it is pretty well accepted that there is a positive correlation between the rule of law and strong economies. so why is the obama administration trying to turn us into russia. we have probably the best bankruptcy laws in the world. companies that become insolvent can file, re-organize, and come out faster than any other country in the world.
so whats the deal with chrysler. the uaw labor contracts are executory contracts that can be voided in bankruptcy and yet for making some concessions they are getting around 55% of the reorganized company. Fiat gets to earn, i think up to 35% of the company for hitting milestones, few or none involve investing any money. and the senior secured bondholders are getting fucked and portrayed as bad people.
senior secured bonds and mortgages are supposed to be senior to everybody, excep dip loans. they are being treated like preferred stock. seems like a pure political pay off to organized labor. who owns the senior secured bonds? i dont know but assume some combo of money managers, hedge funds, individuals. hedge funds are the new black. hedge funds are money mangers; the underlying investors are wealthy individuals, pension funds, endowments, etc. by screwing these bondholders they are screwing these investors. why should these investors lose their rights? what was their crime?
this takes place while the govt. is trying to restart the credit markets. their actions in chrysler are diametically opposed to this effort. in one instance they are asking people to buy bonds with govt. supplied leverage; which implies that the investor can rely on the bond indenture and the rights of that bond under law; and in the other it is saying the indenture means nothing and the law means nothing
is this any way to run a railroad?
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