The more I learn about the Chrysler "bankruptcy," the angrier I get. This is not a bankruptcy, it is a looting of a troubled business for the benefit of organized labor. Pure and simple.
The secured bondholders are getting screwed by Obama. They own almost $7 billion in secured debt in Chrysler. Obama asked them to take a 70% hit in the restructuring, and get nothing in equity. When they refused, Obama attacked them, called them "speculators, and now he is trying to cram them down even further and give to the unions the lions share of the equity (55%) in return for forgiving 57% of its unsecured health care and pension obligations.
It is so incredibly damaging to our financial markets for a President to intervene by changing the rules of the economic game in mid stream, and looting the assets of the company for the benefit of his political supporters.
What happens the next time a group of hedge fund managers are asked to provide financing to a troubled company? Who in their right mind would make the investment, knowing the President might just step in and steal your money?
Guess what? They are not going to play this game. They won't invest here when the rules can change in the middle of the game. Capital will dry up - the US isn't the only place on the planet to invest.
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Did you know that it is not illegal for a corporation to:
1. Rig corporate board of directors elections.
2. Use corporate money to defame, impugn or otherwise attempt to promote an individual to the board or keep someone else off the board.
3. Use corporate money to sue a stockholder with the objective of keeping this stockholder off the board of directors.
4. Use corporate money to lobby, influence or otherwise "buy off" lawmakers to insure the above activities get legal protection.
I know. I tried to run for the board of directors of our monopoly power company. All it got me was insults, defamation and being threatened with a lawsuit funded with my money as a stockholder.
This also explains why CEO's get huge salaries because the CEO determines who serves on the board, not the stockholders.
People wonder why everybody is getting out of stock market right now. I wonder why anybody in their right mind is buying stocks with those rules of the game.
And this shaft job that happened to the bondholders at Chrysler will only accelerate the exodus.
Rob--
Had a thought this morning about the problem with Lesser Developed Country lending during the '70's and early '80's. Too busy to post much, but isn't there an eerie similiarity between the actions of these LDC's and our current crop of policy makers? Wasn't corporate flight one of the outcomes? Do we need to replicate the economic conditions of failure--and that of a failed state--in order to learn from the mistakes of others?
It was the "liberal" policies of the IMF that prompted the financing of these countries' failures, was it not?
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