What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.

Meanwhile, top Obama adviser Valerie Jarrett opened the door wide on CNN yesterday to bank nationalization and CEO firings. Unfortunately, my take (http://kudlow.nationalreview.com/post/?q=ODBkY2Y4ZDdkNzUxZjRkMzZmNWNkMDVmZjdlMTYzYTQ=) that the economic stress tests are a political stalking horse for more government ownership, more government control of the banks, and more government disruption of shareholder rights and normal corporate governance looks to be coming true.

Then there’s today’s huge New York Times story (http://www.nytimes.com/2009/04/27/business/27geithner.html?_r=1&hp=&pagewanted=all) about Tim Geithner. It starts on the front page and goes on and on for thousands of words. Yes, he missed early signs of the crisis. But he was altogether too cozy with the New York banks, especially Citibank — and Robert Rubin along with Sandy Weill. In fact, at one point Weill asked Geithner to be Citi’s new CEO. And Geithner joined the board of a Weill-run non-profit to help inner-city high-school students. There were numerous lunches and dinners with Rubin and Weill and other Wall Street luminaries.

With Geithner running the Treasury and the potentially criminal enterprise called TARP, is his incestuous relationship with Wall Street bigwigs a perfect example of the fox guarding the henhouse? Was he too cozy to keep a critical eye on the very institutions that blew up later?
Geithner: The Fox Guarding the Henhouse? - Larry Kudlow - The Corner on National Review Online (http://corner.nationalreview.com/post/?q=N2U2YTYyZTdhODc4NTEzMjcyYWJmNWExYzcwYTlmNmM=)

The first paragraph was the most interesting, at least to me. I need to research those numbers before I make a decision on whether this is a good move or not. If someone else has verified these numbers, please post a link.

The first paragraph was the most interesting, at least to me. I need to research those numbers before I make a decision on whether this is a good move or not. If someone else has verified these numbers, please post a link.



IMHO it is never a good move for the Gobberment to take over Private Businesses .... :doh:

IMHO it is never a good move for the Gobberment to take over Private Businesses .... :doh:

I agree. But elsewhere I've read the UAW has $20-20.4B in bonds and is being asked to swap $10B of that debt for equity. I haven't waded through the rest of the reporting regarding the other bondholders. I was just trying to confirm the numbers being reported. My head is ready to explode and it's still early.

Geithner: The Fox Guarding the Henhouse? - Larry Kudlow - The Corner on National Review Online (http://corner.nationalreview.com/post/?q=N2U2YTYyZTdhODc4NTEzMjcyYWJmNWExYzcwYTlmNmM=)

The first paragraph was the most interesting, at least to me. I need to research those numbers before I make a decision on whether this is a good move or not. If someone else has verified these numbers, please post a link.

Those numbers are basically correct - we discuss it a little in this (http://forums.somd.com/consumer-financial-affairs/177139-gm-plan.html) thread.

Why the hell didn't GM go into Chapter 11?
I realize there is no chance of that now since Obama took over ownership.

Those numbers are basically correct - we discuss it a little in this (http://forums.somd.com/consumer-financial-affairs/177139-gm-plan.html) thread.

Thanks Tilted. I didn't see that thread. I agree with your last post on that thread. This proposed deal really sucks for alot of people except the UAW.

But is that really unexpected from this Administration?

Why the hell didn't GM go into Chapter 11?
I realize there is no chance of that now since Obama took over ownership.

If this offer to bondholders doesn't get re-worked, I suspect this thing will end up in court to go through some form of bankruptcy. GM has said that it needs 90% of bond ownership to accept this offer, in order to stay out of bankruptcy (that's an arbitrary number, but it is where they have drawn the line).

As it is, the bondholders are getting almost no value. They have very little to loose by not taking the offer, so many of them may refuse it. And, there may be a curve ball in play here - how many of those bondholders bought credit default swaps on their portion of the debt? Those that did will want to force GM into bankruptcy, as they will make out very well in that scenario. They can afford to sit back and laugh at this absurd offer.

Of course, the other curve ball is the government. What will it do? If the bondholders don't agree, will it step in with more money to buy off the bondholders, so that it doesn't lose its shiny new manufacturing toy that it is so excited about owning?

If this offer to bondholders doesn't get re-worked, I suspect this thing will end up in court to go through some form of bankruptcy. GM has said that it needs 90% of bond ownership to accept this offer, in order to stay out of bankruptcy (that's an arbitrary number, but it is where they have drawn the line).

As it is, the bondholders are getting almost no value. They have very little to loose by not taking the offer, so many of them may refuse it. And, there may be a curve ball in play here - how many of those bondholders bought credit default swaps on their portion of the debt? Those that did will want to force GM into bankruptcy, as they will make out very well in that scenario. They can afford to sit back and laugh at this absurd offer.

Of course, the other curve ball is the government. What will it do? If the bondholders don't agree, will it step in with more money to buy off the bondholders, so that it doesn't lose its shiny new manufacturing toy that it is so excited about owning?

They'll have this shiny new manufacturing toy to go along with their shiny new banks. What else do they want to 'nationalize'?

