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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (482627)	5/21/2009 8:20:04 PM
From: tejek	Read Replies (1) \| Respond to of 1573866

Whose doing it? The government is, in all sorts of ways, but the specific relevant case is putting the union, a junior creditor, ahead of the senior creditors in the Chrysler bankruptcy. The gov't didn't do it.....the BK judge did. BK judges have that leeway. Its not the first time its happened. You're projecting future events as if they will definitely happen. That's not true....they may happen. People respond somewhat rationally to obvious incentives. If you make lending riskier by letting those junior to the lenders get theirs first if the company fails, than you create a disincentive to lend. Again, this is not a precedent setting event......so your concerns are unwarranted. Its definitely "going to happen" in that there will be a disincentive created by this. Of course its not the only factor, so if other factors combine to make lenders a lot freer with their money, than borrowing for Chrysler or similar companies may not be that hard, but it will still be harder than it otherwise would have been. Given what I know about car companies and their ongoing profitability, investing in Chrysler was an incredibly stupid move by the Indiana Teachers' Retirement Fund. Do you disagree?

To: TimF who wrote (482627)	5/21/2009 11:13:16 PM
From: Joe NYC	1 Recommendation Read Replies (1) \| Respond to of 1573866

People respond somewhat rationally to obvious incentives. If you make lending riskier by letting those junior to the lenders get theirs first if the company fails, than you create a disincentive to lend. Before disincentive to lend at all will come disincentive to lend at favorable terms. There is a huge difference between the rate one can get on an unsecured loan (Credit Card) and a secured loan (Mortgage). Obama has erased the distinction, and as a result, may have erased source of funding at favorable terms to any borrower. Joe

To: TimF who wrote (482627)	5/23/2009 12:51:45 PM
From: combjelly	Read Replies (2) \| Respond to of 1573866

"but the specific relevant case is putting the union, a junior creditor, ahead of the senior creditors in the Chrysler bankruptcy." That isn't what is happening, though. There is roughly $2 billion in cash that is up for grabs, that goes to the senior creditors. The government is offering to put $30 billion into the new company once it exits BK. That isn't up for grabs and it is a strange argument to claim that it is. I don't see why taxpayer money should be given to those creditors.