Obama worse than Kissinger?

[Jon Miller]

The government making the right choice about being involved in Chrysler is something that should be handled in the voting booth.

JM

[Drake Tungsten]

The Chrysler deal, midwifed and financed by the government, does upend the traditional order and sets a precedent that, were it to be repeated, would be dangerous.

Exactly. **** this. I can't even imagine the outrage if Bush had tried something like this...

The government making the right choice about being involved in Chrysler is something that should be handled in the voting booth.

So whether or not the government should follow the law is determined in the voting booth?

[chequita guevara]

Outrage from who? You think moderates or liberals would be outraged that Bush was trying to save jobs rather than some corporation's fortune?

[Drake Tungsten]

Outrage from who?

The press that is intimately involved in Obama's plans to embarass the senior debtholders that refuse to give away their rights.

[Jon Miller]

So whether or not the government should follow the law is determined in the voting booth?

The government being involved at all is what is determined in the voting booth.

If the government is involved, yes the standard law can be broken, because the government sets what the law is.

JM

[chequita guevara]

Outrage from who?

The press that is intimately involved in Obama's plans to embarass the senior debtholders that refuse to give away their rights.

Which has **** all to do with people being outraged if Bush tried to do something like this. The only people who would be outraged are the people who are outraged now, i.e., conservatives and reactionaries like you.

[KrazyHorse]

You ignored the rest of my post. You can transfer loans to other parties as well.

Sure, it won't be worth much. It isn't worth much now either, is it?

Don't make loans to bad companies in the first place. Risks like this is what make loan companies act responsibly.

JM

Jon, this is a ridiculous argument. Chrysler's bondholders bought bonds (i.e. lent the company money) at the interest rate they did because they were making secured loans. This means that under the law they had first claim on Chrysler's assets in the case of any bankruptcy. Now, the government is changing the rules by putting political pressure on bondholders to accept less than they are entitled to, under the law.

Now, the reason this is important is not because of the poor investors who bought Chrysler bonds and are now getting the shaft.

This is important because future investors who buy secured bonds in companies will have to discount the legal assurance of seniority they have because they will be uncertain of whether or not the government will step in and invalidate their claims. This means that struggling companies will have to pay more for financing, leading to more bankruptcies than would otherwise have been the case.

[Drake Tungsten]

If the government is involved, yes the standard law can be broken, because the government sets what the law is.

I doubt you feel the same way about "torture" and wiretapping.

[KrazyHorse]

The government being involved at all is what is determined in the voting booth.

If the government is involved, yes the standard law can be broken, because the government sets what the law is.

JM

Jon, the point is that is a FANTASTICALLY BAD idea to run around invalidating private contracts made in good faith.

Of course the government sets the ****ing rules. That's always true. It doesn't mean that what they're doing is a good idea.

[Drake Tungsten]

This is important because future investors who buy secured bonds in companies will have to discount the legal assurance of seniority they have because they will be uncertain of whether or not the government will step in and invalidate their claims. This means that struggling companies will have to pay more for financing, leading to more bankruptcies than would otherwise have been the case.

I also wonder if this will have an effect on future debtor-in-possession financing, even though that isn't what's at issue here. If the security of senior debt is in doubt, will anyone trust promises on super senior debt?

[KrazyHorse]

This is true.

[chequita guevara]

Jon, the point is that is a FANTASTICALLY BAD idea to run around invalidating private contracts made in good faith.

You mean like union contracts?

[Drake Tungsten]

This just gets more ****ed up the more you think about the consequences. American contract and bankruptcy law is one of the major reasons our economy is so dynamic, yet Obama is willing to toss it out the window for political reasons and erode confidence in the system.

[KrazyHorse]

The government here is creating MASSIVE future uncertainty (thus higher interest rate spreads for struggling companies) simply for the SHORT TERM BENEFIT of some relatively privileged auto employees.

Is a dollar transferred from a bondholder to an employee probably welfare enhancing in the short term? Sure. A dollar transferred to an unemployed individual is even more so. The reason we don't simply maximize transfers like this is that in the LONG TERM this has disastrous consequences.

And if we were simply aiming to do wealth transfer the way to do it would certainly not be by ****ing over a specific group of people based on nothing more than what company's secured debt they chose to buy.

[chequita guevara]

I also wonder if this will have an effect on future debtor-in-possession financing, even though that isn't what's at issue here. If the security of senior debt is in doubt, will anyone trust promises on super senior debt?

Under survival conditions, people engage in behavior that is considered acceptable for those circumstances, which would not otherwise be considered acceptable in civilized society. For example, you have a right to kill an attacker but not a right to kill someone you think is plotting to kill you.

Right now, the U.S. is in a situation where adhering closely to the free market policies which got us into this mess, would only further destabilize the economy. It's necessary, in order to keep the economy going, to sacrifice some of the bourgeoisie's rights so that all of the bourgeoisie's rights don't go down. The argument against this is the same stupid argument conservatives whined for in the 1930s.