For all our disdain and fear of autocrats and socialism, we are now building upon a foundation of the very same. To invest so much power in the office of one man is dangerous. George Washington warned in his farewell address to the union regarding separation of powers “Let there be no change by usurpation; for though this in one instance may be the instrument of good, it is the customary weapon by which free governments are destroyed.”. Yet this is the very circumstance we find ourselves in.

The notion that we can somehow fix broken companies and hence get people to manufacture and purchase cars, homes , electronics again and start the whole ball rolling is to deny one of the fundamentals as to why economic activity collapsed. High energy costs due to increased demand for a limited resource. Perhaps having fewer autos and manufacturers is a good thing in the long run. The industrial age has been a blight upon the planet. We cannot continue to burn fossil fuels indefinitely.

It is past time to think out of the box and chart a new path. If we do not the future holds more of the same; war ,pestilence, poverty and tyranny.

http://www.googlemenews.com

Gee, you don’t think their judgment on what’s “an okay business deal” might be just a tiny bit in line with “we’ll do whatever the US government wants because otherwise they’ll put us out of business”?

This proposed restructuring is a travesty of the bankruptcy process. Airline employees certainly didn’t get this kind of protection for their retirements!

I don’t know if this will work, but they might be able to muck things up enough to get a better deal:

http://www.nytimes.com/2009/05/02/busine ss/02hearing.html

\”Administration officials said they believed that it was highly unlikely that a bankruptcy court judge would side with the minority when those holding 70 percent of the debt had signed off on the arrangement.

Bankruptcy law allows management of a company the exclusive right to draft a plan of reorganization. A judge can extend that period of exclusivity for 18 months, but creditors or potential buyers for a company can present a competing plan once that period expires.The United Automobile Workers union has agreed to accept company stock for 50 percent of what Chrysler owes its retiree health care fund. Most of the major debtholders, led by JPMorgan Chase, agreed to write down the debt owed to them by more than two-thirds.

But the remaining holdouts — including units of OppenheimerFunds, Xerion Capital Fund of Perella Weinberg Partners and Stairway Capital Management — refused offers to buy out their debt, forcing a bankruptcy filing. They argued that they were falling victim to the willingness of their big banking partners in Chrysler to make concessions to a government that had helped bail them out as well( NB DON ). Perella Weinberg decided late Thursday that it would accept the government’s terms.\”

And from their statement:

http://dealbook.blogs.nytimes.com/2009/0 4/27/gm-faces-obstacle-from-unsecured-cr editors/

\”We are deeply concerned with today’s decision by GM and the auto task force to offer only a small, inequitable percentage of stock to its bondholders in exchange for their bonds.

We believe the offer to be a blatant disregard of fairness for the bondholders who have funded this company and amounts to using taxpayer money to show political favoritism of one creditor over another.

Today’s posturing makes it clear that the company and the auto task force would rather discount the thousands of individual investors and retirees who own GM bonds than undergo earnest negotiations.

The current offer is neither reasonable nor adequate. Both the union and the bondholders hold unsecured claims against GM. However, the union’s VEBA would receive a 50 percent recovery in cash and a 39 percent stake in a new GM for its $20 billion in obligations; while bondholders, who own more than $27 billion in GM bonds and have the same legal rights as the unions, would only receive a mere 10 percent of the restructured company and essentially no cash.

The offer was made unilaterally, without any prior discussion or negotiation with bondholders and in spite of repeated calls for dialogue. ”

In all honesty, with the statements being made about them and their lack of standing, they might have a case. You cannot single out a particular group because you don’t like them, which is what they might well argue is happening. I’m not sure that social policy overrides their legal standing.

“Chrysler may be worth nothing, and 55% of nothing may be worth nothing… It’s walking a very tight rope without a safety net, and a very high wire” http://www.nytimes.com/2009/05/02/busine ss/02bankrupt.html?ref=business

In light of the revelation that Ken Lewis was ‘strongarmed’ to act against the fiduciary interests of BAC shareholders, and given the high percentage of institutions on the hook to the Government for operating capital, I think it reasonable to consider the possibility that the banks who accepted the Obama administration’s terms did so for reasons other than that the proposal was fair & equitable. That is hopefully what the bankruptcy judge will determine in an impartial manner. Furthermore, the renewed demonization of individuals & entities pursuing their legal rights serves no practical purpose other than pandering and, if shown to be inaccurate, may prove counterproductive to future initiatives as was discovered during the AIG bonus fiasco.

What is the future? China who is now has largest market share and our cars will be built there just like Apple’s IPods, Gateway Computers, and many of our high tech products. Yes, the Chinese Invasion of cars is coming!

Lets face it – the other senior creditors have political considerations. Even if it does make legal or business sense for them to say no, the couldn’t if they wanted to.

Whether the holdouts can make this argument under a legal standard, I don’t know. But you could see why they would try.