everywhere – bilingual education. Never has there been a policy with good intentions go so terribly wrong. And yet, even though it’s been proven to hold down wages for those who don’t have to learn English, it just keeps on going.
But as you know, being a leftist means never having to say you’re sorry or that you’re wrong.
agenthex :
May 8th, 2009 at 1:53 pm
If you think they’re getting a poor deal, the concerned “conservatives” should pool their money together and make a bid for the assets.
————————————
I am afraid you mixed up two issues.
1) Is the new Chrysler worth what it is priced at?
2) Did the BK/restructure pay back secured creditors their due amount?
Let’s say Chrysler’s true worth is $3, with a $10 debt. The first secured creditor is owed $1 but payed $0.3. The new Chrysler is valued at $5.
Then, a conservative would think
3) The new Chrysler is overpriced and thus is not worth investing
4) The existing creditors didn’t have enough value out of the deal
You see, both 3 and 4 can happen at the same time, because someone jumped into the head of the queue.
If the entire property right of the new Chrysler is given to the secured creditor as it should be, then it’s either 3 or 4, but not both.
# Pch101 :
May 8th, 2009 at 10:31 am
Leave politics out of it. They will only confuse and mislead you when you’re trying to figure out what’s going on.
——————————————-
I would support that.
But the top politician in the US thinks otherwise.
NulloModo :
May 7th, 2009 at 6:06 pm
I am glad that Obama is out there getting stuff done. The financial crisis needs to end, and end quickly, and it is great he is being proactive about it.
China is rising, the EU is turning Europe into a potential world economic powerhouse, and the US is losing ground every day.
——————————————-
There are 1.4 billion people in China; there are 0.3 billion in the US.
If there is one essential thing that the US has a clear advantage in, is the rule of law (and respect for private property). And that has just been compromised.
If confiscating properties from a tiny group of greedy capitalists for the good of the entire country is the right thing to do, I am sorry but that’s China’s game. The US will lose.
Maybe if you spent less time on virulent websites spewing propaganda and spent more time reading actual news, you’d see both political parties do what is necessary to stay in power. Singling out one political party to aim your hatred at is your choice to do, but it’s intellectually dishonest.
It’s incorrect (and lazy) to assume all members of a category are necessary equal, but I’ll chalk that up to the social conservative’s preoccupation with stereotypes.
While staying in power is a natural function of political parties, actuality matters, and one party and ideology in particular in the US is especially destructive in its deception.
–
Democrats AND Republicans are in support of this policy.
The reason the dems have been so successful recently is they’ve co-oped many themes of the traditionally corporatist conservatives, which left the latter with backwards social issues and a fringe market outlook.
–
Now, it’s mostly illegal immigrants doing the work for less than half the price.
Are you arguing the conservative movement are hating on browns to help blacks? Really?
–
. Never has there been a policy with good intentions go so terribly wrong. And yet, even though it’s been proven to hold down wages for those who don’t have to learn English, it just keeps on going.
That’s not what bilingual edu means. I suggest learning what the terms means before trying to make claims with them.
Also, is this another example of well meaning racism?
1) Is the new Chrysler worth what it is priced at?
2) Did the BK/restructure pay back secured creditors their due amount?
Let’s say Chrysler’s true worth is $3, with a $10 debt. The first secured creditor is owed $1 but payed $0.3. The new Chrysler is valued at $5.
These issues have already been addressed, repeated. That means many times. So I’m not sure if this is a further attempt to either demonstrate ignorance of bankruptcy, or inability to to understand words, or refusal to read them, or what.
Furthermore, the theme of dodging the point and just repeating yourself has also been called out numerous times. Watch:
lw :
May 7th, 2009 at 7:42 pm
Life isn’t fair.. Bondholders need to grow up and realize that the US economy is a sinkhole and should be avoided…
————————————-
Very true. Bond investors or stock investors will be eventually weeded out by government maneuvers. Case in point: bond/stock investors got a combined 11% out of the new Chrysler. They thought they own the company. They don’t.
With bond/stock investors going up in IQ and going down in number, it will be harder and harder for businesses to borrow money. There will be two consequences:
1) More laser printer financing and the greenback will become Fiat money in no time.
