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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: Sdgla who wrote (33436)	11/6/2012 3:53:18 PM
From: research1234	Read Replies (1) \| Respond to of 85487

That is a very good article, and makes many excellent points. The author acknowledges the unavailability of DIP financing, and proposes that if GM and Chrysler had initiated a normal C11 process, the Feds could have stepped in to provide TARP funds as DIP financing. But DIP financing terms are highly dependent on the leverage of the financiers. In this case, an argument could be made that the Feds would have demanded the same terms to provide DIP financing as they took when they initiated the Fed process that the author condems, and Fed control would have happened any way. As I have said earlier, serious financial experts knew how bad off the industry was for at least 20 if not 30 years, so its hard to feel sorry for debtors who should have known what they were getting into. And the hedge funds who bought Chrysler in 2007 knew it was highly speculative, so I don't think they should have been shocked at the outcome. I acknowledge that politics drove a better result for the unions than debtors. But at the end of the day, the hedge funds and creditors probably own just as many houses, cars and other toys as they did before this debacle, while the union workers were able to preserve their grip on a low rung of the middle class instead of being knocked on their butts. Poor management was the major cause of the auto industry decline, and even though the unions were a contributing factor it is hard for me to see why rank and file workers should get smacked any more than they already are through lower wages that will be in place for the next generation.