Doug brings to mind the problematic adage that when a recession or worse wipes out financial claims founded on bad economic decisions, it clears the decks for a renaissance of growth (e.g., Mellon's famous "liquidate everybody" quote).
So David implies that when the Gov zeroes somebody out, that is uniquely bad for the economy, but when it results from chance, then it's good. But since the Chrysler deal is a more or less unique event, it could qualify as really bad luck for the expropriated creditors. Or as Hemingway might have said, if he had done finance, the trick is not to be liquidated oneself. David would have more of a case insofar as people believe the Gov is about to go on a jihad of "financial claim reassignment" (my term of art; Obama people, feel free to adopt it). So far most of the reassignment has been from financial miscreants to taxpayers. -----Original Message----- From: [email protected] [mailto:[email protected]] On Behalf Of Doug Henwood Sent: Friday, May 01, 2009 11:27 PM To: David B. Shemano; Progressive Economics Subject: Re: [Pen-l] Crybaby vultures On May 1, 2009, at 9:49 PM, David B. Shemano wrote: > As I pointed out in an earlier post, Chrysler is sitting on $1.89 > billion in cash. If the proposed payment to secured creditors is $2 > billion, it is a certainty that one or more of the hedge funds is > going to come to court and offer to pay $2.1 billion for all of the > assets, because all the fund would have to contribute is $200 > million (the other $1.9 billion is sitting right there). In other > words, $200 million for all of Chrysler's receivables, inventory, > real estate, intellectual property, etc. The only reason that would > not happen is if the US government exercises its will to > intimidate. No matter what your politics, you should be very, very > concerned if that happens Why? Because workers and the broad economy would be better served than a bunch of hedge fund vultures? I thought American bankruptcy law has historically been friendly to debtors. Screwing creditors now & then is good for growth. Why not now? Doug _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
