Re: [Pen-l] Crybaby vultures

[raghu <mraghu01@xxxxxxxxx>]

On Thu, Apr 30, 2009 at 3:48 PM, David B. Shemano <dshemano@xxxxxxxxxx> wrote:
> As expected, the Obama administration has structured plans that favor the UAW at the expense of other constituencies.  In the normal bankruptcy world, the bankruptcy code provides protection for the other constituencies.  At its simplest, a company cannot force a credior, any creditor, no matter what the circumstance, to take less under plan that what the creditor would receive if the company was liquidated as opposed to the plan proposed.  In addition, a plan cannot be confirmed if it would "discriminate unfairly" between creditors.  The proposed plans almost certainly violate these provisions.
>


Can you explain how? News reports suggest that the renegade hedge
funds are unlikely to make much more under bankruptcy than what the
Treasury offered (around 30c on the dollar). See for e.g. this quote:
"A person at a hedge-fund firm that owns Chrysler loans, speaking
anonymously, told Dow Jones Newswires that the difference between what
loanholders would get in bankruptcy and out of bankruptcy wasn't that
much, meaning the non-TARP lenders are making a political statement
more than anything."
from http://online.wsj.com/article/BT-CO-20090430-725724.html

A political statement! In other words, the hedge funds tried to
blackmail the government into paying them more by holding the workers,
suppliers etc hostage.




> If the political system believes that retired auto workers should be bailed out, the government can bail them out.  It can tax you and me and give it the retired workers.  But that is not what Obama is proposing to do.  He is proposing to have a select few (i.e. the other creditors) of the companies bail outthe workers.  The existing law does not permit it.  If the plan is rammed through notwithstanding the law, it will truly be a sad day..
>


Two points. First of all, can you explain exactly how the Chrysler
workers are being bailed out here? Or are we debating a purely
hypothetical scenario?

Secondly, on a fundamental level, how does it make any sense to treat
workers and hedge fund investors identically? How is a worker and a
hedge fund comparable in any reasonable sense? They each have
different roles and different stakes and it only makes sense to treat
each stakeholder taking the peculiar nature of their stake into
account. What am I missing here?
-raghu.



--
Plankton lobbyist: "NUKE THE WHALES!"
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