Obama May Get His Way After All

It looks like Obama's plan to yank money normally due the secured creditors and hand it to politically more palatable parties may yet win out:

And, as in the Lehman case, the best asset of the bankrupt company is about to be stolen from under the noses of creditors, as the Judge is willing to appease the even bigger powers that be, using the threat that all hell could break loose if the deal is not consummated in T minus 0 nanoseconds. Same old song and dance. Will the last person leaving please turn off the lights on due process.

  • Mesa Econoguy

    This is unbelievably dangerous.

    Here’s a question for the conspiracy theorists (I guess I’m among them) ahead of the release of the stress tests:

    What would it take for this guy to paint a picture of some banks bad enough so that they wind up effectively nationalized? They’ve gotten pretty far with Citi and B of A already, and will probably convert the preferred shares to common, diluting current shareholders and gaining control (which they already basically have under TARP, but this makes it real).

    What this would then allow them to do is control Chrysler (and probably GM), keep it afloat via sweet lending deals, and mandate ridiculous CAFE and/or draconian emissions standards, passable only by cars built by Chrysler (and possibly GM).

  • Bill

    If I were the creditors I would fight like hell and appeal, appeal, appeal...

  • Harry

    I do not think these people understand the huge damage they do by telling the world that creditors get paid whatever they (the rulers)think. Who is going to buy a GMAC bond again, unless the coupon is thirty percent, and it is secured by ten Cadillacs that you have the keys for? (50M GMAC 30% 1-15-10, FIRST MORTGAGE, YOUR OWN REPO MAN HAS THE KEYS AND A GUN).

  • morganovich

    harry-

    my greatest fear is that the DO in fact understand perfectly what they are doing. lenders still possessed of free choice will learn strong object lessons about doing business with the government and with heavily unionized firms. they will stop or demand draconian rates.

    this will put pressure on the unionized firms (and there will be lots of new ones if the card check license for thuggery legislation passes). they will need more government support of the support of firms influenced by government through quasi-fascist paths like TARP and the Chrysler negotiation.

    this just deepens governmental control over whole industries and creates a massive "governmental kieretsu", which is, i fear, what they want. it can spread through card check and be cemented by forced loans from ostensibly private companies that are, in reality, anything but.

    they get to have their cake and eat it too. they control all the interactions, but never take actual ownership, so every time the it falls on its face, they can blame capitalism.

    unions band together when they vote. individuals and entrepreneurs are easy to factionalize.

    this will create a strong power base from which to extend this agenda.

    i dearly hope that the sort of federalist stands being taken by texas and oaklahoma catch on. it's really the only way we are going to roll this back.

  • Mesa Econoguy

    morganovich –

    “quasi-fascist?”

    fascism

    Too late, dude. We’re already there.