2) More monopoly. It’s harder for start ups to borrow money. Larger cooperation will still be able to burrow from the Federal Reserve of Laser Printing.
agenthex :
May 8th, 2009 at 5:14 pm
These issues have already been addressed, repeated. That means many times. So I’m not sure if this is a further attempt to either demonstrate ignorance of bankruptcy, or inability to to understand words, or refusal to read them, or what.
—————————————
If the point is so clear, why would you even say “If you think they’re getting a poor deal, the concerned “conservatives” should pool their money together and make a bid for the assets.”
That’s kind of a … stupid point, isn’t it?
Their getting a poor deal has nothing to do with how much Chrysler is valued at.
That’s kind of a … stupid point, isn’t it?
The point being made is that if the assets are worth more and are put out for sale (which they are), then someone else who wants a screaming deal should rush in and bid more. It’s a steal, so buy it.
That’s the whole point. It isn’t a steal at all. No one else wants them. The assets may be worth even less than what is being paid, with the government overpaying in order to speed things up.
You guys keep trying to argue for value, but you can’t prove it. Don’t worry, you’re not alone — the bondholders couldn’t prove it, either.
The bondholders want to play victim, because they don’t want to admit that they made a very poor investment decision for their clients. They didn’t want their names released not because of death threats, but because they didn’t want to be branded as the morons who lost a ton of money on that dumb Chrysler deal. This screw up won’t be good for business.
Meanwhile, you keep screwing up your analogies, because they involve giving cash to other parties, which is not happening here. Among the government, union and the bondholders, the bondholders are the only ones who are being paid. It’s a little tough for the party that got all the cash to defend any accusations of queue jumping.
Their getting a poor deal has nothing to do with how much Chrysler is valued at.
Except that’s exactly what this type of bankruptcy means. They are getting paid for the assets. They don’t want equity because it’s worth nothing to them.
Seriously, you have this thing in front of you called a web browser. It enables you to read information, which can either come from this site (NPK-Boston’s comments are quite good), or any number of legal centric sources.
Your homework is to find some precedents for these cases and report on those findings.
Pch101 :
May 8th, 2009 at 5:30 pm
Again this is very informative and educational reading, thank you for that.
“That’s the whole point. It isn’t a steal at all. No one else wants them. The assets may be worth even less than what is being paid, with the government overpaying in order to speed things up.”
It all seems to boil down to the above statement no mater how you cut it so the question that comes to the top of my mind is why is the federal government involved in this in the first place? Would it not have made better sense to take the billions dumped into these companies and spent it on retraining and attracting alternative businesses? From what I’ve read here these companies are as good as dead and this is only prolonging things or am I misunderstanding something here?
Ronnie Schreiber challenged me with the question: “Do you even know who the first neocons were? Can you name one?”
In modern times William Kristol’s father Irving was one of the earliest modern neocons, but the term has roots going back many more decades than him.
William F. Buckley never considered himself one, but many of his views fit the mold in many ways.
In Bush Jr.’s era Paul Wolfowitz and Richard Perle are two of the better know guiding lights (or should it be guiding darks?) of the neocon school of thought.
I spent my formative years surrounded by John Birch Society members, so don’t assume I know nothing of conservative orthodoxy. But, this really isn’t the place for that discussion, eh?
Would it not have made better sense to take the billions dumped into these companies and spent it on retraining and attracting alternative businesses?
The problem with this is that it takes time, and it’s potentially tedious and bureaucratic. Ironically, the current method was probably chosen because it’s fairly straightforward and it fits into the existing framework of law (no matter what ignorant people may believe).
Similarly in the case of continuing bank bailouts, obama was asked specifically why the successful swedish model of nationalization was not used, and he claims at least that’s not how market principles or whatever work in this country.
It’s all rather amusing that people want to paint him as a leftist or fascist, when factual evidence points to actions more “conservative” than much of western europe.
If anything, it’s the leftists who should be pissed that he didn’t turn out as progressive as whatever they thought they voted for.
agenthex: As just one example, opposing reasonable minimal wages is exactly hating on the poor while keeping them that way.
The minimum wage discussion is moot, because most businesses – even the hated fast-food outlets – pay more than the minimum wage.
