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Politics : Formerly About Advanced Micro Devices
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To: Alighieri who wrote (481086)5/19/2009 7:38:19 PM
From: TimF  Read Replies (1) of 1573686
 
Your arguing based on a false dilemma. We are not limited to the two possibilities of tilting the situation in the favor of the unions, or liquidating the companies. In fact tilting the proceedings towards the unions makes the company less viable going forward, both because it will retain a larger percentage of the costs it gets from the union contracts, and because creditors will be less likely to lend to it, at least not without higher interest rates, if their acceptance of lower interest rates in order to have their holdings be senior to other debt, still results in them being treated as junior.

Its true that here many of the debt holders where not the initial lenders but those who brought from the initial lenders (or brought from others who did) but depressing the secondary market for debt also depresses the primary market. If you discriminate against the secondary holders than they are likely to pay less, or not buy the debt in the future. If potential lenders know the secondary market is depressed than they will demand higher rates and be more reluctant to lend in the first place, since they lose on the opportunity to cover themselves against some of the possible losses by selling in the secondary market.
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