|
rulemylife -> RE: Government Motors Is Selling The Hummer Division To The Chinese (6/4/2009 8:25:17 AM)
|
quote:
ORIGINAL: Sanity
Hmm. Should I trust you, over the New York Times?
"The 31-Year-Old in Charge of Dismantling G.M."
Flip a coin here.
An unfortunate choice of words by the Times reporter, but you know that it is restructuring, yet in your endless quest to discredit the new administration you try to latch onto anything and everything.
From your link:
Every time Mr. Deese ran the numbers on G.M. and Chrysler, he came back with the now-obvious conclusion that neither was a viable business, and that their plans to revive themselves did not address the erosion of their revenues. But it took the support of Mr. Rattner and Ron Bloom, senior advisers to the task force charged with restructuring the automobile industry, to help turn Mr. Deese’s positions into policy.
quote:
I'm sure you're as much an authority on the global oil market as you are on who is in charge of doing what to GM's tiny little anus.
I don't have to be an authority to realize the obvious. People will not buy vehicles that get 8 miles per gallon when gas is $4 per gallon. And the memory of that price spike and the potential for it to happen again is what continues to kill Hummer sales.
quote:
I'll allow the folks at Bloomberg to refute that one:
No Bond Safe From Obama’s ‘Shared-Sacrifice’ Plan: David Reilly
June 3 (Bloomberg) -- Bondholders have a new risk to contend with -- the Obama administration’s policy of “shared sacrifice.”
The government’s approach to the bankruptcies of General Motors Corp. and Chrysler LLC illustrates how this new, unstated policy works: Bondholders are told to give up legal rights, and cash, as part of a government-mandated tradeoff that favors a politically connected special-interest group.
The big threat is that this policy will extend to all bonds, including Treasury and municipal debt, not just corporate obligations.
That sounds alarmist, even extreme. After all, the government has gone to incredible lengths to assure U.S. creditors -- specifically, central banks that own trillions of dollars in Treasuries and other government-guaranteed debt -- they won’t have to bear any financial-crisis pain.
Yet with California in a budget crisis, worries over all kinds of supposedly safe debt abound. And Wall Street’s disenchantment runs so deep in the wake of GM and Chrysler that once-unthinkable scenarios are being discussed.
(More here)
The article is commentary and Reilly himself admits it is speculation on where this might lead. He fails to mention that bondholders have an unsecured debt, which means that without the government stepping in to prop up GM with funds and a restructuring plan those bondholders may very well have ended up with nothing.
A response to his article:
Felix Salmon » Blog Archive » Memewatch, legal-rights edition
Yet even here, in an 800-word column devoted to the subject, Reilly can’t actually name a single “legal right” which GM bondholders have been told they have to “give up” or which has been “circumvented”. Instead, he’s reduced to a vague sense of “that’s not fair”:
In the run-up to GM’s Monday bankruptcy filing, bondholders were told they would do far worse in a government-organized and -financed restructuring than would a health-care trust fund for GM’s unionized retirees. That was the case even though bondholders were owed $27 billion versus $20 billion for the trust, and even though bondholders’ claims were legally equivalent to those of the trust…
The deal certainly didn’t represent, as Obama said during a Monday press conference, an “equitable outcome” for bondholders. Reilly neglects to mention, here, that the bondholders are going to get a huge chunk of the “old GM” — the assets which will remain in Chapter 11 after the “new GM” emerges from it. The UAW isn’t.
But more to the point, an unsecured creditor has no “legal right” to get exactly the same outcome as any other creditor with whom she is pari passu.
The creditor does have the legal right to kvetch to a judge about fairness, that’s about it. And if the bondholders have a better idea of what’s fair, they’re more than welcome to provide tens of billions of dollars in debtor-in-possession financing in order to make that happen.
But of course they’re not willing to put in so much as a nickel, which means that it’s not up to them, and the entity providing the financing — in this case, the US Treasury — gets to call the shots.
quote:
What I wrote was, a division that could be profitable. Of course I'm daydreaming about Obama allowing American oil corporations to provide affordable, abundant energy, I'll admit - something that will never happen.
Only our competitors can have abundant, affordable energy, under an Obama administration.
Yes you are daydreaming if you believe allowing offshore drilling will have any substantial impact on the amount of oil we import.
Not to mention the fact that the earliest estimated availability of those limited supplies would be at least ten years.
But hey, "drill baby drill" is a great campaign slogan to try and convince people that if we do there will be a Hummer in every garage and gas will be $1 a gallon.
|
|
|
|
