Change the rules ? Isn´t it standard US approach in the finance industry ? Mark-to-market changed. All of a sudden NOBODY is talking anymore about level 3 assets. Nobody mentioning anymore SIV´s, off balance sheet risks. Mainstream media has shifted the "focus" to positive mainstream newsflow. Green shots EVERYWHERE ! Goldman raising 5 billion - by the way : who are the bagholders / investors for their offering ? W.B. and fellow EX Goldman alumnis through their various hedge fund affiliates ? There is a simple explanation to all of this: if the economy does not stabilize now, well, hello S&P 300 here we come !
Anyone who was still holding U.S. automaker debt was speculating. Last time I heard speculating is often an aggressive form of making money that entailed a lot of risk. Considering it was a U.S. automaker we are talking about, the political risks associated with the investment should have been obvious. If the debtholders get burned it would simply be a normal function of markets.
huh? what about the little old schoolteacher pension fund that was holding these bonds to pay out pension payments to frail little widows that worked 30 years in a job that traded pay for pension & benfits? Should they be "american" and hand over their bonds at 30% of par? or should they be wickedly un-american and rely on the insurance they bought on their bonds in case the company ran into trouble? Maybe different rules apply to one set of bondholders than to another? Is there a Secretary of Mind Control somewhere that will determine the relative "american-ness" of the motives for holding the debt, and then apply the rules as he/she sees fit? Wait, what am I talking about; let's bash Goldman some more.
Right, were the 'speculator' debt-holders un-American for providing liquidity and buying securities issued by an American auto company? The most troubling thing to me in all this is that these debt-holders purchased these securities under the assumption of protection from Delaware STATE law. Were they to have made the assumption that the federal government would attempt to meddle with one of its state's laws?
You either don't understand or are ignoring the rule of law- This debt had rules attached to it by the courts of the United States. The debt holders..voluntarily... offered a deal and was turned down. The Obama administration was simply trying to skirt the law. SOMEONE in that administration should have known this, and I believe they did. However, they've proceeded with the same power grab here that they've proceeded with elsewhere. These holders of Chrysler debt were entitled to stay in position- trying to strong arm them into subjugating their rights was simply wrong, and trying to bully the bankruptcy judge by hinting that this should be done as "cleanly" as possible was borderline criminal. Let the bankruptcy process play out. THEN, we'll see who wants to buy a car from a company owned by the US GOVT and the UAW.
I don't know the specifics of the Chrysler case very well but I don't see the inconsistency. What's a pension fund doing with these high risk securities? Will anyone offer to buy the company afterwards? We'll just have to see. The case could be made that if none of these companies had been offered easy loans earlier they would have learned to adjust and adapt sooner and this day of reckoning would have occurred earlier during a stronger economy or could have been avoided.