Comments on: GM bondholders vs UAW retirees: a false equivalence

By: NRA1

NRA1 — Fri, 23 Apr 2010 16:55:21 +0000

No one seems to put much importance on what the federal government threatened to do. (They threatened to withhold further funds)

No one seems to put much importance on the power of a Federal Judge. (He makes the hard decisions)

I don’t like any outcome that gets crammed down your throat, but the Judge decided that the Federal Government was not bluffing and the Judge surely felt there was no choice.

Bondholders can sue the Federal Government in Court. I hope they win something.

By: Gary McDougall

Gary McDougall — Mon, 01 Jun 2009 13:35:11 +0000

I realize I am in a unique position for many members but, quite frankly, I don’t need any insurance from GM or VERA. I want to know what you’re doing to my monthly pension checks. Without those I am finished and I do mean FINISHED like off the membership list for ever.

By: Jason

Jason — Mon, 01 Jun 2009 06:50:36 +0000

An exceptional situatuon, the demise of a company like gm is unprecedented in modern history. Never has the end of any one company affected the rest of the world like it does in our time. We should be horrified and thrilled at the same time. Change is growth in our times, the alternative to change being destruction. This lends no confidence to the thousands of people who have had or will have their livelyhood stripped from them. The mob rules mentallity will rear its ugly head. Cooler heads must prevail. Are we eveolved enough to avoid a third world war? Do we have the right to avoid a third war? I am of the opinion that human beings kick ass and that we have the power to make our own destiny. Take that and make of it what you will.

Note to self: Hopefully this makes sense when I am sober.

By: Widow

Widow — Sat, 30 May 2009 16:12:50 +0000

Im a widow of a GM retiree. My husband left me 40,000 in GM bonds. If GM files bankruptcy what becomes of my money? What are the scenarios? Can someone explain in plain english please? thanx

By: ubdkjrb

ubdkjrb — Sat, 30 May 2009 00:48:43 +0000

A good point was made earlier – the white collar workers at GM don’t even have company paid medical insurance when they retire.

Another interesting note: none of the concessions that the UAW made, except for bonuses, don’t reduce operating expenses and therefore have no effect on profitability. How does this make GM more competitive? Do the hourly Toyota retired employees get their medical benefits covered?

By: Griff

Griff — Thu, 28 May 2009 13:47:26 +0000

his personal circumstances or political affiliation shouldn’t matter…I’m not surprised if that’s indeed the case though.

investing in senior debt should follow contractual rights and rule of law, when and if applicable. Political leanings matter not, or they shouldn’t

kinda like TBP and his push for “wind energy”…oh yes his firm stands to benefit on those tax credits but that’s just minor details.

By: RTD

RTD — Thu, 28 May 2009 10:56:35 +0000

I can’t believe you guys are falling for another Joe The Plumber style astroturf campaign.

30 seconds on Google:

http://www.campaignmoney.com/political/c ontributions/dennis-buchholtz.asp?cycle= 08

The author donates thousands of dollars per cycle exclusively to Republican candidates for nearly a decade, lists his occupation as “Self-Employed Real Estate Investor”, and yet has people crying over his “poor retiree about to take a loss on his GM bonds” sob story.

By: drscroogemcduck

drscroogemcduck — Thu, 28 May 2009 10:24:24 +0000

i think they are equivalent because UAW could have negotiated the retirement plan so they weren’t exposed to GM risk. but they didn’t because i think they believed they could get a higher return by letting GM float the benefit money and they probably also believed they would be bailed out by the government if GM failed.

By: Griff

Griff — Thu, 28 May 2009 00:28:21 +0000

maybe these old men should’ve just assumed they were buying subordinate debt instead of the senior unsecured they presumed to be owning. Buyer beware is always the rule…but if the system screws you over, primarily NOT based on legal precedent then what’s the recourse to the investor ?

GM was downgraded to junk (< BBB) in mid-2005, I think.

Speculating in senior-unsecured, investment grade debt is also called Investing. Oh, and now with the facts in hand it “just looks like speculation”. 12 months ago, I guess investing in a 12-mo CD at Wachovia or WaMu would also have fallen under “speculation”.

By: R Axon

R Axon — Wed, 27 May 2009 23:48:40 +0000

I am one of the unfortunate GM Bondholders who bought in 2002/2003 and paid close to par for the bonds. Everyone is debating whether bondholders should be treated as speculators or creditors. By their vary nature, corporate bonds are far from speculation (under normal conditons). They are sold at a fixed price, paying a fixed interest rate, for a fixed period of time. Holders of these bonds are not speculators but creditors of GM. GM borrowed this money for capital investment, expansion, R&D, etc with the promise of paying this money back with interest at a pre determined time. To now say the bondholders are just “out of luck” is worse than criminal – it is illegal. I’d rather see GM liquidated. At least the bondholders would fair much better than under the proposed exchange.

By: AndrewDover

AndrewDover — Wed, 27 May 2009 23:15:23 +0000

The UAW did exactly the same thing as Dennis Buchholtz:
They made a VEBA deal in 2007 in which they obtained promises by GM to be paid in the future.

And their current situation is not so bad. I would ask the fair minded reader to check out the UAW VEBA terms at
http://www.xpdnc.com/files/relatednewsan dreports09/UAWGM2009May-1to15.pdf (Page 11)

where it states the terms for VEBA recently agreed to by UAW and GM + Auto Task Force.

They are:
10 billion in cash at Jan 1, 2010.
1.384 billion in cash 2013
1.384 billion in cash 2015
1.384 billion in cash 2017
6 billion in prefered stock paying 9%
17.5% of all equity in the restructured GM.

Plus warrants for another 2.5% of equity in GM.

And how much did GM owe them ?

By: Ludwig Berstein

Ludwig Berstein — Wed, 27 May 2009 23:08:47 +0000

Yea, I think he was just gambling pretty hard. Also, diversification is important at all times, especially if you are not sure what you are doing. It didn’t seem like he was certain about his action aside from ‘GM is big, so it got to be a safe investment’. It be a disaster if equity traders would start thinking like this.

- L Berstein
ludwigreport.com

By: Major

Major — Wed, 27 May 2009 23:00:58 +0000

This gent should check out the current fair market value (FMV) of his GM bonds at the FINRA web site — http://cxa.marketwatch.com/finra/BondCen ter/AdvancedScreener.aspx.

Both equities and bonds are a forms of speculation — not to be confused with “savings.” The belief that bond holders should be protected (by Big Government) from their losses – while share holders should have to go punt – is absurd on its face. There’s a reason bonds are rated, why those ratings are periodically updated and why the FMV value of those bonds change with rating changes!

By: J Flory

J Flory — Wed, 27 May 2009 21:40:04 +0000

This aritcle is completly specious reasoning.

The investor’s penalty for ignorant or foolish nondiversification is whatever loss ensues. The investor still retains whatever rights or powers he bought to enforce collection of whatever he can, even if that means there is less left for others. If we feel sorry fot he workers, go to Congress and get Congress to give them some more help– don’t ask or expect the investors to go away and die so that whatever theyown can be handed ove tot hemore needy.

(Personally as a taxpayer and small GM shareholder (diversified luckily) I would gain if the bondholders would go away and take scraps, but I still have to try to be be intellectually honest on this rather than self-serving as so many advocates have become.)

By: AndrewDover

AndrewDover — Wed, 27 May 2009 21:35:00 +0000

Note that ten year employees are being offered $80,000 and a 25,000 car voucher to “voluntary quit” GM.

No wonder GM needs to stiff the bondholders.