http://bit.ly/HJ1HY In the New York Slimes, no less!
- - - GENERAL MOTORS bondholders have until 5 p.m. on Saturday to accept a parsimonious offer to exchange their loans for stock and warrants. Most likely, enough of the creditors will say no to force G.M. into bankruptcy. But there is no escaping the long-term damage that has been inflicted on credit markets by the Obama administrations attempts to reward the United Auto Workers, one of the presidents strongest supporters in the last election, while trampling decades of legal precedent regarding owners of corporate debt. The G.M. debacle is déjà vu all over again. In the Chrysler bankruptcy arranged by the government in April, bondholders also got short shrift, while the union, which might have received little or nothing in a normal bankruptcy, was awarded 55 percent of the company. Whats my interest in this? I head a nonprofit group that encourages developing nations to adopt policies that will lead to prosperity starting with transparency and the rule of law and hold up America as a model. Yet in its high-handed dealings with Chrysler and G.M., the Obama administration reminds me of an irresponsible third-world regime, skirting the law and handing economic prizes to political cronies. Under the complicated G.M. plan, bondholders ranging from large institutions to low-income retirees would receive just 10 percent of the reorganized company, plus warrants that would enable them to get 15 percent more should the companys value reach certain levels, in return for their $27 billion in loans. The government, which could end up putting $70 billion into G.M., would initially get 72.5 percent of the company. In return for money G.M. owes its health trust, the auto workers union would get 17.5 percent of its stock, warrants to raise that share to 20 percent, along with a $2.5 billion cash payout over eight years and $6.5 billion in preferred stock paying a 9 percent dividend. I agree with bondholders who feel the union is getting at least four times as much of G.M. in return for claims that are, at best, equal to those of the creditors. Even if the courts were to reject the plans for G.M. and Chrysler, the administrations actions in trying to force the deals may damage the credit markets for years to come. The treatment of the bondholders is a warning to investors that the federal government wont hesitate to push them aside in a crisis. - - - Obama IS the caricature the Left painted of Bush. They are the racists, the ideologues, the cynical political manipulators. The "failed policies of the last years" was a fiction that will finally become reality in 2016. - Bob _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[email protected] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
