Chryslers Bondholders

thebang

I wanted to ask the board what their opinion was of the Obama adminstrations treatment of the bondholders as 'speculators'? While I do not subscribe to fox news theory about him being a socialist, I think its very bad thing that the government overstepped their legal authority.

silverharp

Lose the rule of law and the game is over, the so called speculators were probably pensions funds carrying out their basic fiduciary duty. Its comical that GM will be owned by the gov. and the unions

pocketdooz

thebang wrote: »

I wanted to ask the board what their opinion was of the Obamas treatment of the bondholders as 'speculators'? While I do not subscribe to fox news theory about him being socialist or anything, I think its very bad thing that he overstepped any proper legal authority.

There is a trend now of far too much government regulation coming into the financial services industry. Once the president of the U.S. steps in assessing fixed income investors and proposing to choose the CEO of compaines I think it's going to far.

thebang

It just seems like they want to dole out punishment arbitritrally.

The comical thing is that no one has the authority to challenge him on this issue, because the republicans are a laughing stock, and they have cried wolf far too many times.

Économiste Monétaire

silverharp wrote: »

Lose the rule of law and the game is over, the so called speculators were probably pensions funds carrying out their basic fiduciary duty. Its comical that GM will be owned by the gov. and the unions

Secured bondholders now being referred to as speculators :rolleyes:, what does that make unsecured creditors like the UAW health care fund? When I last read about the bankruptcy plan the unions were getting approx. 55% ownership of the new holding company. Government is also taking a loss on the transition financing given over the last few months. UAW > Taxpayer > Investor.

A Random Walk

The big advantage that the US financial markets hold over the rest of the world is their mature market system and mature legal system. I'd rather invest in a Chinese share listed on the NYSE than in Shanghai because I have a greater confidence in the figures coming from the US and there is less likelihood that my money will be stolen.

On the one hand I'm very impressed by the blunt and forthright approach by Obama. He played to win quickly and won decisively. On the other hand I think this is bad news for US investors as it dents confidence in the impartiality of the system.

At the end of the day I think this will be forgotten about quickly and the only impact will be that certain companies will see a slightly elevated risk premium. There will be no other impact unless this becomes a regular occurance and I can't see that happening.

ixus

Holding GM Debt? Gubbermint Is Robbing You!

Do you hold GM bonds? Perhaps some so-called "unsubordinated" debt?

A lot of people - individuals - do.

These bonds were quite popular for college savings and other long-term plans - including retirement.

Why?

Because the coupon was pretty good, they were unsubordinated (meaning senior, or first) preference in the event of bankruptcy, and GM has been around for a very, very long time.

If you hold this debt you are about to be wiped out by our government, who has decreed by fiat, without even a vote in Congress, that:

1. You don't matter.
2. You don't have a right to rely on anything in the prospectus printed when these bonds issued, or even common and statutory law.
3. Your rights do not exist. Your government has literally declared economic war on you.

Let me be clear: The government, specifically President Obama's Treasury, is acting exactly as did George Bush's Treasury - they are behaving as gangsters who are about to rob you blind, returning only 10 cents - if that - on the dollar for your investment and they are going to force you to take it at gunpoint.

This despite the fact that the UAW is going to get somewhere between 80 cents and the full buck for every dollar they are owed for their VEBA.

VEBA obligations are unsecured and subordinate to yours under the law.

That means that under the law the UAW is entitled to exactly nothing until you get every dollar you are owed.

President Obama and Geithner have declared that it does not matter what the law says - they are going to do whatever the hell they want - and what they want to do is SCREW YOU.

They just got done ramrodding Chrysler bondholders with the exact same "deal", shoved down their throats, and allegedly enforced with threats of tax audits and other jackbooted actions if the bondholders resisted in court.

To be clear: You have every right, under the law, to receive full value for your bonds before anyone else gets paid for so much as one penny of the subordinated or unsecured debt owed to them, INCLUDING THE UAW.

You accepted a lower coupon in exchange for what was represented to be less risk as a consequence of this protection.

Now, after the fact, you are being robbed just as clearly as you would be if President Obama and Tim Geithner came into your house at 3:00 AM with automatic weapons and shoved them up your nose, stealing every penny you had.

I ask you this essential question:

If President Obama and Tim Geithner will steal from you in this fashion, literally at gunpoint, do you believe that your 401k or IRA will not similarly be confiscated whenever our government decides it wants to steal from you on similar "terms" - or when it suddenly "needs" some money (like when the bond market has had enough of this crap and stops being willing to finance a nearly $2 trillion annual deficit!)

Disclosure: No position in any GM-related instrument.

silverharp

Économiste Monétaire wrote: »

Secured bondholders now being referred to as speculators :rolleyes:, what does that make unsecured creditors like the UAW health care fund? When I last read about the bankruptcy plan the unions were getting approx. 55% ownership of the new holding company. Government is also taking a loss on the transition financing given over the last few months. UAW > Taxpayer > Investor.

who'd have thunk it that the US would be leading the way in workers cooperatives