The poor aren’t poor because the minimum wage is too low.
agenthex: There are plenty of place all around where marketism has created large and permanent and lasting class divisions.
No, personal behaviors and attitudes have created a large and permanent class divisions. Government programs, although well-intentioned, are reinforcing behaviors that, over the long run, keep people mired in poverty.
The simple fact is that, since the 1960s, we’ve spent hundreds of billions of dollars on the poor, and, by your own admission, there is still a “large and permanent underclass.” That, to me, would suggest that it’s time for a new appraisal of the problem.
agenthex: But leave it to the either dishonest or ignorant to argue that ghettos build character and incentive, the social safety net doesn’t work, or even worse, that America in the now is a magical place where lessons from elsewhere and other times do not apply.
You need to dispense with the labeling. Just because someone disagrees with you does not mean that they are “dishonest” or “ignorant.”
Many of us actually work with the poor. We know why they are in the present situation, because we see firsthand the behaviors and attitudes that keep them poor.
It helps to have real-world experience here. It makes one better informed.
The minimum wage discussion is moot, because most businesses – even the hated fast-food outlets – pay more than the minimum wage.
That’s why it’s somewhat reprehensible because they’re just doing it out of spite.
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No, personal behaviors and attitudes have created a large and permanent class divisions. Government programs, although well-intentioned, are reinforcing behaviors that, over the long run, keep people mired in poverty.
The evidence is quite clear in countries with and without these government programs.
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and, by your own admission, there is still a “large and permanent underclass.”
You misread. The places that have this problem are the ones without the central authority to raise the field at the bottom.
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Many of us actually work with the poor. We know why they are in the present situation, because we see firsthand the behaviors and attitudes that keep them poor.
The funny here is that this is exactly what your beloved revolutionaries thought. Woe be unto those who run counter to human nature.
agenthex: That’s why it’s somewhat reprehensible because they’re just doing it out of spite.
So for-profit businesses, just to prove that an increase in the minimum wage isn’t needed, increase their costs and pay employees MORE than the going rate for that type of work?
That is a non-answer at best, and just plain nonsense at worst.
These employers pay more than the minimum wage because they have to in order to attract workers.
agenthex: The evidence is quite clear in countries with and without these government programs.
The United States has had those programs, too, so we can judge their effectiveness without ever leaving the country.
The evidence is quite clear that they are not effective in preventing the formation of a large and permanent underclass – after all, you admitted that it still exists in this country, 40 years after Lyndon Johnson embarked on his ambitious Great Society program.
And please note that there is a permanent and growing underclass in Great Britain, France and Germany, too, even with their generous social welfare programs.
agenthex: You misread. The places that have this problem are the ones without the central authority to raise the field at the bottom.
I guess that includes European countries, too, as I noted above. And please note that the floor has already been raised – private employers have been raising wages ABOVE the minimum rate for quite some time now.
agenthex: The funny here is that this is exactly what your beloved revolutionaries thought. Woe be unto those who run counter to human nature.
I think that the left has been attempting to prove that one for years, although they either don’t realize it, or don’t want to realize it…
So for-profit businesses, just to prove that an increase in the minimum wage isn’t needed, increase their costs and pay employees MORE than the going rate for that type of work?
Wait, I thought you just said hardly anyone employees at those wages, so it doesn’t matter as a symbolic gesture. Which one is it? Oh man, I’m so confused.
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The evidence is quite clear that they are not effective in preventing the formation of a large and permanent underclass – after all, you admitted that it still exists in this country, 40 years after Lyndon Johnson embarked on his ambitious Great Society program.
And please note that there is a permanent and growing underclass in Great Britain, France and Germany, too, even with their generous social welfare programs.
People only say this because they haven’t seen the kind of underclass in countries without the programs. Comparisons only work when you compare relatively, not against some ideal nirvana in your head.
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I think that the left has been attempting to prove that one for years, although they either don’t realize it, or don’t want to realize it…
I’m sure the left in your head does all sorts of crazy things, but I’m not talking about them. In the here and now, there’s only one ideology who still talks about humans as rational characters if not fungible commodities, assumes perfect information, and all sorts of idealisms that hardly worked in the pre-industrial era never mind today.
agenthex: Wait, I thought you just said hardly anyone employees at those wages, so it doesn’t matter as a symbolic gesture. Which one is it? Oh man, I’m so confused.