I think the Administration will pull a Chavez and nationalize the energy sector.

Thanks Tilted. I didn't see that thread. I agree with your last post on that thread. This proposed deal really sucks for alot of people except the UAW.

But is that really unexpected from this Administration?

You're welcome. As I said, I guess the only thing surprising about this plan is the overtness of the theft and government desire to own GM. If you understand what the numbers here mean, it is pretty much impossible to believe that the government doesn't WANT to own a controlling share of GM.

If they didn't, there would be no reason for the plan as proposed - the details of the plan are specifically designed to give control of the company to the U.S. government, and don't help the effort to keep GM out of bankruptcy at all. In fact, the specifics of this plan make bankruptcy more likely, when they could have very easily been different in such a way as to make bankruptcy less likely.

If this offer to bondholders doesn't get re-worked, I suspect this thing will end up in court to go through some form of bankruptcy. GM has said that it needs 90% of bond ownership to accept this offer, in order to stay out of bankruptcy (that's an arbitrary number, but it is where they have drawn the line).

As it is, the bondholders are getting almost no value. They have very little to loose by not taking the offer, so many of them may refuse it. And, there may be a curve ball in play here - how many of those bondholders bought credit default swaps on their portion of the debt? Those that did will want to force GM into bankruptcy, as they will make out very well in that scenario. They can afford to sit back and laugh at this absurd offer.

Of course, the other curve ball is the government. What will it do? If the bondholders don't agree, will it step in with more money to buy off the bondholders, so that it doesn't lose its shiny new manufacturing toy that it is so excited about owning?

And who probably holds the credit default swaps? If you guess AIG or someone else already in the bailout trough, then ding, ding, ding, winner, winner, chicken dinner!!!

So the taxpayers pickup the bill regardless.

:popcorn:

Why the hell didn't GM go into Chapter 11?
I realize there is no chance of that now since Obama took over ownership.

Easy. Because George W. Bush bailed them out. Without him, they would have had to go into bankruptcy last fall, long before Obama and company could come to their rescue.

Why did Bush do it? Some think because he is a Republican it must have been necessary. I think it was because he thought it might hurt McCain's chances to win the election if didn't bail them out.

If so, when a Republican bails out a union that is, was and always will be opposed to the GOP, and thinks it will help the country or the GOP, then that is indicative of how lost the GOP is.

And who probably holds the credit default swaps? If you guess AIG or someone else already in the bailout trough, then ding, ding, ding, winner, winner, chicken dinner!!!

So the taxpayers pickup the bill regardless.

:popcorn:

If there were a lot of cds's taken out on those bonds, then you are more than likely right - I'd bet at least some were issued by AIG and other institutions which have received bailout funds.

Easy. Because George W. Bush bailed them out. Without him, they would have had to go into bankruptcy last fall, long before Obama and company could come to their rescue.

Why did Bush do it? Some think because he is a Republican it must have been necessary. I think it was because he thought it might hurt McCain's chances to win the election if didn't bail them out.

If so, when a Republican bails out a union that is, was and always will be opposed to the GOP, and thinks it will help the country or the GOP, then that is indicative of how lost the GOP is.

I've little doubt that Michigan's and, to a greater degree, Ohio's electoral votes and congressional seats factored into the calculus in some way, shape or form.

I've little doubt that Michigan's and, to a greater degree, Ohio's electoral votes and congressional seats factored into the calculus in some way, shape or form.

Right. Which is why one should have few principles, but deeply held ones.

If the GOP is going to do fundamental things, regardless of the reason, that are at odds with the very core of what Republicanism is, then there is no rationale for it to exist other than to serve itself.

How does a Republican make the argument against socialism if they supported it?

Right. Which is why one should have few principles, but deeply held ones.

If the GOP is going to do fundamental things, regardless of the reason, that are at odds with the very core of what Republicanism is, then there is no rationale for it to exist other than to serve itself.

How does a Republican make the argument against socialism if they supported it?

Larry = preacher

Tilted = choir

:buddies:

Larry = preacher

Tilted = choir

:buddies:

It's like being in a bad, recurring nightmare. The whole Paulson circus, walking out every couple of days with another crumpled up cocktail napkin; "Well, last night, we came up with this..." And Geithner was right in the middle of all this. And the president says "We just gotta do this..." And McCain suspends his campaign to, obviously, stand up and say "No and hell, no!" and then voted for it.

One man, in his maverick hands, the right time, the right place, could have, if not stopped this madness, could be this towering, true maverick who put country before party and been the one, the ONE, standing there saying "I told you this was stupid..."

What a moment in time!

The sad part about all this is Chrysler is right behind them. On the front page of the washington times is an article about the Obama admin trying to push thru a deal for the unions to take a majority owership in chrysler. Watch out Ford, im sure Obama is comming for you next.

The sad part about all this is Chrysler is right behind them. On the front page of the washington times is an article about the Obama admin trying to push thru a deal for the unions to take a majority owership in chrysler. Watch out Ford, im sure Obama is comming for you next.

Would that be an example of the workers controlling the means of production? Karl would be proud. :yay:



But it's ok...Obama isn't socialist :sarcasm: