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Politics : Ask Michael Burke
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To: LowtherAcademy who wrote (115261)8/24/2008 6:49:25 PM
From: Knighty Tin  Read Replies (1) of 132070
 
This is a good article, except that the author confuses the equity holders with the debt holders. The debt holders can be made well, and probably should be, as the govt. has long had a "moral guarantee" on these bonds. However, IMHO, the stocks should be allowed to drop to zero. The equity holders, including many mutual fund managers who should know better, allowed these guys to do dumber and dumber things while still "voting with management." There has to be some pain for being that culpable.

Back when I ran a Government Bond Fund, I used to rant and rave about my competitors buying Freddie and Fannie credits. I only bought Treasuries. I didn't mind Ginnies as a credit, just mortgages as a vehicle. Folks thought I was nuts. Here, 22 years later, I'm finally proven right. I sure wish all of my critics weren't dead. <VBG>
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