I said that most businesses pay more than the minimum wage, which goes against your contention that opposing an increase in the minimum wage keeps people poor and proves that conservatives hate them. Most people already make more than the minimum wage.
You replied that businesses are only doing this to be “reprehensible because they’re just doing it out of spite”. Which, of course, is utter nonsense. Why would a company employ people at a higher wage, and increase its costs, out of spite?
Do you really think that McDonalds, for example, is run that way?
If you are confused, it is apparently because you can’t keep track of your own arguments and counterpoints.
agenthex: People only say this because they haven’t seen the kind of underclass in countries without the programs. Comparisons only work when you compare relatively, not against some ideal nirvana in your head.
Comparing non-western countries with western countries is difficult because, cultural differences and attitudes about work, money and wealth all play a part in how people fare – just as they affect how various groups WITHIN a particular country fare.
The attitudes regarding work, saving and delay of gratification are very different in Pennsylvania Dutch Country than they are in North Philadelphia. That is more important than government programs, or lack thereof. Give someone in Pennsylvania Dutch Country $1 million, and he or she will still probably have $990,000 of it within five years (or, perhaps, have grown it to $1.5 million). Give that amount to most poor people, and he or she will be broke within five years.
Look at the example of most lottery winners (most of which were poor, or at least lower middle class, when they won the lottery). Most of them are bankrupt within a decade after winning the lottery.
Within a country, we can compare how many people escaped poverty BEFORE the enactment of these programs with the rate after they were enacted. The results are, at best, mixed, regarding the effectiveness of these programs.
We can also note that, even after the enactment of these programs, there is STILL a permanent underclass (you just said so yourself), even though some people prefer to pretend that this country isn’t spending anything on programs to help the poor.
agenthex: I’m sure the left in your head does all sorts of crazy things, but I’m not talking about them.
Interesting…I often say the same thing about your characterizations of “the right.” The right in your posts only exists in your imagination. You, for example, accused conservatives of “hating on the poor,” which is a complete distortion of their position.
Let him who is without sin cast the first stone…oops, now I’m going to be accused of being a religious fanatic, because, as we all know, all conservatives are religious nuts!
I said that most businesses pay more than the minimum wage, which goes against your contention that opposing an increase in the minimum wage keeps people poor and proves that conservatives hate them. Most people already make more than the minimum wage.
That’s what you thought I said. What’s actually said is that it’s a wedge issue pushed out of spite for the poor. ie. It’s not a huge issue on the ground, so opposition is clearly meant as a symbolic gesture, which is in many ways worse.
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Comparing non-western countries with western countries is difficult because, cultural differences and attitudes about work, money and wealth all play a part in how people fare – just as they affect how various groups WITHIN a particular country fare.
The challenge is not limited to western countries. Pretty much all the relatively wealthy places ON EARTH with very few exceptions have not been on the “conservative” plan.
The challenge was thrown down in this thread: https://www.thetruthaboutcars.com/chrysler-zombie-watch-6-bankruptcy-prof-condemns-chrysler-c11/
So take it.
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there is STILL a permanent underclass (you just said so yourself)
You keep saying this as if there true. Again, the implication is that is almost a 1:1 correlation between relative prosperity and progressive policies. The permanent underclasses tend to be in places run the way you seem to prefer.
Just take the challenge.
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You, for example, accused conservatives of “hating on the poor,” which is a complete distortion of their position.
“Hating” is a figure of speech in the vernacular. The reality is that there is a sense of entitlement not among the poor, but the rich in this country. The culture of individual greed dictates (again strongly implied in you posts) that success (measured by money) is a personal issue to the exclusion of social phenomena.
This was exactly the fundamental cause the of our recent downfall. For example, the prime example of this is perhaps AIGFP, whose blatantly destructive financial transactions were rewarded with massive personal payouts. Compare to poor person crimes that are rewarded with massive cell time. Another example closer to the topic are similar execs in Detroit taking very generous paycheck to run companies into the ground.
They may not “hate” the poor, but they certainly don’t give a shit about putting everyone else in the poorhouse to get their due. And why should they? It’s not as if there’s a lack of peeps cheering on that culture.