Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (50209)	5/19/2009 7:01:56 AM
From: TobagoJack	3 Recommendations Respond to of 217883

just in in.traInteresting article in today's FT regarding GM bondholders. ft.com The government wants to shaft GM Bondholders in the same fashion that they are currently doing with Chrysler debt holders. But they have a problem, namely: "Individual investors hold about 20 per cent of the $27bn in unsecured debt in question." "GM also sold $4.7bn “retail notes” that were designed for individuals." So unlike Chrysler debt, which is mainly institutionally owned, there is a lot of GM debt that is apparently owned by "moms and pops" and retirees. I'm not sure about double counting, so let's assume that 5.4 Billion in debt is owned by small investors. Let's also assume that the average investor holds $25,000 of these bonds. That would imply that there are 216,000 small investors in GM Bonds, and more importantly, I would assume that nearly all of them vote. So the Obama dilemma is as follows: 1 - Protect the union workers and screw the small bondholders (uh, oh - you're probably losing more votes than you gain, and they are spread out across the US, not just in the states that you have won handily). 2 - Give the small bondholders their rightful share of proceeds that should result from their senior position in the capital structure (but that screws the GM workers, at least in comparison with the Chrysler workers - so how does the UAW square that circle? Sounds like the GM workers will accept a deal no worse than that received by the Chrysler workers). Once again, the fallout of "unintended consequences" rears its ugly head..... So who will Obama end up pandering to in this case?