http://www.salon.com/tech/htww/2009/04/30/chrysler_and_the_vultures -----------------------------------------snip "I am in turmoil," says Chrysler investor Geoffrey Gwin in a Wall Street Journal feature story published today. According to reporter Serena Ng, Gwin, the "principal" of the Group G Capital hedge fund, "is wrestling with the knowledge that the retirement plans of some 80,000 Americans may rest in his hands."
"At the heart of his angst," reports the Journal, "Mr. Gwin says, lies his own family's experience. His father, a 30-year veteran of Delta Air Lines, lost most of his pension and health-care benefits after the airline filed for bankruptcy protection in 2005." While he may swallow hard and vote to help salvage parts of the company, Mr. Gwin says his father's treatment makes him loath to pave an easy road for Chrysler. "It's very hard for me to deal with this," says the younger Mr. Gwin, a 41-year-old father of three. "As horrible as the situation looks for Chrysler's employees, I keep thinking about how horrible my own family felt when Delta was going to file for bankruptcy and my father's pension was going to take a hit. No task force or the federal government came to his aid then." So... in other words: No bailout for Dad, so the hell with Chrysler's workers. The Journal also published an overwrought "letter" from Gwin explaining all the anguish that the head of this "small investment fund" feels at his unexpected responsibility for Chrysler's future. I call bullshit. If you're looking for an example of the "speculators" that President Obama attacked in his speech on Chrysler today, Group G Capital is a prime suspect. Not once in Serena Ng's article do you hear Group G Capital described by its true name: It is a distressed debt hedge fund that specializes in swooping in on companies who are in big trouble, buying their debt at a discount to face value, then hoping to eke out a profit either in an out-of-court restructuring deal or in bankruptcy court, where they'll play hardball. [....] An argument can be made that, as with your run-of-the-mill carrion feeders, distressed debt funds fill an important ecological niche in the capitalist ecosystem. You can think of them as facilitators of the kind of "creative destruction" that keeps natural selection hopping on Wall Street. But now might not be the best time to make that case. Especially when you consider this: We don't know for sure whether one of the reasons why the hedge funds refused to make a deal with the government was that they had bought credit default swaps insuring that they would get a nice payoff in the event of bankruptcy. But it doesn't take a great leap of the imagination to think that distressed debt funds are exactly the breed of hedge fund sharks most likely to engage in such behavior. It's a perfect fit for their ultra-cutthroat business model. So spare us the sob story, Geoffrey Gwin. You're in this game to make money by speculating on the bonds of companies that are in big financial trouble. Now you've found yourself smack in the middle of a major political showdown between a pissed-off public and a Wall Street that hasn't had this little credibility since 1929. Too bad for you. Good luck sweet-talking the judge. -raghu. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
